The global surge in real-time payments continues apace, with governments and private firms launching fresh initiatives to increase banking participation. But there are also a few geopolitical angles in this seemingly anodyne sector.

Mastercard has announced that South Africa will be the first market to benefit from real-time card payments, marking a significant push into digital finance on the continent. In partnership with ACI Worldwide, a payments technology provider, Mastercard aims to equip local acquiring banks with the capabilities to process card payments instantly, promising enhanced liquidity and faster fund access for businesses and consumers alike.

Bill Farris, ACI’s Head of Issuing and Acquiring, notes that the initiative will streamline cash flow for South African businesses, fostering smoother payment experiences for merchants and their customers. Mastercard plans to roll out real-time clearing and frequent settlement cycles, allowing same-day payouts to merchants—a boon for small businesses seeking greater cash flow efficiency.

The initiative is part of Mastercard’s broader ambition to accelerate digital transformation in cash-reliant markets - Africa and other developing countries have still-uncaptured banking clientele, referred to as "the unbanked" in official literature. The company has pursued partnerships across Africa, from telecommunications firms to e-commerce giants like Amazon, in a bid to increase dependency on more centrally-controllable, billable, and monitor-friendly digital platforms.

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Global push

The European Union remains at the forefront, as regulatory mandates for real-time euro payments push providers towards compliance. Broadridge Financial Solutions recently rolled out its Instant Payments Service, leveraging the Swift Alliance Gateway Instant to ensure eurozone payments in under 10 seconds, a move aligned with EU regulatory deadlines set for 2025. Broadridge plans to expand this service beyond the 20 Eurozone nations in due course.

Romania, meanwhile, has introduced RoPay, a real-time mobile payment service from TRANSFOND, part of the national payment network. RoPay facilitates instant account-to-account (A2A) transactions via QR codes, NFC, and mobile numbers. With banks gradually implementing the service, initial emphasis is on person-to-person transfers processed in seconds.

But these efforts, largely driven by the Central Banking system, include efforts to penetrate BRICS countries with the protocol. South Africa is merely the first, but in Brazil, payments giant EBANX is preparing for the introduction of Pix Automático, which promises to transform Latin America’s largest digital market by supporting recurring payments. By providing merchants with early access to resources, EBANX is enabling companies in subscription-based sectors to optimize their systems ahead of the feature’s launch in June, streamlining automated payments through QR codes or bank details.

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Benefits, costs

Real-time payments are advertised as a faster, secure alternative to traditional checks and electronic bank transfers. Real-time payments (RTPs) allow instant, 24/7 fund transfers, transforming global financial transactions by improving cash flow, enhancing efficiency, and streamlining customer experiences. RTPs, projected to reach $511 billion by 2027, support immediate fund availability, reducing delays common in traditional systems.

RTP systems begin with payment initiation and authentication, followed by instant processing, confirmation, and settlement, all within seconds. However, challenges include higher fraud risks, costly infrastructure requirements, regulatory compliance, interoperability, and customer education. To leverage RTPs effectively, businesses must invest in secure, adaptable systems, ensure regulatory alignment, and encourage customer adoption.

With South Africa being the capital of fraud on an already lawless continent, the likelihood is that the new forms of digital banking will open doors for a wider variety of fraud.

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Fintech arms race?

It is suspected that the recent push may be part of the arms race against Russian efforts to circumvent the SWIFT payments system, from which they have been embargoed since the start of their invasion of the Donbas region in Ukraine. Russia has reportedly unveiled an ambitious blueprint to reshape cross-border payments within the BRICS bloc, aiming to sidestep traditional global financial channels. Released in advance of the BRICS summit slated for October 22-24, the plan outlines potential frameworks for transactions across member states, which now include new entrants Iran, the UAE, Ethiopia, and Egypt.

Drafted by Russia’s Finance Ministry, the Bank of Russia, and consultancy Yakov & Partners, the report suggests several mechanisms to facilitate direct settlements in local currencies. Among the options: a network of commercial banks handling transactions, direct central bank connections, commodity trade hubs, and a distributed ledger or token-based platform for cross-border settlements.

Moscow’s proposal is strategically aimed at insulating BRICS economies from Western financial systems and, crucially, from sanctions. By crafting an independent payment architecture, Russia seeks to provide a “ring-fence” against external pressures, reinforcing its economic resilience amid increasing geopolitical tensions.

There is also the emerging potential for crypto-based alternatives, which can facilitate instant international payments without the need for major financial institutions, and can potentially circumvent the increasingly burdensome capital controls South Africa imposes on its financial environment. But this is also a more global phenomenon, and several major companies are scrambling to integrate these digital payments systems.

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