Mercator: The US Increasingly Seeing Faster Payments Services

August 27, 2018         By: Steven Anderson

The United States isn’t exactly known for its patience, overall. We take some of the fewest vacations of any nation in the world. We invented fast food with White Castle and the charge card with Western Union. We know instant, and we know fast. So when Mercator dropped word our way that the United States was increasingly pursuing, and realizing, faster mobile payments systems, the news wasn’t really a surprise.

Mercator’s report—titled “U.S. Faster Payments Forecast 2017-2021 Update: The Consequences of Faster Payments”—examines one particular segment of the mobile payments market: sheer raw speed. One of the biggest points it revealed was that, by the end of 2018, the faster payments market would hit $255 billion once all the separate subchannels—business-to-consumer, business-to-business, and so on—are factored in.

The report notes that faster payments have both benefits and constraints to consider. For instance, faster payments have speed on their side. That improves not only cash recognition, but also makes for improved cash flow for businesses.  Transaction certainty is also increased—no worry about a payment lost in the lag—as well as better reporting and an improved payment infrastructure.

However, there are concerns afoot. Costs increase substantially as new infrastructure is required to accommodate the faster payments. Adoption rates and return on investment are largely unknown; it’s too new to really have base figures to work from. Worse, regulatory uncertainty rears its head, and may scuttle any newly-laid plans at any time, causing potentially immense waste. The potential for payment fraud is also higher thanks in some part to the increased speed of payments; fraud could go unnoticed until after the transaction is concluded thanks to higher speed.

Essentially, the report makes it clear that faster payments are coming, but not without some risk to the user. Since most of the constraints noted in the system are largely matters of the unknown, it should be a safe bet to go forward, if with some restraint, some backup plans, some hedged bets and a grain of salt as to just how far this market will go.

Mobile payments are delivering great value to the field, and faster payments likely will too. Potentially, though, not as much value as some might expect.