The number of consumer instant payments is forecast to exceed 235 billion transactions by 2027; up from 74 billion in 2023. This growth of 218% will be driven by lower merchant acceptance costs when compared to traditional card schemes.
An instant payment is any payment outside of a card network that is capable of receiving funds in 10 seconds or under. This is of particular importance now, as many merchants will be seeking to reduce costs and protect margins through the global economic downturn.
Find out more about the new research, Instant Payments: Future Opportunities, Regional Analysis & Market Forecasts 2022-2027
Almost 70% of consumer payments to be instant by 2027
The research found that the transition to instant payments for consumers will rapidly expand, reaching 70% of all global transactions by 2027, up from just over 30% in 2023.
By 2027, the three largest markets for consumer instant payments globally, by transaction volume, will be China, led by the popularity of WeChat Pay and AliPay; India, driven by UPI; and the US, brought by the introduction of FedNow. They rank as follows:
The research recommends that instant payment vendors focus on building value-added services within their offering, including real-time fraud prevention or automation of payments for B2B use cases, in order to benefit from this shift in a highly competitive market.
Merchants to gain from instant payments adoption
The research identified that the lower costs of instant payments allow merchants to pass on savings to consumers, as well as benefitting from increased speed of transfers. With instant settlement, merchants will receive payments within seconds, reducing payment settlement delays.
Report author Michael Greenwood explained: “Payment processors, who provide payments acceptance for merchants, should look to offer instant payments integration via a single API. This will allow merchants to accept instant payments at checkout alongside existing payment methods, such as cards and wallets, without needing to undertake a separate, costly and time-consuming integration process.”
Instant payments through Open Banking are attracting growing interest in the telemedia space, with many merchants, aggregators and VAS providers seeing them as a good alternative to DCB in developed markets. They are instant, have excellent outpayments and, above all , are cheap.
At Telemedia 8.1 LIVE in Barcelona last week, Nuapay and Dynamic Mobile Billing both talked extensively about the use of open banking and instant payments, showcasing just how the tech can create better services, faster flows and cut down costs.
In fact, last year a fintech start up called Volume rolled out its service pledging that it can pass on the savings made by using open banking to allow merchants and retailers to give discounts to consumers at the point that they purchase – if they use the Volume digital payment app.
In a move dubbed “Pay now, spend less”, Volume says that thanks to open banking rules it can not only offer the immediacy of account to account direct payments between consumers and merchants, but can also allow sellers to offer shoppers tailored discount levels based on savings from bypassing the fees levied by conventional payment intermediaries, such as debit and credit cards, e-wallets and Buy Now Pay Later.