Reed Luhtanen, Executive Director, FPC
What a historic month for faster payments in the United States! The second instant payments system, FedNow®, formally launched, enabling new opportunity and innovation for financial institutions, payments providers, businesses, and consumers.
While this launch offers a significant industry milestone, our work is far from complete. In an exclusive, members-only Town Hall session in late June, we took a deeper dive into the 2023 Faster Payments Barometer findings, which revealed that while we have traction in faster payments, adoption still needs to build, particularly when it comes to businesses.
The Barometer showed us that nearly 80 percent of organizations have or plan to implement RTP®. We also learned that almost 70 percent of organizations plan on making use of FedNow (and side note, 23 FPC Members are already ready to support the Service.) And of those that haven’t implemented the systems, turnaround time to do so is fast: 46 percent of organizations plan to implement FedNow in 1-2 years and 40 percent have the same timeframe for RTP.
Though this is promising, if you look at it from the other perspective, you can see there is still work to be done. Twenty percent of organizations have no plans to implement RTP and 30 percent have no plans for FedNow. And a major segment of those with no plans to implement the real-time systems are businesses.
The Barometer also pointed to waning enthusiasm around faster payments from businesses. In the previous Barometer, 84 percent of organizations considered faster payments a “must have.” In the latest Barometer, that number decreased to 78 percent, with business a significant contributing factor to the decline. According to Elizabeth McQuerry, Partner at Glenbrook Partners, LLC, the firm who facilitated the study and led the Town Hall, this could be “an indicator that we haven’t proved our value proposition completely. Maybe, we haven’t fully demonstrated the value to all end parties, including businesses.”
It could also very well be that we haven’t made enough progress around barriers to adoption. One of the biggest issues remains around interoperability. Organizations want systems to interoperate and want to get to ubiquity. Fifty-eight percent of financial institutions and 56 percent of businesses want to see this. And it’s not just interoperability. High upfront costs/complexity remain a challenge with 59 percent of financial institutions and 33 percent of businesses indicating this to be the case. A lack of common rules and standards continues to serve as a pain point as well, with 42 percent of businesses and 26 percent of financial institutions citing this as a top challenge.
The takeaway from these new findings is pretty clear: While we are making great progress, there is more for us to do, particularly on the business side. So, while we should celebrate that we now have two instant payments systems in the United States, and we have traction in faster payments, we can’t lose sight of the long-term goal: ubiquitous, safe, easy-to-use faster payments. And we’re not there just yet. We must continue the work and activities we are tackling now to get us there.
If you’re interested in helping us chart the course ahead to ubiquitous faster payments, consider joining the FPC as a Member. You’ll get early exclusive access to research like the Barometer and other resources, and of course you can help us direct and guide the activities and efforts to help us achieve our goal. Visit fasterpaymentscouncil.org/Why-Join-the-FPC to learn more.