Author(s):
KoreFusion
More than any other transaction form, real-time payments (RTPs) will dominate the next five years. By 2030, around one-third of global payments will be real-time.[1] Within this growth, corporate payments represent a massive opportunity: despite being more than twice the size of the consumer market,[2] over 30% of B2B payments are still made using cash and check. Furthermore, corporate payments will grow around a third faster than consumer payments in the next five years,[3] creating a massive opportunity for RTPs’ faster transaction speeds and lower costs.
The G20 has identified RTPs as one of their five key pillars for the global economy, and Central Banks and regulators are following developments with close interest. Momentum is now building behind new RTP initiatives such as SEPA Instant Payments in the EU and IXB-2 (a planned cross-border RTP scheme between Europe and the US), as well as India’s NPCI: a network that will link India’s UPI with RTP schemes across at least 13 markets in Asia, the Middle East, and Europe.
Regional RTPs: Building Economic Advantage
“Markets that account for around half of global GDP could have interoperable RTP systems within three to five years”
As regional RTP schemes emerge, they will help to improve financial inclusion and the efficiency of remittance schemes, a topic we discuss separately. Seven Asian markets have already created cross-border RTP links for their domestic remittance and/or consumer payments systems, as the table below shows. Meanwhile, the next-generation Nexus project from the Bank for International Settlements (BIS) aims to create multilateral links between the ASEAN-5 countries (Indonesia, Malaysia, the Philippines, Singapore and Thailand) for e-commerce, remittances, and small business payments.
From Bilateral Links to Multilateral Platform: RTP Links in ASEAN Countries
As Nexus scales up to full operability in Asia, other regions have not been idle. Europe’s SEPA-Inst mandate comes into force from January 2025, initially at a domestic level before extending to cross-border payments within eighteen months. Meanwhile the Buna initiative between the GCC and Levant/North African markets will expand from real-time account-to-account bank transfers to include consumer payments to merchants. Likewise, IXB-1 will link European and US real-time settlement infrastructures from late 2024, with plans for the UK, Canada, Singapore and Australia to join soon. Finally, African countries continue to push cross-border RTPs on two fronts. The Pan-African Payment and Settlements System (PAPSS) is attempting to bring government settlement systems onto a single platform and TCIB (short for Transactions Cleared on an Immediate Basis).
Cross-Border RTP Initiatives in Africa
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TCIB is a cross-border low-value payment scheme that enables the immediate clearing of single credit “push” transactions, settled on a deferred basis. It is open to all banks and authorized non-banks across the Southern African Development Community (SADC), with integration points into other African regions including the East African Community (EAC) and the Common Market for Eastern and Southern Africa and East African Community (COMESA).
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The Pan-African Payment and Settlement System (PAPSS) is a public-private partnership between African governments and Afreximbank, that has a decade of build-up behind it. |
Taken together, these developments mean that markets representing more than half of global GDP – Asia ex-China, Europe and North America, and the Middle East and North Africa – could have interoperable RTP systems within three to five years.
Linking Domestic RTP Initiatives: Building the Base for a Global RTP Network
Not Always Smooth – But Positive Signs Abound
As the failure of the P27 project to link up domestic RTP schemes in the Nordics demonstrates, however, delivering full interoperability is no trivial undertaking. But failures provide learnings and the base for improvement. The lessons from P27 underscore the need for the need for political will, managing conflicts of interest, and genuine appetite from both consumers and businesses of all sizes. That said, a range of factors suggest we’ll see relatively rapid adoption of cross-border RTP networks.
At the technical level, the successful promulgation of international data standards such as ISO 20022 (culminating late 2025) will help standardize rich data messaging between banks worldwide. Furthermore, harmonized API sets are emerging rapidly, both within national markets like the UK, Poland, and South Korea – as well as cross-border API standards such as The Berlin Group’s NextGenPSD2 API.
Banks Move to Global ISO 20022:
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At SIBOS 2024 in Beijing, the Swift Board re-confirmed the community’s commitment to November 2025 as the end of the MT/ISO 20022 cross-border coexistence period for payments instructions. For compliance reasons, less rich MT standards will start migrating to native ISO 20022. MT messaging standards will not be withdrawn, but Swift will no longer be maintained, and disincentives will be introduced down the road. This is the strongest incentive yet for FIs and Payment Market Infrastructures (PMIs) to switch to ISO 20022. |
“A range of factors – technical, legislative and more – suggest we’ll see the rapid adoption of cross-border RTP networks”
On the legislative side, there’s strong evidence of convergence between regions and nations with regard to legal, regulatory and supervisory requirements. This is most obviously the case in Open Banking, where the EU, UK, US, Australia, GCC markets, Singapore, India, South Korea, and Brazil have all mandated broadly similar legislative programs over the last five years.
Finally, RTP schemes benefit from rapid adoption once they are established. Our analysis of central bank transaction data shows that UPI transactions in India accounted for 82% of all non-cash transactions just seven years after launch, while 65% of remittances in the Singapore-Thailand corridor were RTPs just two years after launch.
RTP Schemes Establish Quickly After Launch 
What Happens Next – and What It Means
By now, the fundamental benefits of RTPs are well understood – lower costs, faster transfer and settlement, and better visibility to end customers. Beyond this, we expect cross-border RTP networks to have an even higher impact on the remittance market than the developments in alt-ACH payments we discuss elsewhere.
In practical terms, the rise of cross-border RTPs has two implications. The first is that we should expect card-based B2B solutions to experience significant downward pressure on pricing, as well as pressure to improve transaction and settlement speeds. There will also likely be fewer new integrations of these technologies as banks adopt a multiple-solution approach in anticipation of cross-border RTP networks, not to mention downward pressure on volumes for these schemes as cross-border RTPs are adopted.
Likewise, we should expect a slowdown in cross-border card transaction volumes and a concomitant increase in non-card cross-border transactions, especially in ASEAN markets and to a lesser extent in the GCC and North Africa. As with card-based B2B solutions, cross-border card transactions will likely experience downward pressure on pricing, from interchange to network fees and forex spreads.
KoreFusion optimizes payments strategy across 80 countries. We help banks, brands, and fintechs develop embedded payment and financial services for SMBs. For more information, please email hello@korefusion.com.
[1] Data Bridge Research, “Global Faster Payments Market – Industry Trends to 2029”: https://www.databridgemarketresearch.com/reports/global-faster-payment-service-fps-market
[2] Sapphire Ventures, “The rise of digital B2B payments”: https://sapphireventures.com/blog/the-rise-of-digital-b2b-payments-and-why-were-excited-about-avidxchange/
[3] McKinsey & Company, “Accelerating Winds of Change in Global Payments”: https://www.mckinsey.com/industries/financial-services/our-insights/accelerating-winds-of-change-in-global-payments
