Streaming media, on-demand meetings with service providers, and all kinds of instant online interactions have shaped expectations about how to pay and get paid — and when.
Elena Whistler, senior vice president at The Clearing House (TCH), told PYMNTS in an interview that the volume of real-time payments will rise in the new year and beyond.
PYMNTS research found that real-time payments made up 17% of all payments made in 2021, up from 5.7% last year. Besides the growth in electronic payment methods, she said, “The growth comes from the availability of more real-time methods for businesses. More financial institutions are enabling offerings as well.”
Pay wages faster
Companies are increasingly choosing to pay their employees in real time, partly reflecting a shift toward an economy of temporary jobs and project-based work. Whistler said companies with a traditional workforce can leverage TCH’s RTP network to their strategic advantage as well.
“Today’s work concept, pay-to-day programs in tight labor markets, especially retail and food services, can make a difference” in employee retention, she said.
Individuals are willing to pay for instant access to funds in the account. PYMNTS found that nearly a third of respondents would be willing to pay the fee in order to get paid more quickly – and the value and use cases for real-time payments extend well beyond just being able to get (or send) money in an emergency.
As Whistler said, “speed also comes with choice and control, which is why they are willing to pay” for real-time transactions.
She added that consumers have grown to anticipate and demand real-time capabilities in all aspects of their lives – including banking.
With a return to consumer choice, she said, consumers have become so conditioned by their experiences with the world’s streaming providers that one does not need to go to the theater for instant access to movies, day or night. They expect the same in financial services, she said, adding that “once you experience real-time deposits, it may be difficult to get back into them.”
Real-time payments are still in their infancy, with dozens of real-time local schemes forming around the world, and where interoperability still needs to be established.
To get critical mass, Whistler said, “You need to order the customer, the customer pays for it [real-time payments], but at the same time, you need companies and financial institutions to deliver.”
Word of mouth has proven an effective tailwind, she said, “and we’re starting to see a variety of companies changing the business as well as [peer-to-peer (P2P)] space, like Venmo, PayPal, Cash App and Zelle too.” Many of these companies, apps, and services will continue to accelerate their payments.
Whistler noted Singapore’s nearly 60% growth in real-time payments during the pandemic, driven in part by continued consolidation in digital wallets that are attracting more consumer transactions (while the use of cash is also declining).
In order to see that kind of growth in faster payments initiatives in other markets, she said interoperability is key.
“Interoperability is ’emerging’ in a more regional fashion,” she told PYMNTS, particularly in Asian and Northern European markets. As business and cross-border travel resume, it follows that regional corridors will begin to “connect,” she said.
Looking to the future, Whistler said, RTP network sizes will “at least” double over the next year, driven by growth in the account-to-account (A2A) and enterprise payments space.
“We see 2022 as a very promising year for growth in real-time payments,” she said.