The Year in Review for Real-Time Payments — And a Future Preview

The Clearing House - Real-Time Payments: 2022 Continues Strong Growth For Real-Time Payments - September 2022 - Discover the growth of real-time payments, what the future holds and how banks, businesses and other firms can encourage real-time transactions in the coming years

The Clearing House - Real-Time Payments: 2022 Continues Strong Growth For Real-Time Payments - September 2022 - Discover the growth of real-time payments, what the future holds and how banks, businesses and other firms can encourage real-time transactions in the coming years

The RTP® network has been a game-changer for the financial industry since its introduction in 2017. The ability to process payments in mere seconds allows for more financial security, more accurate bookkeeping and extraordinary levels of convenience for both businesses and individual consumers.

What were some of the most exciting real-time payments developments this year?

“We enjoy watching the volume grow on the RTP network, for sure. But one of the most exciting things we see in real-time payments is how they are changing the movement of money, and in many different ways. One use case that we are seeing on the RTP network that absolutely exploded in volume in 2022 is earned-wage access, where workers can access their accumulated earnings instantly. It is currently the fastest-growing use case on RTP, and it is helping consumers access their earnings instantly, so they don’t have to wait for the normal weekly or biweekly pay cycle.”

Today, 61% of direct deposit accounts can now receive real-time payments on the RTP network, indicating widespread adoption among businesses and consumers. While initially slow to get going, adoption rates skyrocketed as the pandemic wore on and limited individuals’ and businesses’ access to legacy payment services. This uptick in adoption and implementation has carried over through this year as the pandemic continues, and it is likely to extend well into the future as consumers grow accustomed to the technology.

This month, PYMNTS explores the most significant real-time payments developments of the year thus far and predicts what the coming years hold for this quickly maturing industry.

2022 In Real-Time Payments Review

A wide variety of large-scale firms joined the RTP network this year, fueling massive growth in the real-time payments industry. U.S. Bank announced it was integrating bill pay and real-time payments in January, and TD Bank began offering real-time payments for auto dealers in March. Both of these developments, along with countless others among credit unions, community banks and smaller firms, introduced millions of consumers to real-time payments for the first time.

The Clearing House continued to improve the RTP network, expanding its capabilities to previously unseen levels. The transaction limit was raised to $1 million in April, a huge leap from the $100,000 transaction limit previously in place. This massively increased the potential use cases for real-time payments, making it feasible for large businesses and institutions to leverage the network for business-to-business payments.

Overseas real-time payments continue to improve as well. Western Union announced that it would join the European Union’s Single Euro Payments Area Instant Credit Transfer scheme, offering European customers the ability to make real-time payments across 24 countries and from more than 2,300 FIs. In the United Kingdom, meanwhile, the Bank of London joined the country’s Faster Payment System, which processed 3.4 billion payments in 2021 and does not show any signs of slowing down.The Clearing House - Real-Time Payments: 2022 Continues Strong Growth For Real-Time Payments - September 2022 - Discover the growth of real-time payments, what the future holds and how banks, businesses and other firms can encourage real-time transactions in the coming years

Looking Forward

Real-time payments’ true potential remains largely untapped in the U.S. These payments account for just 0.9% of total transaction volume in the U.S., with only 1.8 billion real-time transactions taking place. These numbers are projected to improve in the future, however: Real-time transaction volume is expected to hit 8.9 billion in 2026 — still a minority but representing a promising increase.

Incoming competition and regulations could potentially hamper real-time payments growth. The RTP network could soon face a prominent competitor when the Federal Reserve’s FedNow system, a federally backed real-time network that could prove more appealing to many banks and businesses, launches in 2023. SWIFT’s ISO 20022 mandate could also have a major impact on the industry, and banks could delay their RTP integration until they are fully aware of how this mandate will affect the industry as a whole.