Payments lie at the heart of global commerce and its digital economy. Payments are also increasingly central to corporate finance and treasury activities, facilitating the efficient transfer of funds both domestically and across borders.

With payments serving as the backbone of our economies, the rapid development of payment technologies, along with the proliferation of payment methods and payment fraud, means that corporate finance leaders, treasurers, and their teams must stay informed about important developments in the world of payments, while also focusing on three pivotal areas that will significantly influence the future of global payments:

Cross-border payments poised to enter a new era

The surge in payment methods and networks, coupled with legacy infrastructure, has resulted in a splintered payment ecosystem. Yet, as interoperability moves to the forefront, the future of global payments is expected to become seamless.

Building on this momentum, organizations worldwide are actively laying the foundation for instant, frictionless, and interoperable international transactions. This development is set to usher in a new era in cross-border payments, poised to transcend national boundaries and accelerate its growth by unlocking new digital opportunities for financial institutions, corporations, small and medium-sized enterprises (SMEs) and consumers alike.

EY’s report, The rise of PayTech – seven forces shaping the future of payments, projects that the volume of international payments will continue to rise, reaching US$200 trillion in 2027. Moreover, the uptake in digital assets, as well as evolving trade dynamics has led some regions, governments, and regulatory bodies to develop “Intra-regional cross-border payments systems in a quest to develop a global harmonized solution”, as noted in the EY payments report.  

Furthermore, advancements in infrastructure and the growing adoption of the ISO 20022 financial messaging standard by businesses and financial institutions are expected to significantly improve compatibility and interoperability in cross-border payments. This progress is likely to spur substantial growth and drive a transformative phase for international payments, which are used for various purposes, including global trade, remittances, foreign investments, ecommerce purchases, and global workforce payments.

Several factors driving a notable increase in digital payments

The push to streamline payment processes, along with a focus on enhancing digital security and convenience, is broadening the demand for digital payments and contributing to their exponential growth worldwide.

Additionally, several other factors have propelled this significant growth in recent years, including the COVID-19 pandemic, global supply chain disruptions, the impact of interest rate hikes, rising regulatory scrutiny, ongoing standardization of international payments, the emergence of innovative payment methods, the development and adoption of digital payment technologies, and the increasing digitization of businesses focused on optimizing payment costs.

The shift towards digital payments has been further fueled by growing competition and strategic partnerships among tech giants, traditional banks, corporations, fintechs, and payment service providers. This is rapidly transforming corporate digital payments, resulting in greater operational efficiency, reduced systemic risks, cost savings, and stronger relationships with customers and suppliers.

In fact, the total volume of corporate non-cash payments globally reached nearly 133 billion transactions in 2021; a figure that’s forecasted to expand to 200 billion transactions by 2025, according to findings from the inaugural LexisNexis® Risk Solutions Corporate Digital Payments Study by LexisNexis® Risk Solutions and Capgemini Invent. This rise underscores the continued momentum towards digital payments.

Global payments landscape shifting towards real-time payments with advanced use cases

The evolving landscape of global payments is also pivoting towards real-time payments (RTPs), spurred by advanced use cases for consumers and businesses, steering global RTP volumes to record highs, with 266.2 billion RTP transactions recorded globally in 2023 — a year-over-year (YoY) growth of 42.2%, as per the 2024 Prime Time for Real-Time report, published by ACI Worldwide, in partnership with GlobalData.

Source: 2024 Prime Time for Real-Time ® report (published by ACI Worldwide with GlobalData)

The report also projects that 575.1 billion real-time transactions will occur globally by 2028, representing a 2023-2028 compound annual growth rate (CAGR) of 16.7%. RTPs are expected to account for 27.1% of all electronic payments worldwide by 2028.

India is the undisputed leader in real-time payments, accounting for about 45% of global RTP transactions in 2023—followed by Brazil, Thailand, China, and South Korea, as highlighted in the ACI report.

Source: 2024 Prime Time for Real-Time ® report (published by ACI Worldwide with GlobalData)

The ACI report reveals that the Asia Pacific region is the largest regional market, home to four of the five largest RTP markets globally by transaction volume. Meanwhile, the Middle East is currently the fastest-growing market for instant payments.

The launch of the US Federal Reserve’s (Fed) real-time payments service, FedNow, in July 2023, alongside The Clearing House’s (TCH) real-time payments system, RTP®, which has been live since November 2017, is expected to modernize the US payments system, and ramp up the growth of immediate payments. In “Europe, the new EU Instant Payments Regulation is expected to drive instant payments volume across the 27 EU member states”, the ACI report explains.

Seeking to replicate Brazil’s success in instant payments, Latin American countries are advancing RTP modernization efforts, observes the ACI report. In Africa, Nigeria is at the forefront of the RTP landscape. As the world’s largest free trade area, Africa recorded the “Highest real-time share of electronic payments in 2023”, reaching 40%, the ACI report further adds.

The EY report outlines five primary characteristics of RTP that impact the people, processes and technology at both banks and non-banks: 24/7/365 availability, ISO 20022 messaging format, immediate access to deposited funds, irrevocable payments and instant notifications. These attributes make RTP a strategic differentiator, enabling organizations to offer value-added services for immediate payments to their vendors or employees, while also reducing transaction costs, and improving cash flow visibility and control over their working capital.

Recognizing the diverse benefits of real-time payments, corporations, financial institutions, and governments of the world’s major economies are playing catch-up, as widespread adoption of instant payments is expected to accelerate global real-time payments growth through 2025 and beyond. On the corporate side, this will enhance the treasuries payments experience and likely bring greater transparency to the business-to-business (B2B) payments ecosystem.

In conclusion, the payments industry’s role in fostering inclusion and accessibility, supporting digital economic development, and serving as the lifeblood of our economies is making it a disruptor in the world’s retail, banking and financial systems.

As the digital world continues to expand and as innovation, technology, and collaboration across the payments ecosystem—among big tech companies, banks, fintechs, corporations, and payment service providers—bring us greater interoperability across borders, vendors, systems, and platforms, consequently, cross-border payments, digital payments, and real-time payments will not only grow at a staggering rate, but also play a major role in shaping the future of the global payments sector and facilitating seamless value transfer in the years ahead.