By Glenn Wheeler, VP of Item Processing Operations
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 FedNowSM 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.
As a pilot participant in the Federal Reserve’s FedNow program, Catalyst Corporate is actively providing design input on credit unions’ behalf, working toward pilot launch of the service in 2022 and the live service in conjunction with the Federal Reserve in 2023.
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 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. The Federal Reserve has also created a new website, FedNowExplorer.org, that provides learning paths and tools on the FedNow Service to assist financial institutions in their instant payments education.
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.
Although it sounds cliché, Catalyst Corporate wants to be your one-stop shop for faster payments resources and solutions.
Just as Catalyst Corporate currently manages traditional transactions and settlement for checks, ACH, and wires, we are now actively building connectivity to and/or establishing automation for the faster payments channels listed above. So no matter how your member presents a payment, Catalyst Corporate will ultimately be able to handle exchange of that transaction, as well as settlement with the financial institution on the other side.
Establishing connectivity to these platforms is simply the groundwork, though. The real differentiators will be found in the value-added features Catalyst Corporate is building into its payments system. Features currently on Catalyst Corporate’s roadmap include:
- 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® Funding Agent Service or FedNow Service – including serving as a FedNow pilot credit union – contact us today.