A new study from Juniper Research has found that the value of instant payments, where transactions are completed within ten seconds, will reach $18 trillion in 2025. This will be a growth of over 500%, up from $3 trillion in 2020.
This represents 17% of all B2B and consumer digital money transfer and banking payments by value in 2025. The research found that West Europe is driving innovation and will account for 38% of instant payment transaction value by 2025.
The report, entitled “Why Instant is Critical to Payments”, identified that success of domestic instant payment schemes will enable cross-border vendors to connect different schemes into cross-border networks, which will radically reduce the time, cost and frustration involved in the current cross-border payments ecosystem. However, this will also require established vendors to revisit their business models, as the fundamentals of the market change drastically.
The European Central Bank defines instant payments as ‘electronic retail payment solutions that process payments in real-time, 24 hours a day, 365 days a year, where the funds are made available immediately for use by the recipient.’ In their report, Juniper Research defines an instant payments scheme as ‘any payments scheme where the funds are capable of being received in ten seconds or under, outside card networks.’
In another report on Instant Payments, “Instant Payments: Domestic and Cross-border Analysis and Forecasts 2020-2015”, Juniper Research forecasted that the US will trail in terms of instant payments adoption, with only an 8% share of Global instant payment transaction values in 2025. While RTP has been available in the US for some time, the fragmented nature of its financial system means that adoption has been slow to date.
Nick Maynard, author of the research report, said “With the proposed FedNow service from the US Federal Reserve not coming into service until 2023/24, the US is rapidly falling behind in instant payments. Payments vendors must concentrate on creating innovative digital payments products to bridge this gap or be faced with an outdated system.”
The research also found that B2B payments will dominate values in the instant payments market; accounting for 89% of global transaction values in 2025. While consumer payments are numerous, B2B payments have much higher average values. The research identifies that instant payments adoption can be particularly transformative in B2B payments, where value-added capabilities, including automation and additional remittance data enabled by ISO 20022 can be valuable in tackling complex accounts payable processes.