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September 23, 2024 • Issue 24:09:02

Instant payments: Are we there yet?

of non-adopters citing concerns about implementation hur-
dles and 32 percent expressing concerns about fraud.

"Until the U.S. reaches the point where consumers can pay
using their bank accounts at the point of sale, it [instant
payment usage] is going to remain stagnant," said Ronald
Herman, Founder and CEO at Atlanta-based Sionic, which
specializes in pay-by-bank commerce services.
Playing catch up

Clearly, participation in the two main instant payment net-
works (FedNow and RTP, launched by The Clearing House
six years ago) hasn't come close to meeting its full potential.
By Patti Murphy As of late August, TCH counted 700 banks and credit
unions using RTP. FedNow is said to have about 800 FI
etting U.S. financial institutions to adopt new, users. According to published data, just over 5,800 FDIC-
faster, better ways to facilitate payments is a insured U.S. banks and 5,733 NCUA-insured credit unions
bit like turning around a giant ocean liner. It are operating in the U.S.
G will get done, eventually. But it requires a lot
behind the scenes work, and a lot of moving parts. "We haven't made much progress on either network," Her-
man said. He pointed to other countries where instant pay-
We've seen this show before. Back in the early 1990s, the ments are going gangbusters, such as India and Brazil. Pix,
Federal Reserve (and Nacha) wanted the ACH to be fully the instant payment network that went live in Brazil in
electronic. After all, it wasn't uncommon at the time for 2020, was being used by 66 percent of the population (near-
financial institutions (FIs) to deliver floppy disks or large ly 145 million people) as of December 2023, according to the
mag disks containing payment information to their local central bank of Brazil.
Fed office for ACH processing. The idea was to get all FIs
to send transaction information using computers (typically India's mobile-based instant payment network (known as
PCs). It took almost the entire decade to accomplish that the Unified Payments Interface) handles about 75 percent of
feat. consumer-to-merchant payments in that country.

Hopefully, that will not be the case with FedNow, the in- There's a major difference between the experiences of Brazil
stant payment network the Fed rolled out in July 2023. and India and what's occurring in U.S. FIs, however. Both

Clearly, there is a groundswell of support for instant pay-
ments. A survey undertaken by Glenbrook Partners in 2023
revealed that 90 percent of FIs, payfacs and other business- Contributed articles inside by:
es were implementing FedNow, or at least planned to do so
within the next two years. Allen Kopelman .....................................................................................16

And the website Pymnts.com reported that real-time pay- Adam Atlas ..............................................................................................24
ments are proving to be a game changer for small restau- Cheryl Fitzgarrald .................................................................................26
rants. Those accepting instant pay-by-bank and platforms
like PayPal reported higher net profit margins than those Leo Azurmanyan...................................................................................28
relying on traditional payment methods. All SMB restau-
rants surveyed are not on board, however, with 34 percent
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