Faster payments are garnering greater interest from US financial institutions, businesses, and consumers. Over the past decade, several offerings in particular have risen to the forefront in the US, with some settling transactions in a matter of seconds. But those that don't deliver instant settlement are still viable, given the significant reach and ability of faster payment systems to handle both credit and debit transactions.
B2B, consumer-to-consumer (C2C), and business-to-consumer (B2C) payments all stand to gain from shorter settlement times, which offer greater financial flexibility and control. Faster payments' speed also provides valuable transparency for firms, which benefit from the certainty of immediate payment.
B2B payments have been slow to digitize relative to other types of payments. But with the US B2B payment market set to reach $26.742 trillion in 2021, per our forecast, real-time payment (RTP) systems stand to reap gigantic rewards if they can gain even a sliver of the market.
This year, $12.034 trillion in US B2B payments will be made via check or cash, making up about 45% of the market. That means a huge number of transactions would see noticeable improvements from faster settlement speeds.
Furthermore, $9.599 trillion will transact via Automated Clearing House (ACH) payments this year, and businesses that have already chosen to use ACH will be keen to upgrade to a faster digital payment option.
C2C payments have quickly digitized, thanks to the rise of platforms like PayPal's Venmo and remittance firms including Remitly. Those platforms, as well as actual remittance services, are improving by incorporating faster payments.The US mobile peer-to-peer (P2P) payments market will reach $538.73 billion in 2021, according to our estimates.
The US mobile peer-to-peer (P2P) payments market will reach $538.73 billion in 2021, according to our estimates. These transactions already occur digitally, as do many remittances, so shifting to a faster platform should boost consumer appetite, since faster payments give consumers access to their funds sooner.
The quicker settlement speeds and additional transparency of faster payments are attractive to firms and consumers involved in B2C payments, which include bill payments, payroll, and retail. We forecast that retail sales will hit $5.630 trillion in the US in 2021.
Also in this segment are bill payments, which hold an estimated value of $2.75 trillion annually, per doxo Insights.