Real-Time Revs Up As Consumers’ Awareness Grows

Real-time payments (RTP) methods aren’t much use if few people understand what they are, where to find them and how to use them. That’s why awareness is so important at this point.

“PYMNTS’ research reveals that a fair share of consumers do not fully understand what real-time payments are or which payment methods support real-time transfers. A surprising 36.2 percent of consumers claim to have used real-time payments, even though the methods they use either do not support real-time payments or are not made in real time. This lack of understanding may occur in part because payers receive instant confirmation upon making a payment, regardless of the method used and the time it takes for the receiver to access funds.”

This is among the more eye-opening findings in Accelerating the Real-Time Payments Demand Curve: What Banks Need to Know About What Consumers Want and Need, a PYMNTS and Alacriti collaboration.

The fact is that people love the idea of RTP — once they understand it — and “consumers are even willing to pay fees to ensure that recipients can access funds quickly and seamlessly. This is the case for nearly 40 percent of consumers making tuition payments, 35 percent of those paying their contractors and 25 percent of those making P2P payments,” per the new report.

FIs Are Risking It Without Real-Time

Findings from Accelerating the Real-Time Payments Demand Curve bear out the spreading awareness that people are starting to switch banks for real-time access. That’s key.

“Access to real-time payment methods is another important factor that affects consumers’ choice of an FI, as three out of 10 consumers say that having access to real-time payments is one of the most important features they look for in financial institutions,” per the report.

PYMNTS researchers found that that close to 24 percent of consumers “would be willing to switch to financial institutions that offer real-time payment availability,” adding that “consumers want services from FIs that they can trust and that offer strong personal data protection. Approximately two-thirds of consumers cite these needs as one of the top factors affecting their decisions about which FIs they use. These two factors are especially important to baby boomers and seniors as well as Generation X consumers.”

The fact is, whether consumers’ payment methods are technically “real-time” or whether they just think they are, they’re hooked. “Interest in using real-time payment methods — once [consumers] know what that really means — is fairly high. Our research shows that consumers believe they use real-time payment methods for 27.7 percent of their payments and would be ‘very’ or ‘extremely’ likely to use them for 42.3 percent of their transactions if they were available.”

Consumerizing RTP

When consumers are willing to pay for something, ears perk up – and so it is with RTP. As consumers become more willing to pay for real-time funds, more firms will offer it.

“One-third of consumers believe it is ‘very’ or ‘extremely’ important for them to be able to send money in real time, and 35.2 percent think it is ‘very’ or ‘extremely’ important for recipients to have immediate access to their funds,” according to Accelerating the Real-Time Payments Demand Curve. “The importance of being able to make real-time payments is greater in specific cases: 48.4 percent of consumers who made P2P payments and 42.3 percent of those who made payments to contractors find it ‘very’ important to make those payments in real time. Only 28.9 percent of consumers who paid installment loans and utility bills said the same.”

All of this – and much more contained in the new report – means use cases are already forming around RTP that will consumerize these services, ultimately transforming the speed of money.

“Consumers’ interest in real-time payments comes down to factors that benefit them,” per the report. “The most common reason consumers want to use real-time payments is that they would simplify their payment experiences. Our study finds that 58.4 percent of consumers would use real-time payments because they are easy and convenient, and 51 percent say that they would be able to manage their accounts more easily if they made payments in real time.”