The financial industry is undergoing rapid evolution as faster payments gain momentum, and 2018 is shaping up to be a landmark year. Forecasts suggest that faster payment volumes will exceed $650 billion, driven by growing adoption across consumers, businesses, and financial institutions.
Surge in Same Day ACH Activity
This uptick in volume reflects increasing expectations for speed and efficiency in payment processing. Whether it’s individuals splitting dinner bills or businesses managing payroll, the need for real-time settlement has become critical. In the U.S., this is especially evident in the growth of Same Day ACH, which logged 75 million transactions totaling $87 billion. While impressive, this still represents less than 1% of the total ACH transaction volume—indicating room for growth as adoption widens.
Zelle Expands Its Footprint
Another key contributor to the movement is Zelle, the peer-to-peer payments network backed by U.S. banks. Currently operating across 29 financial institutions, Zelle is poised for expansion with an additional 140 banks expected to join. Interestingly, 70% of Zelle transactions are completed within the same bank, enhancing speed and reducing friction in the payment experience.
Lessons from the U.K.: Security Risks
However, the shift to instant payments is not without risk. The U.K. provides a cautionary example: following its Faster Payments launch, instances of bank fraud doubled. This serves as a critical reminder for financial institutions to balance innovation with investment in fraud prevention and cybersecurity measures.
A New Era in Payments
Faster payments are no longer just a technological upgrade—they are becoming an industry expectation. As adoption continues to rise and new systems come online, stakeholders must remain vigilant about the risks while capitalizing on the benefits of real-time transactions.
Data for this episode of Truth In Data is provided by Mercator Advisory Group’s report: “Faster Payments Forecast, 2017–2021, Update: The Consequences of Faster Payments.”
