For the second consecutive year, the Middle East is the fastest-growing real-time payments (RTP) market globally, according to the 2024 Prime Time for Real-Time report published by ACI Worldwide in partnership with GlobalData.
Real-time payments are swiftly becoming the foundation of modern economies in the region. Governments are implementing real-time payment schemes, resulting in tangible benefits for businesses and consumers and propelling the Middle East into a new era of financial transformation and opportunity.
The region saw a remarkable YoY growth of 33.6 per cent in 2023, with 855 million real-time payment transactions. This number is projected to grow to 3 billion by 2028, with a 2023-2028 CAGR of 28.8 per cent.
Last year marked a significant milestone as Oman, Kuwait, and Qatar launched their national real-time payment schemes, joining Saudi Arabia, Bahrain, and the UAE.
With all six GCC member states now running real-time payment programs, transaction value in the Middle East is projected to rise from $230 billion in 2023 to $903 billion by 2028. Bahrain stands out as one of the most developed payment markets in the region, with real-time payments accounting for nearly 50 per cent of total payment volume.
The real-time and electronic payments surge signals the Middle East’s determined shift towards a cashless economy. In 2023, electronic transactions comprised over 50% of all transactions and 95 per cent of the transaction value in the region. Notably, real-time payments accounted for 12 per cent of electronic transactions last year, a figure set to soar to 22 per cent by 2028, outpacing Europe and North America. By 2028, cash-based transactions will dwindle to a mere three per cent of transaction value.
Drawing on insights from successful real-time payment implementations globally, ACI Worldwide highlighted the importance of active collaboration in fostering a thriving real-time payment ecosystem. He pointed to India’s achievements as an example of how diverse real-time payment methods—via QR codes, mobile apps, or online accounts—can drive innovative use cases.
With the Middle East leading the world in real-time payments growth, financial institutions have a unique opportunity to study these successes and extract valuable insights to inspire their pioneering real-time payment solutions.
In a conversation with edge/ Santhosh Rao, Senior Vice President, Sales at ACI Worldwide MEASA, talks about the growth and adoption of RTP in the region.
What is fuelling the adoption of RTP?
Real-time payments eliminate payment friction, inject greater liquidity into the system, and promote economic growth and financial inclusion. Yet, their full potential can only be realised when banks transcend legacy silo systems.
With real-time payment schemes now operational in every GCC nation, local banks are at a pivotal juncture where they must harness technological evolution as the catalyst for innovation.
The path to innovation lies in modernising and future-proofing their infrastructure, enabling them to leverage the potential of real-time payments fully
Why is the Middle East the world’s fastest-growing real-time payments (RTP) region?
Rapid real-time payments (RTP) adoption in the Middle East stems from various factors. Firstly, the region hosts a diverse expatriate population from India, Brazil, Malaysia, and Indonesia, with advanced RTP systems. These expatriates expect similar financial efficiencies in their new home, driving demand.
Moreover, Middle Eastern governments and regulators are exceptionally proactive and ambitious. They continuously seek innovations and improvements backed by substantial financial resources. The region’s leaders aim to position their countries as global frontrunners in technology and infrastructure.
Another critical factor is the robust infrastructure. Mobile device penetration and network quality in the Gulf Cooperation Council (GCC) countries are among the best in the world, providing a solid foundation for RTP systems.
All six GCC countries—Bahrain, Saudi Arabia, UAE, Oman, Kuwait, and Qatar—have already established the infrastructure to support RTP services. Bahrain led the way, and the others have followed suit, showing a collective regional commitment to this advancement.
How does RTP benefit businesses in the Middle East?
RTP offers numerous benefits to businesses. First and foremost, it drives innovation within the financial ecosystem. With a robust RTP infrastructure, various entities can introduce new services, enhancing overall efficiency and customer experience. This innovation is particularly evident in the rise of FinTech startups, which complement traditional banking services by offering specialized solutions for different stages of the financial transaction process.
The impact on remittances is also significant. Given the large expatriate population in the Middle East, efficient remittance services are crucial. RTP ensures that money transfers happen almost instantaneously, a game-changer for many families dependent on timely financial support.
On a more granular level, RTP transforms everyday transactions. Small businesses, taxi drivers, and service providers can receive payments instantly, greatly improving cash flow and reducing dependency on physical cash. The introduction of QR codes and other digital payment methods is already making waves, and as adoption increases, we can expect a substantial shift away from cash transactions.
Overall, RTP benefits all participants in the financial ecosystem—businesses, banks, and consumers—by providing a more efficient, cost-effective, and secure method of handling transactions.
What are the implications for larger financial organisations?
For larger financial organisations, moving towards a cashless economy and embracing RTP has several profound implications. Improved liquidity is a significant benefit, as it reduces the necessity to hold large amounts of physical cash. This change enhances cash flow management, enabling banks and financial institutions to operate more efficiently and cost-effectively.
Operational costs of handling and processing cash—such as transportation, security, and storage—can be significantly reduced.
These savings can be redirected towards enhancing customer services or developing new financial products, thereby increasing competitiveness and customer satisfaction.
The transition to RTP also allows financial institutions to innovate and offer advanced digital payment solutions, such as mobile wallets and instant payment applications.
These innovations can improve customer experience, attract new users, and open opportunities for partnerships with FinTech companies. Such collaborations allow traditional banks to leverage cutting-edge technology and maintain a competitive edge in the rapidly evolving financial landscape.
Furthermore, RTP facilitates greater financial inclusion. Digital payment solutions can reach underserved populations, providing secure and convenient ways to manage their finances. Financial institutions can drive economic growth and expand their customer base by tapping into these new markets.
How long until the Middle East reaches RTP levels in India or Brazil?
The Middle East is making significant strides towards achieving RTP adoption levels comparable to those in India or Brazil. Several factors contribute to this rapid progression. Firstly, the region’s governments are highly proactive and supportive of technological advancements. This top-down approach ensures that necessary policies and infrastructure developments are prioritised and implemented swiftly.
The robust infrastructure regarding mobile device penetration and network quality provides a strong foundation for RTP systems. As more consumers and businesses adopt digital payment solutions, the ecosystem will continue to grow and evolve.
Fintech startups play a crucial role in this transformation, offering innovative solutions that complement traditional banking services and help bridge any gaps in the financial transaction process.
While legacy systems in some financial institutions might slow the transition, the overall momentum is towards rapid adoption.
Consumer demand, coupled with support from governments and the private sector, ensures that the region will catch up and potentially lead in certain aspects of RTP adoption.
In conclusion, the speed of adoption will depend on how quickly financial institutions can adapt to new technologies and how effectively the ecosystem can support and promote these changes. Given the current trajectory, the Middle East is well on its way to achieving RTP adoption levels seen in more advanced markets.
