Financial technology evolves quickly, and real-time payments (RTP) and international standards like ISO 20022 are at the forefront of transforming the global payment landscape. According to ACI Worldwide’s 2023 “Prime Time for Real-Time Payments” report, RTP transactions are projected to soar to 511.7 billion by 2027, demonstrating a compound annual growth rate (CAGR) of 21.3% from 2022.

Similarly, Grand View Research’s “Global Real-Time Payments Market Size & Trend Report 2030” anticipates an even more robust growth, predicting a CAGR of 35.5% from 2023 to 2030. Payments Cards & Mobile further corroborates this trend, highlighting that widespread adoption is driving significant growth in the RTP market, with transaction volumes expected to reach 511.7 billion by 2027.

These projections underscore the transformative impact of RTP on the global payments landscape, positioning it as a critical component of future financial transactions.

As businesses and consumers alike seek faster, more reliable transaction methods, these innovations are setting new benchmarks for efficiency and integration. These advancements are not just about speed and efficiency; they represent a significant reduction in costs and operational hurdles.

The USA has been relatively slower compared to other countries in adopting digital payments, but fintech and payments practitioner Hari Prasad Josyula is determined to play his part in propelling the United States to the forefront of payment innovations.

The Rise of Real-Time Payments

The shift towards RTP systems is revolutionizing how money moves, offering instantaneous fund transfers that enhance cash flow management and operational efficiency. As a fintech product lead in the development of these systems, Hari Prasad Josyula provides a unique perspective on the profound benefits and considerations businesses must navigate.

Josyula outlines key advantages such as immediate access to funds, which allows companies to manage working capital more effectively, and improved operational efficiencies that streamline activities dependent on the receipt of funds.

However, the adoption of RTP is not without its challenges. Businesses must carefully manage liquidity, adjust cash forecasting, and ensure the irrevocability of transactions to avoid costly errors. Josyula emphasizes the importance of robust internal processes to handle these issues, stating, “The bigger the size of the business, the more complex it is to track payments. Efficient methods of capturing and sharing payment information are essential.”

ISO 20022: Standardizing Financial Communication

Hari Prasad Josyula also sheds light on ISO 20022, a critical framework for electronic data interchange between financial institutions. As an advocate for its adoption, Josyula highlights ISO 20022’s benefits in promoting transparency, reducing discrepancies, and enhancing the interoperability of global payment systems. He explains that the standard’s structured format and ability to carry comprehensive transaction data make it superior to older systems, facilitating clearer communication and more efficient processing.

The migration to ISO 20022, however, presents hurdles such as the integration with legacy systems and the need for widespread industry acceptance. Josyula points out that “Adapting to ISO 20022 requires not just technical upgrades but a shift in mindset towards more open, standardized financial communications.”

Practical Applications and the Future Outlook

In practical terms, Josyula sees RTP as a replacement for traditional wire transfers and checks, providing a lower-cost, more secure alternative. He also addresses the role of cryptocurrencies and blockchain in the current financial ecosystem, noting their potential in specific applications like cross-border payments despite the challenges posed by regulatory uncertainties and market volatility.

Looking forward, Hari Prasad Josyula is optimistic about the role of mobile payments and the impact of technologies like NFC and secure mobile wallets in making physical wallets obsolete. He predicts a future where mobile payments will dominate, spurred by consumer demand for convenience and the ongoing digital transformation accelerated by the pandemic.