"Transforming Transactions: The UPI Effect and the Global Real-Time Payments Landscape"

The landscape of payments is undergoing a seismic shift as real-time payments (RTP) gain momentum globally.

With approximately 96 RTP systems now operational, the impact is profound.

In 2023, a staggering 266.2 billion real-time payment transactions were recorded worldwide, marking a 42% year-over-year increase. This surge highlights the growing recognition of RTP as a catalyst for efficiency, cost reduction, and working capital optimization across various sectors.

The Current State of Real-Time Payments

The adoption of RTP has accelerated in recent years, with projections estimating a rise to 575 billion transactions by 2028—accounting for 27% of all electronic payments. Countries like India, Thailand, the Philippines, and Brazil are leading the charge, leveraging RTP systems to promote financial inclusion and expand access to banking services.

RTP adoption is diverse, with emerging markets showing rapid growth in person-to-person (P2P) payments, evolving into person-to-merchant (P2M) transactions through innovations like QR codes.

For instance, Thailand saw a remarkable 38% growth in RTP transactions, totaling 20 billion in 2023, while the Philippines experienced a 24% increase.

In contrast, mature markets, including the UK and the US, are approaching cashless economies. Here, RTP offers enhanced payment options amid a backdrop of well-established card payment systems. Growth rates in these regions, around 12-20% annually, reflect ongoing digitization efforts and the adoption of open banking principles.

Driving Participation Through Strategic Partnerships

Successful RTP schemes rely on collaboration among central banks, financial institutions, fintechs, and other payment service providers (PSPs). Effective partnerships enhance accessibility and integrity across the payment landscape. Notably, the European Union mandates compliance with the Single European Payment Area (SEPA) Instant Credit Transfers by 2025, driving uniformity and participation.

Thailand’s PromptPay service serves as a prime example, demonstrating rapid adoption driven by government initiatives. With 19.89 billion real-time transactions in 2023, it mirrors the exponential growth seen in India’s UPI and Brazil’s PIX systems.

Moreover, RTPs are increasingly utilized to facilitate seamless electronic wallet top-ups and open-loop payment systems, streamlining user experiences and expanding consumer choices.

Addressing Fraud and Enhancing Security

With the acceleration of RTP comes the challenge of fraud prevention. The UK Payments System Regulator reported ￡459.7 million lost to authorized push payment (APP) scams in 2023, prompting the introduction of a new fraud liability scheme in October 2024.

Mastercard , VISA and NPCI are proactively combating fraud through advanced AI solutions capable of real-time transaction monitoring and risk detection. Such measures, combined with government regulations and consumer education, are essential for building a secure payment environment. TSB estimates that if all UK banks utilized these protections, nearly ￡100 million could be saved annually.

The Future of Real-Time Payments

The potential of RTP is vast, promising simple, secure, and efficient payment solutions that enhance cash management for businesses and consumers alike. Continued advancements in payment infrastructure will foster innovative use cases, such as open-loop wallets and improved cross-border transactions. Collaborative efforts among countries to establish bilateral and multilateral payment links will further facilitate global commerce.

Looking ahead, interoperability between RTP systems and emerging digital assets, including Central Bank Digital Currencies (CBDCs), will redefine the payment landscape. The focus has shifted from merely adding payment rails to fostering interoperability that enhances customer experience.

The evolution of real-time payments, epitomized by systems like India’s UPI, is set to transform the payment ecosystem. With enhanced speed, security, and efficiency, RTP will not only drive economic growth but also foster financial inclusion on a global scale. As the demand for faster, more secure payment options continues to rise, financial institutions must seize this opportunity to modernize their systems and meet consumer expectations.

The next generation of real-time payments represents a pivotal moment in the financial sector, unlocking new opportunities for innovation and collaboration. As we embrace this new era, the potential for economic transformation through real-time payments has never been more significant.