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Instant payments are booming in Europe while the US lags behind

Banking
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Instant payments are predicted to account for 17%, or $18 trillion worth of B2B and consumer digital money transfers by 2025.

According to a report from Juniper Research, this figure indicates the growing appeal of instant payments, where transactions are completed in under ten seconds and in real time compared to conventional and typically slower bank transfers.

In 2020 the value of instant payments sits at the $3 trillion mark, which indicates that the market could grow by over 500% in the next five years. Juniper’s research has found that much of the innovation within the instant payments arena is happening in Western Europe, with 38% of overall transaction values set to happen within the region by 2025.

The research also suggests that the B2B market could benefit substantially from the evolution of instant payments, allowing business to overcome complex accounting practices involving large amounts of money. In fact, 89% of the value of instant payments will come from B2B by 2025 based on the Juniper data.

Instant payments

While instant payments have been proving most successful in domestic markets, the Juniper report indicates that there is growing potential for using the real time transaction method across country borders. However, the research also highlights how companies selling across borders will need to look at their current business models and adapt to the changing face of the payments system.

Interestingly, the research found that the US is falling behind when it comes to the adoption of instant payments. Data from Juniper reveals that the American market will have only 8% of the market in global instant payment transactions by 2025. Slow progress on the take up of instant payments is largely blamed on the fragmented nature of the US banking system.

“With the proposed FedNow service from the US Federal Reserve not coming into service until 2023/24, the US is rapidly falling behind in instant payments,” Research author Nick Maynard explains. “Payments vendors must concentrate on creating innovative digital payments products to bridge this gap or be faced with an outdated system.”