Real-time payments are growing around the globe, and according to ACI Worldwide research, the Middle East is leading that trend as the region’s economic diversification journey approaches maturity. Our Prime Time for Real-Time report showed the Middle East as the fastest-growing region for real-time payments for the second consecutive year. This year’s edition recorded year-on-year growth of 33.6% in volume, with 855 million real-time payments transactions in the Middle East. This is projected to grow to 3 billion by 2028, a five-year CAGR of more than 28%.
The central banks of Saudi Arabia, Bahrain (real-time payments in the Kingdom account for nearly half of the total volume and the majority of electronic payments), and the UAE have all launched real-time payments systems — and Qatar, Oman and Kuwait have now joined them. With the entire GCC now running real-time payments platforms, transaction value in the Middle East is projected to rise from $230 billion in 2023 to $903 billion by 2028. At a CAGR of more than 31%, it is interesting that value growth outstrips transaction volume in the 2023-2028 period.
Apart from the consumer benefits of faster, cheaper, more convenient transactions, regional governments have seen the wider economic advantages of a cashless economy. One major benefit is reducing the use of paper and plastic — a boon to governments’ sustainability ambitions. However, the increase in economic participation as the unbanked become more entwined in gross domestic product is also worth mentioning. For private institutions, real-time payments can be a more robust guarantee against fraud and money laundering because of their baked-in security measures. Furthermore, the delight among customers about the instantaneous transfer of funds can help to strengthen relationships with financial services industry (FSI) brands.
There is an opportunity in the real-time payments arena to not only lead in adoption but also carry the torch further. The Middle East has every reason to lead the world as a pioneer of powerful new real-time payments use cases. If this were to be a nation’s goal, then its government should start by looking to those countries that currently lead the world in real-time payments maturity. Here is a five-point summary of approaches those leaders take.
Collaboration
Governments can mandate or actively encourage an industry consensus to collaborate actively on real-time payments systems. The players in this cooperative—banks, payment service providers, central authorities, government agencies, merchants and other third-party stakeholders—would work together to build and operate real-time payments ecosystems. Success will be predicated on the extent to which this collaboration is truly active. While ensuring intensive engagement seems an obvious role for the government, it could, with the right will, be achieved autonomously by the industry.
Openness and inclusiveness
The payments ecosystem can be an international success story only if traditional institutions accept that they cannot hope to match emerging fintech startups for their tenacity and agility. Research shows that more successful real-time payments nations tend to be those that have established startup-friendly environments. This is the case in many GCC nations, which also support vibrant fintech communities—good news for real-time payments journeys as fintechs and smaller banks will provide meaningful value to the services market built on top of real-time platforms. However, this raises questions for larger banks that must now re-evaluate their positions and forge new partnerships with these smaller players to remain competitive.
Strong incentives for merchants
Merchant participation is crucial to the growth of real-time payments, and some governments around the world have contributed to merchant adoption by taking bold steps to entice them to offer them. The Indian government, for example, removed merchant discount rates and issued all merchants with QR codes for UPI (Unified Payments Interface—a mobile app that facilitates transfers of funds between accounts) acceptance.
Continuous stream of user-friendly use cases
Utility payments, tax bills, bus tickets, highway toll fees, subscription payments and the weekly grocery shop are among the things private individuals can do in the most successful real-time payments markets. And among the large expat populations of the Middle East, the next frontier use case will be cross-border real-time payments links. Asian countries currently lead the way, but the Middle East could replicate the success of nations like India—where the popular UPI scheme now allows payments to be made in Malaysia, Indonesia, the UAE and France—and Malaysia, where users of DuitNow can now make QR code real-time payments from Indonesia, Singapore, Thailand and China.
Fraud prevention
As generative artificial intelligence (AI) continues to change the game when it comes to fraudsters’ success rates, the payments industry is fighting back. Consumer rights initiatives, education programs and government interventions—combined with new AI-based anti-fraud technology—are starting to have an impact, and real-time payments systems in mature markets use this technology to protect transaction stakeholders.
Key takeaways for FSIs
Watch. Learn. Collaborate. Real-time payments are a growing opportunity, and FSIs that want to remain relevant in the digital economy will need to participate. In the history of digitalisation, where processes were getting faster all the time, the evolution of commercialism was inevitable—from “this week” to “next day” to “same day”. We now live in the world of “now”. FSI entities that fail to come to terms with this today will find that tomorrow they are yesterday’s news.
