Can real-time payments help change the world?

Since completing his acquisition of Twitter, now X, in October 2022, Elon Musk has been vocal about his desire to transform the platform into a real-time payments powerhouse.

In an all-staff meeting back in October 2023, he highlighted his ambition to enable X users to “send money anywhere in the world instantly and in real-time.” The launch of what’s now being referred to as “X Payments” will help “revolutionize 2024,” according to a recent X Business blog post.

Musk’s borderline obsession with payments—dating back to his time as a founder of X.com, which eventually evolved into PayPal—raises a fundamental question: Is payments modernization as critical to our future as zero-emission electrification, artificial intelligence, gene editing, space exploration, and safe, low-cost transportation? And, if so, how do we achieve payments modernization in our lifetime?

Unlike other monumental global challenges that desperately need solving, we have the technology to fully address payments modernization today.

Many economies throughout the world aim to achieve sustained economic growth by modernizing their payments infrastructure through transitioning to real-time schemes, viewing real-time payments as the path toward transforming global payment systems.

Nigeria is a prime example. The Central Bank of Nigeria believes that the adoption of real-time payments will create a clear path forward in modernizing payment systems to achieve greater financial inclusion. The Central Bank’s Nigeria Payments Vision 2025 strategy includes measures aimed at democratizing electronic payments to fuel demonetization, which they see as a foundational step toward overall national prosperity.

Since it was introduced in 2006, the roadmap has been updated multiple times to reflect emerging market realities and appears to be powering significant payments transformation in Nigeria. With 3.7 billion real-time transactions in 2021, and ranking sixth among the world’s real-time payments markets, Nigeria is Africa’s undisputed leader when it comes to digital payments.

Nigeria’s commitment to modernizing its payments infrastructure has helped unlock a staggering $3.2 billion in additional economic output in 2021, representing nearly 1% of the country's GDP, and this is forecast to rise to $6 billion by 2026.

India, the largest real-time payment market in the world, is another important example of a country that considers payments transformation—specifically, real-time payments—crucial to long-term economic progress. Demonetization mandates, conjoined with the ubiquity of the country’s Unified Payments Interface and a comprehensive opening of the system to non-bank players, have helped the country become a global leader in real-time payments over the last decade.

In India, this has fueled a reduction in the use of cash, cutting the costs of printing and transporting currency, improved tax compliance, and greater convenience for businesses and consumers. It has also provided a boost to the local fintech economy, powering even more innovation in the sector.

Brazil, like India, is a leader in real-time payments, fueled in large part by the rapid expansion of the regional fintech sector. While banks retain a strong share of Brazil’s real-time payments market, consumers are, thanks to government regulations, able to open bank accounts fully digitally. As a result, the market has moved to a mobile-first payments landscape, with the PIX real-time payments scheme at the center of peer-to-peer payments, bill payments, retail payments, and e-commerce.

Brazil and other economies such as Mexico and Colombia are fueling a surge in real-time payments transactions throughout Latin America, the projected total in the region growing from 33 million in 2022 to 1.2 billion by 2027. Latin America is expected to grow faster than all other regions worldwide, with a forecast 56% of all real-time payments in the world within the next five years.

Nigeria, India, and Brazil are only three of the many countries experiencing material economic benefits from payments transformation spurred by a move to real-time payment schemes. Real-time payments in these countries enable faster, more secure transactions, lower transaction fees, and the ability for more people to participate in the financial system, even without using traditional networks.   

There is an equally impactful movement underway to migrate existing payment systems to the cloud. This move will enable banks and merchants to operate more efficiently, providing scalability, security, and enhanced data protection while reducing costs and eliminating the need for hardware and data hosting.

Unlike other major global challenges, payments modernization is one that we are well positioned to solve in our lifetime. The early adopters—countries that are prioritizing payments transformation, such as Nigeria, India, Brazil, Mexico, and Colombia—will be at a significant advantage when it comes to building more durable economies. Those who delay the transition to real-time payment schemes will fall behind the rest of world, facing added costs when they eventually, and inevitably, make the switch.

It is critical to act now. Payments transformation driven by real-time payments schemes is the future. So, the obvious question: Why wait?