FIs in the U.S. are recognizing the importance of real-time payments. According to a recent survey by Ovum, half of U.S. banks and credit unions see real-time payments as a priority in the next 18 months and of those, 28% say they will increase budgets by more than 6% over 2017 levels.
However, this market isn’t a top priority — the biggest priority among U.S. institutions is mobile banking (58%), followed by cybersecurity (56%) and online banking (53%), according to the survey. Further, U.S. FIs have lower priorities for investment in real-time payments compared to the rest of the world — the U.S lags behind other nations by nine percentage points. However, this attitude isn’t unique to real-time payments: The U.S. lags the rest of the world across all of the prioritization categories in the survey.
In countries where real-time payments have been introduced, there is a very wide discrepancy in the average transaction value, demonstrating that real-time payments are not just for small ticket items and P-to-P, but are increasingly for much higher value transactions.
At the low end of the scale, the average real-time transaction value for Sweden is equivalent to $65. At the high end of the scale, Brazilian real-time payments average $3,841.
What is interesting here is that the transactions don’t represent the relative income levels per country — one would expect that Scandinavian transactions would be of a higher value than Latin American transactions but this isn’t the case. What it highlights is that as real-time payments gain familiarity and trust, the use cases broaden. This may cause indigestion for some FIs that see real-time payments as stepping on the toes of cash-cow revenue streams from wire transfer and ACH.
While U.S. FIs may not necessarily be "all in" when it comes to real-time payments, the benefits for businesses are extremely compelling in a number of areas.
Faster payments enable a wide range of enhanced services for businesses and their staff including weekly or daily wage processing and urgent payment dispersal for dynamic inventory requirements. The main benefit, however, is likely to be from decreased cash and check handling.
In a 2016 study by the Association of Financial Professionals (AFP), 62% of finance professionals expected the impact of faster payments to be positive or extremely positive, with just 4% predicting that faster payments would have a negative impact. However, a sizeable third of financial professionals said that faster payments would have no impact.