Upgrading the UK payments infrastructure and boosting real-time payments adoption could increase GDP by $3.8 billion by 2026.

A new study published by ACI Worldwide, Global Data, and the Centre for Economics and Business Research (Cebr) found that a much-needed upgrade could boost our economy by 0.11% of formal GDP.

Cebr established the enormous ‘untapped potential’ of real-time payments in Britain. Theoretically, the research said, the impact of all payments being real-time could boost the UK’s economy by up to $98 billion in 2026, or 2.7% annually.

The research comes after the latest UK GDP figures from the Office for National Statistics (ONS) revealed a slow output for the UK economy in 2022 and follow recent IMF forecasts suggesting the UK is set to have the weakest growth in the G7 next year.

Research highlights the importance of the UK New Payments Architecture (NPA) programme which will bring sector-wide changes to the UK’s payments infrastructure over the next five years.

The aim of the upgrade would be to enable more innovation and foster competition among UK financial services providers.

Led by Pay.UK, NPA is seeking to modernise the UK’s legacy payment infrastructure through real time account-to-account payments. These provide consumers with more choice and newer, innovative payments options over more traditional payment types such as cards.

Although real-time account-to-account payments continue to grow in the UK – the number of payments processed by Faster Payments (FPS) increased by 23% to 3.6 billion in 2021 – data revealed that growth rates for real-time transactions are higher in many other countries, mainly due to the popularity of new digital overlay services built on real-time rail which have enjoyed rapid adoption among consumers and businesses.

This means that many emerging and developing countries are leapfrogging the UK to reap the full economic benefits that real-time account-to account payments bring.

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Owen Good, Head of Economic Advisory at Cebr, commented: “By enabling money to transfer between parties within seconds rather than days, real-time payments can significantly improve overall market efficiencies in the UK economy and play an important role in helping facilitate growth.

“Real-time payments improve liquidity in the financial system and therefore act as a catalyst for economic growth. Our theoretical modelling suggests the impact of all payments being real-time could add 2.7% to formal GDP by 2026. However, this by no means suggests there is not a place for non-instant electronic payments or paper-based cash payments in the future.”

Data from the report revealed some interesting statistics. The UK recorded 3.4 billion real-time transactions in 2021 which resulted in an estimated cost savings of $950 million for businesses and consumers.

This in turn helped to unlock $3.2 billion of additional economic output, representing 0.1% of UK GDP.

Ultimately, the forecasted macroeconomic benefits in 2026 are estimated to be $3.8 billion of additional economic output – or the equivalent output of over 38,000 jobs.

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