Assessing the Real-Time Payments Competition Between the US, UK, and Europe

08 Oct, 2023

Assessing the Real-Time Payments Competition Between the US, UK, and Europe

Real-time payments have transformed the global financial landscape, ushering in increased efficiency, convenience, and financial inclusion. Countries worldwide are embracing real-time payment systems to meet the rising demand for instant transactions. These systems offer various advantages, including enhanced security against fraud, round-the-clock accessibility, and quicker settlements for both businesses and consumers.

Despite their widespread adoption, several challenges persist. These challenges include concerns about interoperability and cybersecurity risks. Addressing these issues requires ongoing innovation and collaboration among financial institutions, regulators, and technology firms to shape the future of global real-time payments.

The United States has lagged behind many other industrialized nations in adopting real-time payments. This delay can be attributed, in part, to the absence of coordinated government efforts to establish such a system—until recently. In 2017, The Clearing House launched the RTP® network, marking the nation's initial significant foray into the real-time payments arena.

The United Kingdom entered the realm of real-time payments with the introduction of the Faster Payments Service (FPS) in 2008. FPS aimed to reduce the processing time for bank transfers from the typical three business days to mere seconds. The UK is further modernizing its payments infrastructure through the New Payment Architecture (NPA) scheme, which is ISO 20022-compliant. This compliance facilitates smoother interoperability among different payment systems.

While numerous European countries have developed their domestic real-time payment schemes, the continent's first multinational real-time effort began with the launch of the Single Euro Payments Area (SEPA) Instant Credit Transfer scheme in 2017. Simultaneously, the European Commission has explored ways to expand instant payments throughout the continent. They have proposed a single application programming interface (API) standard to simplify third-party payment providers' access to implementing real-time payments for their customers.

As the digital economy continues to grow, real-time payment systems are facilitating an increasing number of daily transactions, connecting people and businesses worldwide. The "Real-Time Payments World Map," a collaborative project with The Clearing House, provides insights into the current and projected volume of real-time payments worldwide.