In Kano, Nigeria, a student boards a bus to meet friends after school. In Bangalore, India, a businessman tops up a prepaid phone. In Belo Horizonte, Brazil, a soccer fan grabs a quick snack outside the stadium while waiting for the game to start. Unbeknownst to them, they are all essential participants in the ongoing revolution of instant payments. People have seamlessly adopted various instant payment methods, with NIP in Nigeria, UPI in India, and Pix in Brazil standing out as the preferred options for their daily transactions.
The numbers tell a compelling story. In 2022, the global volume of real-time transactions surged by 63.2%, reaching a record 195 billion transactions. Projections indicate that this number will jump to 511.7 billion by 2027, reflecting an impressive compound annual growth rate of 21.3%. By 2027, real-time payments are expected to account for 27.8% of all electronic payments worldwide, a substantial increase from the 18% observed in 2022, according to ACI Worldwide’s report, It’s Prime Time for Real-Time 2023.
“Pix is considered the younger sibling of UPI,” says Paula Bellizia, President of Global Payments at EBANX. “The Brazilian solution was launched three years ago, and it’s no exaggeration to say it’s literally everywhere now.” Brazil already accounts for 15% of all instant payments made worldwide, trailing only India, according to ACI Worldwide. Data from Payments and Commerce Market Intelligence (PCMI) for EBANX projects that nearly one-third (29%) of the total value transacted in digital commerce in Brazil this year will occur via Pix.
And just as India inspired Brazil, Pix is now spreading the idea of instant payments throughout Latin America. They are available at any time, inexpensive, and, by definition, fast. However, according to Lindsay Lehr, Managing Director of PCMI, there are other reasons explaining why instant payments are becoming so popular in the region: “Although most Latin Americans now have a bank account, credit card penetration is still low. Instant payments are filling that gap and also replacing cash. Consumer behavior changed during the Covid-19 pandemic, and people now prefer digital payments.”
According to ACI Worldwide, instant payments in Latin America are expected to grow from 33 billion transactions in 2022 to 323.8 billion in 2027. “Payments are the backbone of digital growth,” says Paula Bellizia. “They become a bridge to digital and financial inclusion, bringing everyone into the digital economy. This access seamlessly unfolds into instant payments, with mobile phones serving as the primary tool, enhancing overall convenience.” In 2020, instant and real-time payments had only a 16% share of digital commerce in Latin America. PCMI expects this to rise to 34% in two years.
With more customers in the digital economy, global companies are seeing the opportunity to leverage alternative payment methods and increase their revenue, especially in emerging markets like Latin America. EBANX’s annual report, Beyond Borders, shows that, on average, APMs already accounted for 39% of e-commerce volume in the region in 2022, and are expected to represent 42% by the end of this year, with Colombia (projected at 50%) and Brazil (projected at 49%) as the main highlights. Offering alternative payments is an effective way to gain consumer trust and elevate the average order value (AOV). “Take Brazil as an example: Pix has become the preferred payment method. If you are selling products or services to customers there, you have to offer this option,” says Juliana Etcheverry, Director of Strategic Payment Partnerships at EBANX.
Keeping Brazil as an example, it’s interesting to understand how instant payments can evolve as a product and also in the way people use them. Three years ago, Pix was primarily a solution for person-to-person (P2P) transactions. According to the Central Bank of Brazil, only 6% of transactions were related to bill payments or the purchase of products or services (P2B) at that time. The scenario is quite different now: P2B transactions via Pix account for 34% of the total volume. Some new features, such as “automatic Pix” (or “Auto Pix”) — a solution that will allow recurring payments — are already on the roadmap and are expected to make the method even more attractive for P2B transactions.
As Pix transforms the way Brazilians conduct transactions and inspires broader adoption in Latin America, there are new potential opportunities on the horizon, such as enabling cross-border payments. The President of the Central Bank of Brazil, Roberto Campos Neto, recently stated that Brazilians are already using Pix to pay for products while traveling abroad. Here again, there is likely some inspiration coming from Asia, where cross-border payments already occur under international agreements.