Real-Time Payments to Slash $280B in Bank Payment Revenue
Central banks and digital wallet companies are pushing the RTP revolution!
Real-time payments (RTPs) are coming for banks’ US$280B in payment revenue, made on a predicted payment volume worth US$290T by 2030.
Bankers look at this 0.1% revenue on these transfers and will tell you it’s cheap, my advice is to look at the numbers.
In reality, only the largest wholesale clients get this deal. Consumer-to-consumer payments come with a 6% fee!
So when you hear bankers say there is no need for a CBDC or other account-to-account transfer, know that they think only of their business clients.
This is why RTPs, such as CBDC, Stablecoin, and even debit cards, are set to fundamentally change payments.
👉TAKEAWAYS
RTPs RULE: over 5,000 payments-focused fintechs generate around $100 billion in revenues, with projections suggesting a surge to $520 billion by 2030.
GDP GROWTH LINKED TO INSTANT AND RTP: RTPs are becoming a key driver for economic growth, with 86% of businesses with revenues between $500 million and $1 billion already adopting them.
RTP AND GDP: RTPs have a positive impact on GDP growth, a study for an RTP system in New Zealand could elevate the GDP by $271 million, or 0.1%. The EU’s SEPA RTP system and digital euro both seek to capture this boost.
GOING GLOBAL: RTPs had a 63% jump in transactions in 2022 and 21% annual growth rate with Asia as the standout region.
OPPORTUNITY FOR BANKS: Banks are not rushing into RTPs; however, they may be forced to by customer demand and national CBDC payment systems.
CENTRAL BANKS SPEARHEAD: Central banks are driving RTPs, as banks won’t!
RTPS IMPROVE FINANCIAL INCLUSION AND HUMANITARIAN AID: This is clearly a driver not just in the developing world but also for wealthy economies with aid programs.
👊STRAIGHT TALK👊
Regular readers know that I love to write about the need to reform our payment system with CBDC and other RTP methods.
What I love about this report is that Convera shows how much money banks are taking out of cross-border payments, and it should be a shocker.
For perspective, the US$280B in bank payment revenue is roughly the entire GDP of Finland, Portugal, or Kazakhstan!
I ask sober minded readers, are banks giving us a good deal?
Look at the numbers:
🔹 Because of the massive transfers they make, the wholesale transfer market gets a good deal with revenues of $153B on $146T of transfers for a rate of 0.1%.
🔹 Smaller C2C, B2C and C2B payments were worth roughly US$6.6T and contributed some $40bn to bank revenue for .67% or 5 times the revenue!
🔹 One final note is that bank revenue on these transfers and fees are related but not the same thing. Revenues are smaller than fees and depend on expense charges.
It is inconceivable to think that these fees can continue when RTPs can bring down costs and speed up the entire system.
Banks are the problem and not contributing to the RTP solution,
We need to credit central banks and digital wallets for pushing them to do better!
Thoughts?
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