Are You Moving Forward with a Faster Payments Strategy?

Individuals and businesses want to send and receive money at the click of a button. In fact, two out of three consumers and three out of four businesses think it’s important that their financial institution offer faster payments, according to a 2020 Federal Reserve survey.

Faster payments are quickly becoming the expectation, with new use cases for the various faster payment technologies found almost daily. Gig workers are already one of the greatest beneficiaries. For example, food delivery services, such as Uber, GrubHub and DoorDash, are accessing these payment channels to pay their drivers at the end of a shift. That means workers can immediately cash out their earnings rather than wait for a weekly direct deposit. But there are so many more applications, from receiving regular retirement distributions to invoicing.

One option for meeting this demand by consumers and businesses is offering instant payment services using the FedNow^SM Service, which is set to launch in 2023. Currently under development, FedNow is the Federal Reserve’s 24/7/365 instant payment service that will aim to provide safe and efficient real-time payments for financial institutions across the United States.

The time to start preparing for the FedNow Service is now. But where do you begin? The Federal Reserve suggests three steps to get you started on your path to instant payments. They are:

• Understanding the demand for instant payments
• Assessing member needs
• Starting to build a business case
  
  

A new video video released by the Federal Reserve walks organizations through these initial steps to prepare for instant payments. Research and advance planning will ensure your credit union understands its member needs and doesn’t fall behind the competition.

But FedNow isn’t the only faster payments channel. 

You’ve likely seen an uptick in recent publicity regarding faster payments of all kinds, whether FedNow Service, P2P, or The Clearing House (TCH) real-time payments…and it can be a challenge to decipher what is relevant and what is not.

One important consideration?

Look for a service provider with a holistic platform that accommodates traditional payments as well faster payments, and has value-added services on their long-term roadmap. This can include service enhancements such as:

• Request for Pay
• E-invoicing
• QR code functionality
• ISO 20022 capabilities

If you have not yet started, it’s time to develop a faster payments strategic plan, and Catalyst Corporate can help. For more information about P2P, The Clearing House^® RTP^® Network or FedNow Service – including serving as a FedNow pilot credit union – contact us today.

As Catalyst Corporate’s Vice President of Payments Products & Innovations, Glenn Wheeler oversees the organization’s item processing operations for member credit unions. Glenn is also actively involved in the payments industry, currently serving on four U.S. Faster Payments Council work groups and as an acting member of the FedNow Development Community.