According to Federal Reserve surveys, the majority of U.S. businesses sent or received a faster payment in 2022, the most recent year for which data is published. Offering instant payments via the FedNow® Service can help your institution meet this demand, improve customer experience, and keep pace with the competition.
Your organization can also reap other benefits from instant payments. For example, transactions settle between financial institutions in seconds, so there’s no buildup of interbank obligations. Plus, instant payments provide revenue growth and cost-saving opportunities that can benefit your financial institution’s bottom line.
Instant Payment Use Cases
By offering instant payments, you can help your individual and business customers enjoy the benefits these types of payments provide. The possibilities are endless, but here are a few instant payment use cases to consider:
- Workers completing their shifts can have access to their wages immediately after payroll funds are deposited into their account.
- Insurers, government agencies and emergency relief organizations can instantly disburse funds to people impacted by a natural disaster.
- Small businesses can use instant proceeds from sales or services to ensure steady cash flow and avoid reliance on short-term, and often costly, credit.
- Parents can immediately send funds to children, such as college students, who could then use those funds to immediately pay a bill and avoid a late fee.
- Account holders can move funds from a brokerage or retirement account to a checking account, with no delay in accessing transferred funds.
- Digital wallet holders can fund or defund their wallets with immediate funds availability.
For more, visit the Use Case Arena on FedNowExplorer.org.
The Business Case for Instant Payments
Offering instant payments can provide your financial institution with opportunities to drive revenue growth and create new revenue streams, including:
- New customer segments. As a platform for innovation, instant payments can open up new market segments and revenue opportunities for your institution.
- Cross-selling products. When your customers experience the efficiency, ease and transparency your instant payment platforms provide, it may make them more willing to explore other services and products your organization offers.
- Expedited bill payments. With the FedNow Service, your financial institution can enable RFP for your retail customers. This allows your customers to receive requests from billers to pay invoices, meaning customers get the convenience of an end-to-end payment process — from invoice notification to payment delivery — all on their mobile phone or tablet.
- Loans. The always-on nature of instant payments makes it possible for your financial institution to disburse funds instantly on weeknights and weekends, which can lead to additional loan revenue opportunities.
In addition to revenue growth opportunities, instant payments can provide cost-saving opportunities. They can help your organization increase efficiency and shift to higher profitability margin products, save on loan collection, and reduce customer calls and inquiries.
For details and examples on revenue growth and cost-saving opportunities related to instant payments, view the “What value can the FedNow Service deliver to your financial institution?” resource on FedNowExplorer.org.
Learn More and Get Support
For more information on instant payments and the FedNow Service, visit FedNowExplorer.org or contact your Federal Reserve relationship manager.
You don’t have to go it alone - ePayAdvisors can help you navigate your FedNow® implementation journey. Let us perform an operational analysis to get you started in instant payments on the right foot. Contact us at 800-475-0585, Option 5 or visit www.epayadvisors.com to request a proposal.