Autumn brings falling leaves, cooler weather, and for many organizations, strategic planning. As such, it is an opportune time to highlight the importance of planning for faster payments. While we’ve been encouraging organizations to prepare for years now, 2021 truly serves as the tipping point for faster payments implementation.
And I say this for a number of reasons. First, the pandemic has accelerated the use of digital payments. Research shows that the global digital payments market is expected to grow from $3.9 billion in 2019 to about $5.5 billion by the end of this year. This demonstrates consumers increased comfort in digital transactions laying the groundwork for an easy transition to the digital nature of faster payments.
Second, with the increased use of digital payments, consumer expectations are changing. Consumers have become accustomed to the immediate nature of digital payments in retail and P2P payment settings. It only follows that they will expect other transactions that have historically leveraged legacy infrastructure, such as disbursements, to shift to a more immediate nature as well. Take for instance the insurance industry. Research shows that more than 40 percent of consumers are more likely to stay with an insurance provider that offers to pay approved claims in minutes, and 13 percent are willing to switch to a provider that will. And what’s even more telling is that they are willing to pay for it. A quarter of consumers would be willing to pay a small fee to receive payments in minutes.
Finally, with the increasing use of digital and shifting expectations of consumers who are now demanding faster payments, the faster payments explosion becomes imminent. Up until this point faster payments have been growing moderately, with real-time volume at 734 million transactions in 2019. But that number is predicted to grow to 4.2 billion by 2024, and we won’t be able to get there without seeing significant growth in faster payments volume in 2021.
At the FPC, we are already preparing for that faster payments wave. Thanks to the work of our Members, the FPC has supported the industry in getting to this point and is creating resources to keep up with the pace of change. For instance, our Regulatory Work Group is finalizing its comprehensive resource of current U.S. faster payments laws and regulations to help the industry understand and plan for compliance considerations. Also, the Cross Border Work Group is developing a Cross Border Faster Payments Interoperability white paper. The new paper, which builds on the Network Committee’s Faster Payments Interoperability
white paper, will help further dialogue on how to achieve interoperability, which we all know is a key piece of continued faster payments growth. Both resources will be available in Q4 of this year.
Certainly, all signs point to 2021 being a pivotal year for faster payments. Thanks to the dedication of FPC Members, the foundation has been set, but much more work lies ahead of us—as individual organizations and as a collective industry. So, as you consider your 2021 business plans, we hope you will factor in aggressive attention to faster payments. Now’s the time for us to come together to build the future of faster payments in a way that makes sense for the industry. Together, we’ll respond to market demand – in 2021 and beyond – and set the strategy for faster payments in the United States.