As real-time payment systems become increasingly pervasive, they are transforming the lives of citizens who previously lacked access to formal banking systems.
For individuals who rely on daily cash transactions, the shift to real-time electronic payments has been strongly correlated with an uplift in financial inclusion.
This trend spans across multiple countries, positioning real-time payments as a vital “gateway” to the benefits of financial inclusion long championed by the World Bank, including enhanced financial security, reduced economic inequality, and improved entrepreneurship and community well-being. By providing individuals with access to affordable financial services, modern digital payments can help lift millions of people around the globe out of poverty.
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Real-Time Payments: Bridging the Gap for the Unbanked and Underbanked
Through innovations such as real-time apps, QR codes, and mobile wallets, unbanked and underbanked individuals are gaining access to affordable financial products and services. These technologies enable users to receive essential financial support, such as government aid for farming or education, with unprecedented ease and immediacy. The impact of real-time payments is especially significant in developing countries, where large portions of the population remain unbanked or underbanked.
However, the benefits are not confined to developing economies, as even in advanced nations, real-time payments are empowering those without debit or credit cards to manage their finances without resorting to high-cost alternatives like payday loans or check-cashing services. By lowering transaction fees, these systems make financial services more accessible and affordable for a broader segment of the population.
Predicting the Future: Financial Inclusion Gains by 2028
Using historic banking data from the ACI report on “Real-Time Payments: Economic Impact and Financial Inclusion”, data from 40 countries estimated that a hypothetical country with a 50% banked population could see a 10% increase in the value share of real-time payments boost its banked population by nearly 10%, reaching 59.1%. The analysis highlights three key demographic groups benefiting disproportionately from real-time payments:
Younger People (18-24 years): This group, often reliant on daily cash, experiences a 7.4% higher financial inclusion uplift compared to older individuals at similar levels of real-time payment adoption.
Women: Traditionally excluded from financial decision-making in many regions, women see a 4.3% higher inclusion uplift than men. Real-time payments empower them with financial independence and greater control over family resources.
Lower-Income Groups: Representing the lowest 40% of earners, this group experiences a 4.1% greater inclusion uplift compared to higher-income earners, addressing barriers such as cost, distance, and financial literacy.
Empowering the Marginalized: Real-Time Payments in Action
Real-time payments provide younger populations, particularly in regions with large youth demographics like Africa, with immediate insights into their finances, encouraging better liquidity management. Women, often sidelined in family financial matters, can now play a central role in managing household budgets and improving outcomes for children. For lower-income citizens, who face challenges opening traditional bank accounts, real-time payments offer access to essential financial services without prohibitive costs.
Beyond individual benefits, real-time payments drive systemic advantages. Citizens with real-time accounts in developing nations gain faster access to government funds and subsidies, which can be life-changing. Immediate transaction updates promote transparency and financial literacy, enabling users to make informed decisions about their resources.
Notably, real-time payment systems are reshaping the global financial landscape by making financial inclusion a reality for millions. These systems not only enhance personal financial stability but also contribute to broader economic and social ’empowerment, creating opportunities for more equitable and sustainable development.