ACI Worldwidethe global leader in mission-critical data management software instant payments, today announced its support for banks, financial institutions and merchants who want to comply and be ready for the imminent obligation proposed by the European Commission to adopt the system of instant payments, allowing merchants to take advantage of the many advantages of payments in real time and, ultimately, to protect their competitiveness in a payments market that is undergoing digital transformation and moving to real-time services.
Instant payments thanks to the Enterprise Payments Platform
With several flexible deployment options to choose from, ACI enables financial institutions across Europe to connect to their national systems or pan-European TIPS and RT1 services for real-time payments. The platform Enterprise Payments Platform of ACI is the market leader and currently offers access and connectivity to TIPS and RT1 services to twenty banks, enabling end-to-end instant payments through connectivity, payment processing and value-added services, including fraud protection through cutting-edge artificial intelligence.
In addition, ACI has recently launched ACI Instant Pay in Europe and the UK. This service allows merchants to accept online, mobile and in-store payments in real time through simple API integration with the ACI’s Payments Orchestration platform. Merchants will benefit significantly from the adoption of instant payments thanks to the elimination of interchange fees, instant transfer which makes cash immediately available and the elimination of debit disputes.
Banks across Europe must comply with the law proposed by the European Commission, which requires banks and financial institutions in the countries of the Single payments in euros (SEPA) to offer the instant payment service under the SEPA Instant Credit Transfer programme, at a cost equal to or lower than that of ordinary transfers. The new regulation intends to ensure that instant payments can give new life to European economies. The obligation is expected to bring about significant changes such as increased participation, simplified access, attractive prices and new value-added services for consumers and businesses.
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Europe lags behind Asia and Latin America in the adoption of instant payments
The Prime Time for Real-Time 2023 report prepared by ACI shows that European economies are mostly trying to catch up with countries that are already experiencing economic growth thanks to instant payments. According to the report, 195 billion instant transactions were recorded worldwide in 2022, with a 63.2% growth compared to the previous year’s payments.
While significant growth in instant transactions is expected in Europe, with a increase from 13.2 billion in 2022 to 34.2 billion by 2027 At a compound annual growth rate (CAGR) of 21%, most European countries lag behind the emerging economies of Asia and Latin America in adopting instant payments.
While l’India remains the undisputed leader in instant payments with 46% of all transactions globally, followed by Brazil, China, Thailand and South Korea, no EU country is included in the top 10 global markets for instant payments. Among all the geographical areas examined, Europe has the third lowest level of instant payments on total electronic payments (7%), but growth is expected with an estimated CAGR of 21% by 2027.
The case of France, one of the fastest growing markets in Europe
The France recorded 202 million instant transactions in 2022 and is expected to reach 1.4 billion in 2027, with a CAGR of 47.8%. It then adopted the SCT Inst system in 2018, implementing instant payments in the national network. SCT Inst was developed by the EPC with the aim of creating an instant payments network within the Eurozone, although the evolution, at least so far, towards a truly pan-European instant payment network is proceeding slowly.
In 2022 instant payments represent only 0.5% of the total payment volume. The Commission’s requirement for instant payments and EU invoicing rules should give a boost to national markets.
The case of Italy: cash reigns supreme, but there is a big change on the horizon
Italy recorded 364 million instant transactions in 2022 and it is estimated that payments will reach 787 million in 2027, with a CAGR of 16.7%. Italy is among the few countries that adopted the pan-European SCT Inst system from the beginning, in November 2017. Despite the start in “pole position” and the large participation of banks and payment service providers (287 participants in November 2022 ), the adoption and use of instant payments has grown slowly due to the strong preference for cash and higher fees initially charged by financial institutions.
In 2022, instant payments reached just 1.4% of the total payment transaction volume, while paper-based transactions stood at 71.5%. Projections indicate that the share of instant payments it will rise to 8.2% by 2027with a further acceleration foreseen after the entry into force of the Community obligation.
The case of Germany: instant payments are starting to gain ground
The Germania recorded 1.1 billion instant transactions in 2022 and is expected to reach 2.7 billion in 2027, with a CAGR of 18.9%. It adopted the SCT Inst service in 2017, thus accessing the pan-European instant payment system. Today SCT Inst offers instant payments not only to participating financial institutions in Germany, but also to any participating institution in all other Eurozone countries. As will be the case in all countries that have adopted SCT Inst, the Commission obligation could spark a big change.
Despite these possibilities within the Union, instant payments represent only a small percentage of the total volume of payments and spending in Germany. In 2022 instant payments amounted to 2.5% of the total volume of payments, while other forms of electronic payment accounted for 66.4% and cash payments for 31.1%. However, the use of cash is expected to decrease by 10% of the total market share by 2027.
Inside Real-Time by ACI
This year we are excited to be able to launch Inside Real-Time, a new multimedia and multi-channel platform that intends to be the guide and reference source for instant payments news around the world, with exclusive content that delves into the latest developments and opportunities that instant payments are offering to consumers, merchants, businesses and banks . ACI’s Prime Time for Real-Time ratio underpins this new platform.