Reed Luhtanen, Executive Director, FPC
While spooky season may have passed, the FPC continues to work hard to take fear out of faster payments.
For example, insightful sessions at our Fall Member Meeting, which took place September 30 – October 1, in Denver, CO, gave us the opportunity to reduce apprehension around faster payments by increasing understanding, sharing varying perspectives, and engaging in dialogue and discussion to explore opportunities and find solutions.
Consider how the session, “How Pay-by-Bank is the Perfect Solution for Merchants and Consumers,” gave us the chance to unpack the challenges around this new modality. According to panelists, what’s holding back Pay-by-Bank is a lack of awareness. But beyond that, to displace consumer’s current payment choices, new options will have to be materially better. Speed and finality of payments are what consumers like, but Pay-by-Bank today is ACH-based. Panelists suggested that utilizing instant payments will attract more people, allow people to budget much better than they have in the past, and experience other benefits. And value-adds like these and others, in addition to continued awareness, would begin to make Pay-By-Bank a payment option consumers will find more appealing.
But the meeting established that it is more than just awareness and perceived benefits that will drive use of faster payments and associated products and solutions. We can look to the session, “Insights Into the Instant Payments Outlook Study,” which provided a deeper exploration of the 2024 U.S. Instant Payments Adoption Quantitative Study. In that session, we identified that 70-80% of financial institutions plan to receive instant payments by 2028. But despite those promising numbers, the session showcased there are still headwinds and tailwinds impacting instant payments adoption. According to panelists, financial institution adoption may be the impediment to broader use. Panelists agreed that increasing reach by growing the number of receiving institutions is of utmost importance, because without reach, people will have to determine if the service can be at a particular institution, which can be a big roadblock. Without 100% reach, a higher level of investment is needed. As such, while investment in send capabilities is still important, focusing on receipt could drive continued adoption and use.
And while challenges remain around faster payments that must be addressed, the meeting showed that our faster payments future is bright. In the session “Financial Inclusion and Cross-Border Payments: Perspectives, Opportunities, and Challenges,” panelists shared that Amazon is a great model to think about when it comes to faster payments. What the company has done for same-day package delivery where they prioritize certainty and speed is what we should be aiming for when it comes to money movement. You know when it is going to arrive, you know how fast, and you can even return it and get a refund if it doesn’t arrive on time. And that would be a true ideal state for faster payments in the United States.
If our Fall Member Meeting is any indication, as faster payments continue to ramp up in the United States, there’s nothing to fear: FPC members are on top of ways to embrace these opportunities and mitigate risk. If you’re interested in supporting our efforts to continue to take the fear out of faster payments, consider becoming an FPC Member. Learn more here.