[ad_1]
Buried in BlackRock Chairman and CEO Larry Fink’s annual letter to investors this year was a slam on the U.S. payments system.
Fink, who leads one of the largest asset managers in the world, sounded almost embarrassed about the state of his country’s payments technology.
In the lengthy letter, where he opined on everything from “stricter capital standards for banks” to “meeting societies’ energy needs,” Fink touched on payments.
From his perch leading the gigantic asset manager, he described how he sees payments innovations in the U.S. compared to such advances in other parts of the world.
“In many emerging markets – like India, Brazil and parts of Africa – we are witnessing dramatic advances in digital payments, bringing down costs and advancing financial inclusion,” he said in the letter to BlackRock investors that the company said was published March 15.
Then, Fink jabbed the U.S. payments system. “By contrast, many developed markets, including the U.S., are lagging behind in innovation, leaving the cost of payments much higher.”
That’s a sentiment that was underscored last month by ACI Worldwide’s annual analysis of the progress that nations are making in adopting real-time payments, which allow consumers and businesses to send and settle instant digital payments around the clock, without hours or days of delay. Real-time means payments to landlords, suppliers, retailers, government agencies, employees and others settle in seconds.
Last year, India processed $89 billion in real-time payments, nearly half of the worldwide transaction amount, according to the ACI report. By contrast, the U.S. processed a relatively miniscule $2.8 billion in 2022, the ACI report said.
“The Indian real-time payments market is the most advanced in the world by far, ahead of developed and developing markets alike,” the ACI report said, explaining that real-time payments have been available in India since 2010 and were upgraded in 2016. The Indian government’s system, coupled with its peoples’ extensive digital wallet use, has “disrupted the payments space,” enabling real-time payments that use QR codes, mobile numbers and virtual identification, the report added.
ACI’s report on the topic the year before highlighted the U.S. payments system shortcomings. It noted that U.S. consumers and businesses have snagged net benefits from real-time payments that equate to less than 5% of the comparable benefits China is achieving.
Fink’s statement would seem to be a wake-up call for the world’s largest economy to push its payments system forward, and soon.
The Federal Reserve has been making plans to do just that with the launch of the central bank’s real-time payments system, called FedNow, later this year. The U.S. has already had a private real-time system available in the form of the RTP network, but that operation, run by the nation’s largest banks, hasn’t made as much progress as might have been expected.
Fink didn’t elaborate on payments, but he noted that his annual letter is a means for him to advocate on behalf of BlackRock’s investment clients. The companies and consumers for whom BlackRock manages money certainly stand to benefit from a more efficient U.S. payments system.
[ad_2]