Market Landscape: Real-time Payments

Summary

Catalyst

Regulatory initiatives are driving major change in the payment industry with the development of real-time payment infrastructure (for low- and high-value payments) in many markets, urging banks to invest in new systems. At the same time, there have been significant changes to payment composition, particularly in Europe, with the expansion of open banking and cloud-based technology making sending and receiving money more accessible for businesses and consumers alike. Coupled with the implementation of the ISO 20022 standard, it will mark a significant step forward in how efficient and secure payment systems are overall in an increasingly digitized economy. All these factors are contributing to new payment services being a particularly high-profile investment area for many issuers and acquirers. This report outlines recent developments in real-time payments and examines challenges and opportunities for the payments industry.

Omdia view

Payment issuers and acquirers are prioritizing investments toward real-time payments in 2023, with merchants’ interest growing. Given that investments have dried up in a challenging macroeconomic environment and the cost of capital is higher for all, there is a greater premium on how to gain commercial benefits from alternative payments, but some banks lack a strategic vision. Payments are widely viewed as the lynchpin of a broader technological ecosystem, attracting non-financial institutions to provide payment capabilities as a core facet of their product offering, which has led to the rise of superapps—especially appealing to younger generations. Ultimately, real-time payments will facilitate a global cross-border system making payments and remittances more accessible to everyday consumers and businesses. Payment leaders, therefore, need to have a clear vision of what the future of payments would look like as they also begin to harness the possibilities of interconnecting application programming interfaces (APIs), open banking, big data, and emerging technologies such as smart and connected devices with real-time payments and paving the way to embedded finance. Omdia’s analysis shows that greater use of the cloud is needed to increase capacity and support the open API ecosystem. As players are being pushed to upgrade payment systems to fit with the new marketplace, they also need to understand the broader trends in the global landscape to maximize their investment opportunities.