Real-time payments continue to gain momentum in 2022, especially as a new economic environment spurs the need for faster payments. As cross-border payments continue to gain steam, real-time payments show promise to aid those capabilities, too.
The focus has long been on faster payments, as both people and businesses aim to collect payments more quickly. According to Rockville, Maryland-based research firm Fact.MR, the real-time payments market is projected to grow at a compound annual rate of 33% over the next decade – topping out at an annual volume of roughly $300 billion by 2032.
This promising growth has the eyes and ears of fintechs, banks, and other organizations. Corporate treasurers are also paying attention as the benefits become crystal clear.
Current State of Real-Time Payments
Currently, real-time payments account for 2% of all corporate payments and 1.3% of payments received today. But three-quarters of companies that use real-time payments regularly say they expect an increase in the real-time payments they’ll receive next year. And nearly 70% say they plan to make more real-time payments by next year, too.
PYMNTS research also shows that one in seven businesses that have annual revenues of $50 million to $1 billion report making or receiving real-time payments. That figure increases to 86% for businesses with annual revenues between $500 million and $1 billion.
What Do Real-Time Payments Mean for Tuition?
Perhaps most obviously, real-time payments mean faster tuition payments. As of 2020, ACH was the most popular payment method for higher education, making up 40% of tuition payments. Yet projections estimate that a quarter of online bill payments will be sent in real time to higher education institutions by this year.
If this holds, real-time payments could quickly eclipse ACH payments, which often take several days for funds to deposit because they rely on batch transfers. Real-time payments also outperform paper checks, which require enough forethought to send ahead of time, ensuring payments arrive by their due date. When it comes to convenience, paper checks are simply no match.
And while credit and debit cards are fairly fast and convenient – taking just a day or two to process – they may not be perceived as fast enough in a world where instantaneous reigns supreme. Real-time payments are instant, fee-free ways to send tuition payments, and their immediacy also makes it easier to track how much money a person has left in their bank account, reducing the problem of overdrafts.
Other Benefits of Real-Time Payments for Higher Ed
While real-time tuition payments may take center stage, there are other benefits. Financial aid funds can also be distributed in real time. Beyond actual payments, the level of security of real-time payments is also something to note. Real-time systems often use technologies like encryption and tokenization to protect sensitive personal data and account numbers.
As real-time payments continue to gain popularity in fintech and insurance, other industries are sure to follow suit. Enabling real-time payments for higher ed can not only guarantee faster payments, but more convenience for students and parents and greater security for all parties.
Considering the benefits of real-time payments for your university? Contact us today to talk to our team of seasoned payments professionals and receive a free consultation.