Growth in instant payment systems could transform ‘cash is king’

By our News Team | 2023

Cash is still widely used around Africa – particularly in the informal economy. But a global move to instant payments may change that.

While in many parts of Africa cash still remains king for daily consumer interactions, there is a rapid global rise in instant payments which could ultimately change the way that many businesses on the continent transact with their customer base.

A study released last week by Juniper Research, a consultancy that specialises in researching the global digital ecosystem, has found that the number of consumer instant payments will exceed 235-billion in 2027; up from 74-billion in 2023. This equates to a three-fold increase in only five years.

Payment strategies

Photo by iMin Technology from Pexels

The growth will be driven by lower merchant acceptance costs when compared to traditional card schemes. Juniper says this is of particular importance now, as many merchants will be seeking to reduce costs and protect margins through the global economic downturn.

An ‘instant payment’ is defined as any payment outside of a card network that is capable of receiving funds in 10 seconds or less.

The research found that the transition to instant payments for consumers will extend to around 70% of all global transactions by 2027, up from just over 30% this year.

China and India to lead the market

By 2027, the three largest markets for consumer instant payments globally (by transaction volume) will be China, led by the popularity of WeChat Pay and AliPay; India, driven by UPI; and the US, brought by the introduction of FedNow. They rank as follows:

  1. China.
  2. India.
  3. United States.

Juniper recommends that instant payment vendors focus on building value-added services within their offering, including real-time fraud prevention or automation of payments for B2B use cases, in order to benefit from this shift in a highly competitive market.

The research identified that the lower costs of instant payments allow merchants to pass on savings to consumers, as well as benefitting from increased speed of transfers. With instant settlement, merchants will receive payments within seconds, reducing payment settlement delays and the costs associated with that.

“Payment processors, who provide payments acceptance for merchants, should look to offer instant payments integration via a single API (a software interface that allows two or more computer programs to communicate with each other),” explained report author Michael Greenwood. 

“This will allow merchants to accept instant payments at checkout – alongside existing payment methods such as cards and wallets – without needing to undertake a separate, costly and time-consuming integration process.”

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.