The real-time payments market serves consumers, corporations, and governments alike. It is a global service provided by various financial companies. Some providers are specific to a country, while others have a global reach.
In the U.S., Zelle is a popular real-time payment provider. A payer can send money to someone via email and have funds exchange accounts immediately (once the payee signs up for the Zelle network). In other cases, a company may send a request to a customer to pay, and once accepted (i.e., paid), funds exchange accounts immediately.
The real-time payments market is a growing industry. Last year, ACI found that the market grew by 64.5%. They expect to see a four-fold increase in real-time payments by 2026. Rather than impacting the card market, real-time payments are taking transactions away from cash and checks.
At its core, a real-time payment transaction debits one account (payer) and credits another (payee). Debit cards can do this fairly quickly. Other payment methods, such as checks, take much longer to clear. Real-time processing of payments doesn't mean security has to be given up. In fact, real-time payments are able to provide highly secure transactions.
To make this possible, real-time payments utilize ISO 20022, a global and open standard that provides rich and structured data. Transactions are analyzed (usually by AI-based software), and if all security checks pass, the transaction is approved and the payment processed. This happens extremely quickly and doesn't delay the transaction. Of course, security quality can vary from one company to another. But depending on the country, certain regulations will need to be met, providing a minimum layer of security.
The security layer is often an add-on or integrated part of a provider's offering. In other words, the merchant doesn't have to worry about building a security layer. It is left to fintechs that specialize in this area.
Real-time payment platforms also have the backend analysis and configurations that merchants have come to expect, making them on par with many other enterprise-level payment processing systems.