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  • Writer's pictureJaime González Gasque

What are real-time payments and what is their impact?

By Catalina Arango Bedoya

Payments in real time allow people and companies to make payments quickly; They offer an instant interbank electronic funds transfer service, with 24x7 availability through channels such as mobile devices and web platforms. Under this method, a payment request is initiated in real time that makes it possible to transfer funds from one account to another. In many cases, notifications are given instantly.

According to the ACI Worldwide study, Prime Time for Real Time 2022, the number of real-time payments globally reached 118.3 billion in 2021, an amount that will increase to 427.7 billion in 2026, to become a quarter of all global electronic payments. The three main economies in Latin America that follow this scheme and are projected to have significant growth are Brazil, Mexico and Argentina.

These types of payment ecosystems are the invisible infrastructure that drives both people's daily lives and different types of businesses, determining how people exchange goods and services. Real-time payments make funds more easily available; since they are settled in seconds instead of hours or days, which influences the agility of the budget and cash flow management. With these kinds of innovations, companies can stay competitive, especially in an increasingly globally interconnected economic landscape.

What is driving the growth of real-time payments?

We have witnessed tremendous changes in technology and business models in recent years, driven by the pandemic since 2020 to advance in leaps and bounds, from new payment platforms and solutions, to updated regulations. As changes in financial ecosystems accelerate, people's expectations change at the same pace. Let's look at the four things driving the real-time payment trend.

Regulators around the world are leading efforts to speed up payments in real time, regulations in some developed countries are supporting this method. This can benefit consumers and the government, as they can efficiently track financial activities and help increase the fluidity of the economy.

8 pillars to offer payments in real time

Speed: Funds must be available in the beneficiary's account within 10 seconds for 99% of transactions.

Availability: have availability 24 hours a day, 365 days a year.

Convenience: The transfer of funds should be a simple and intuitive process, initiated by a mobile device capable of connecting through an email address, QR code, among others.

Ease of reconciliation: Through the use of an open and standardized interface, it allows the transaction information to be associated with the payment order, helping companies to improve reconciliation.

Widespread use: Participating institutions include traditional banks, digital banks, and non-bank service providers.

Security: protocols are used that are at least as robust as those associated with any other electronic means of payment.

Low cost: The cost of a transfer is subsidized by the government and therefore provided at no cost to the individual and at low cost to financial institutions.

Multiplicity of use cases: it must be able to serve a variety of audiences, both individuals and companies, including P2P, B2B, bill payment, tax collection, among others.

Advances in mobile technology, development of software such as application programming interfaces (APIs), tokenization, and hardware have created new payment lanes and digital payment operators and enabling actors. The result is a dramatically large payments ecosystem with a diverse set of players who must keep pace with ever-evolving innovation to deliver the right solutions, products, and/or services.

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