U.S. Real-Time Payments Will Climb Fast But Will Still Account for a Small Fraction of Activity

The Federal Reserve’s planned launch in July of its FedNow service is widely expected to spur big growth in real-time payments in the U.S. market. That’s likely to happen, but the overall share of transaction volume for instant payments is expected to remain under 5% for at least the next five years. That’s according to research released late Tuesday by the payments-technology company ACI Worldwide Inc.

At first glance, real-time transactions in the United States will mount up at an impressive rate, according to ACI’s “Prime Time for Real Time” report, produced in conjunction with Global Data. Total transactions will grow from 2.8 billion in 2022 to 11.4 billion in 2027, the report forecasts, a 32% annual growth rate. But as a share of all payments, paper and electronic, real time will remain relatively small, accounting for a 3.8% share by 2027, up from 1.2% in 2022—a proportion the report refers to as “negligible.” Dollar volume on instant payments, meanwhile, will grow from a 0.7% share to 3% over the same five years.

As a share of all electronic payments, real-time transactions accounted for a 1.4% share last year, up from zero in 2015. That share is projected to rise to 1.8% this year and to more than 4% by 2027.

Against this backdrop, the introduction of FedNow is likely to be “a major catalyst for [real-time payments] adoption,” according to ACI. The Fed’s service will bring access for real-time processing to smaller financial institutions, the company says, along with new services such as request for pay.

FedNow will be the latest, and certainly one of the most important, entries in the real-time payments sweepstakes in the U.S. market, but other companies have already been operating for a number of years, either as processors or as technology providers. Perhaps the most ambitious effort to date is the Real Time Payments platform offered by The Clearing House Payments Co., a company owned by many of the nation’s largest banks. The RTP service launched in 2017.

For the world as a whole, some 195 billion transactions occurred on real-time networks in 2022, up 63% from 2021, according to ACI’s report, which forecasts that number will grow to 511.7 billion in five years, for a 21.3% annual growth rate. That number implies real-time payments will control a 27.8% share of all electronic payments around the world, the report says.