ACI claims first-time data link between instant payments and financial inclusion

The phenomenal growth of real-time payments and the resulting rise in financial inclusion not only provide a potential community economic engine but significant profit opportunity for banks and credit unions.

Already, the upside for payments platforms has been lauded by those in the fintech space and among partner banking institutions for a handful of years. But now, at least one global payments platform — who does stand to benefit from projecting growth in the space — says it can connect for first time instant payments popularity with evidence of greater financial inclusion for the unbanked and underbanked in the U.S. and the world over.

ACI Worldwide’s Economic Impact and Financial Inclusion report further includes analysis from the Centre for Economics and Business Research (Cebr), U.K.-based global economic forecasting and research consultancy.

The growth projection is significant. Real-time payments are forecast to generate $285.8 billion of additional global GDP growth, a jump of more than 73% from its GDP contribution as recently as 2023, according to ACI Worldwide’s findings. Similarly, real-time payments could create more than 167 million new global bank account holders as soon as 2028.

“The research for the first time identifies a positive empirical link between instant payments and financial inclusion. As economies increase adoption of instant payments, reduction in transaction costs, enhancements to user experience and wider behavioural factors are directly linked to increasing the share of the population engaging with financial institutions,” says Owen Good, head of economic advisory at Cebr.

“Specifically, we find that real-time payments adoption is expected to create significant benefits for individuals, the financial sector itself and the wider economy,” Good says. “Put simply, we continue to see that moving money in seconds rather than days rewards everyone associated with the transaction.”

According to ACI, boosting technological opportunities allows for more money into circulation within a primary economy. Real-time payments improve overall market efficiencies that reduce transaction costs and formalize segments in many locations of what are now largely a cash-based “shadow economy,” thereby increasing revenue opportunities.

The impact from real-time payments is already clear in the U.S., where businesses and consumers reaped more than $1 billion in savings in 2023 – expected to quadruple to $4.4 billion by 2028, according to the report.

The U.S. is among the top 10 countries with the largest projected financial inclusion uplift from real-time payments: 4.9 million citizens previously excluded from the financial system could have bank accounts by 2028.

Additional key highlights from the report:

• Across all 40 countries in the study, real-time payments boosted GDP by a total of $164.0 billion in 2023 – equivalent to the labor output of 12 million workers.
• Forecast for 2028: GDP contributions from real-time payments will total $285.8 billion – a 74.2% increase over five years, equivalent to the labor of 16.9 million workers.
• Aggregated net savings for consumers and businesses: $116.9 billion in 2023 – predicted to grow to $245.8 billion by 2028.
• Real-time payments are boosting financial inclusion, especially among three demographic groups: younger people (aged 18-24 years); women; and people in lower income groups (40% of the population with the lowest incomes).
• Top five countries for financial inclusion uplift (number of newly banked citizens): Pakistan – 63.5 million; India – 25.5 million; Philippines – 20.9 million; Nigeria – 13.8 million; China – 13.8 million.
• Asia Pacific: Asia Pacific is home to some of the world’s largest real-time payments markets, including India, China and Thailand. Real-time payments boosted India’s GDP by $50 million in 2023, making it the world’s largest market in terms of GDP growth. In Indonesia, one of the world’s top 10 fastest-growing markets, real-time payments are forecast to contribute $3.6 billion of additional GDP to the economy by 2028, 0.21% of total GDP. The region also boasts the top three countries for financial inclusion uplift: Pakistan, India and the Philippines.
• Africa: As Africa’s largest real-time payments market, Nigeria is reaping the biggest economic benefits. Real-time payments added $7.0 billion to the country’s GDP in 2023, equivalent to 1.4% of combined GDP. Nigeria is also the top market for bank profit opportunities in the region, followed by South Africa, with projected profit opportunities for banks of $40.4 billion and $899.1 million, respectively.
• Europe: Europe’s shift to instant payments, mandated by the EU’s Instant Payments Regulation, is expected to unlock economic growth and improve financial inclusion across the 27 EU member states. The EU aims to replicate the success of other countries in the region, such as Turkey, which is expected to generate $5.1 billion of additional GDP by 2028 due to real-time payments, followed by the UK, with an expected additional GDP growth of $4.0 billion by 2028.
• Middle East: The economic and financial inclusion benefits of real-time payments in the Middle East—the world’s fastest-growing real-time payments market—are most felt in Saudi Arabia, Bahrain and the UAE. Saudi Arabia’s GDP is expected to get a boost of $1.1 billion by 2028, while Bahrain is forecast to have additional GDP growth of $677.6 million by 2028.
• Latin America: In Brazil, the largest economy in the region, real-time payments contributed $24.6 billion to the overall economy – equivalent to the labor of more than 1.3 million workers. Mexico is in the top five countries worldwide for economic benefits of real-time payments, with a GDP boost of $10.3 billion in 2023. Colombia is expected to experience the biggest financial inclusion uplift in the region, with 5.1 million new account holders projected by 2028.

Read more on the payments space from BAI Banking Strategies:

Payments play a major role for future-ready banks (bai.org)
What will it take to get more banks plugged into FedNow and RTP? (bai.org)
Modernizing payment methods: tough competition and a chance to differentiate (bai.org)
The instant payments quandary: DIY, buy or partner? (bai.org)

Rachel Koning Beals is Senior Editor with BAI.