The Centre for Economic and Business Research (Cebr) predicts that by 2026, £1.3 billion could be made in cost savings for British businesses and consumers through real-time payments – helping to generate an additional add £2.6 billion economic output, equivalent to 0.11% of formal GDP, as part of a new report, Prime Time for Real Time.
In 2021, real-time payments resulted in £730 million in cost savings for firms and consumers in the UK – helping unlock £2.2 billion in additional economic output, equivalent to 0.1% of formal GDP.
The findings come as the IMF has forecast the UK will have the slowest growth out of the G7 nations in 2023, amid reports half of small British companies say rising costs will hit their growth.
Real-time payments are a big lever governments can pull to improve liquidity in financial systems, enable quicker payment of workers and suppliers, and drive economic growth. Globally, in 2021, real-time payments helped to generate additional GDP amounting to £59.9 billion across 30 key economies – forecast to climb to £133 billion by 2026.
The report also finds the UK is missing a trick. Emerging economies outpace developed nations in real-time payments modernisation, boosting global economic growth.
- Emerging economies are outpacing developed nations when it comes to real-time growth and the associated economic benefits. In 2021, 92.9 billion real-time payments were made across the five top real-time markets – India, China, Thailand, Brazil and South Korea – forecast to grow to 356.9 billion by 2026. The combined real-time volume helped facilitate £41.9 billion of additional economic output across these countries in 2021 – forecast to climb to £100.7 billion in 2026.
- Leading developed countries, including the US, Canada, UK, France, and Germany, lag and are losing out on economic growth – 7.5 billion real-time payments were made across these countries in 2021, forecast to grow 20.9 billion by 2026 – helping to facilitate £5.6 billion of additional economic output in 2021 – forecast to rise to £11 billion in 2026.
- Real-time payments accounted for 13.8% of total global electronic payments in 2021 – forecast to rise to 25.6% in 2026. In the Middle East, Africa, and South Asia, real-time payments are forecast to account for 80% of all electronic payments by 2026, while the EU’s and US’ trajectories sit at 12.7%and 4.7%, respectively.
“By allowing for the transfer of money between parties within seconds rather than days, real-time payments improve overall market efficiencies in the economy,” commented Owen Good, Head of Advisory, Centre for Economics and Business Research.
“Real-time payments improve liquidity in the financial system and therefore act as a catalyst for economic growth. This is especially important for our fast-paced and digital-led gig economies. Workers are paid quickly, allowing them to better plan their finances. And businesses can be more flexible and reduce the need for burdensome cashflow management.”
“As the research reveals, modern economies depend on real-time payments to boost economic growth, prosperity and financial inclusion, with central governments worldwide being the primary enabler of these systems,” continues Odilon Almeida, President and CEO, ACI Worldwide.
“The challenge for financial institutions worldwide is to leverage the new payment rails and maximise their value for the benefit of their customers.
Banks must reinvent their mission-critical operating systems to compete in the new real-time, cloud-first and data-centric business environment. Inaction is not an option as broad-based disruption of the sector has moved beyond a tipping point.”
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