Raynor de Best
Content expert covering payments and (crypto)currencies
Instant payments, or real-time (RTP) payments, make it possible to perform payment transactions nearly instantaneously and are expected to grow in importance in the coming years. The value of transactions processed using this technology will grow by 289 percent between 2023 and 2030. Real-time payments are typically not settled on a card rail - the networks from Visa or MasterCard - but on a bank rail. One example of a real-time payment scheme is UPI (Unified Payments Interface) in India, which allows Google Pay to operate in the country. The country with the highest growth in instant payments, however, is Brazil - due to the growing popularity of the domestic scheme Pix. Instant payments in developed countries take on a different role altogether. A system like FedNow in the United States cannot be immediately compared to UPI.
FedNow (U.S.), Faster Payments (UK), SEPA (EU): Supporting banks
Real-time payments are not new in Europe. The Faster Payments scheme in the UK - rolled out in 2008 - facilitates interbank payments on the same day. Similarly, the pan-EU SCT Inst scheme - live since 2017, supporting SEPA - focuses on wire transfers, as European consumers prefer American payment brands in their daily lives. The United States only received its first instant payment system - FedNow - in July 2023. This scheme again focuses on interbank payments and will first co-exist with existing settlement schemes Zelle and RTP. The UK and EU hope to improve real-time transactions by implementing ISO 20022 in the future, sensing consumers wish to see transaction speeds increase. The UK hopes to roll out the New Payments Architecture of NPA come 2030. The European Union continues testing the European Payments Initiative (EPI).UPI (India), Pix (Brazil), CoDi (Mexico): A focus on financial inclusion
Brazil and India take a consumer-driven approach to instant payments, looking for applications in day-to-day life. UPI - live since 2016 - is seen by many as the biggest instant payment system in the world. It provided a framework for Google Pay, but also serves as an innovation hub. UPI plans to implement QR codes for cross-border payments, for example. Pix stands out due to its sizable growth after launching only in late 2020. For Pix, the level of convenience and it being cheaper than debit or credit cards are reasons why the unbanked population in Brazil declined. Mexico hopes to follow Pix with Cobro Digital or CoDi. Mexico's centralized scheme is not growing as fast as Pix as big domestic retailers like Oxxo already developed their own payment schemes.
