Did you know that the majority of U.S. businesses sent or received a faster payment in the past 12 months, according to Federal Reserve surveys? Offering instant payments via the FedNow Service will help your community bank meet this demand for immediacy, improve customer experience and keep pace with the competition.
Your organization can also reap other benefits from instant payments. For example, transactions settle between financial institutions in seconds, so there’s no buildup of interbank obligations. Plus, instant payments provide revenue growth and cost-saving opportunities that can benefit your community bank’s bottom line.
Instant payment use cases
With the FedNow Service, you can help your customers enjoy the convenience of instance payments, better manage cash flow and reduce the risk of overdraft and late fees. The possibilities are endless, but here are a few instant payment use cases to consider:
- Workers completing their shifts can have access to their wages immediately after payroll funds are deposited into their account.
- Insurers, government agencies and emergency relief organizations can instantly disburse funds to people impacted by a natural disaster.
- Small businesses can use instant proceeds from sales or services to ensure steady cash flow and avoid the costs of short-term credit.
- Parents can immediately send funds to their children, like college students who need money to immediately pay a bill and avoid a late fee.
- Account holders can move funds from a brokerage or retirement account to a checking account, with no delay in accessing transferred funds.
- Digital wallet holders can fund or defund their wallets with immediate funds availability.
For more ideas, visit the Use Case Arena on FedNowExplorer.org.
The business case for instant payments
Providing instant payments can provide your community bank with opportunities to drive revenue growth and create new revenue streams, including:
- New customer segments. As a platform for innovation, instant payments can open up new market segments and revenue opportunities for your institution.
- Cross-selling products. When your customers experience the efficiency, ease and transparency your instant payment platforms provide, it may make them more willing to explore other services and products your organization offers.
- Loans. The always-on nature of instant payments makes it possible for your financial institution to disburse funds instantly on weeknights and weekends, which can lead to additional loan revenue opportunities.
- Expedited bill payments. With the FedNow Service, your financial institution can enable requests for payment for your retail customers. This will allow your customers to receive requests from billers to pay invoices, meaning customers get the convenience of an end-to-end payment process — from invoice notification to payment delivery — all on their mobile phone or tablet.
In addition to revenue growth opportunities, instant payments can provide cost-saving opportunities. They can help your organization increase efficiency and shift to higher profitability margin products, save on loan collections, and reduce customer calls and inquiries.
For more details on revenue growth and cost-saving opportunities, view our business value resource on FedNowExplorer.org.
Visit FedNowExplorer.org for more information on instant payments and the FedNow Service.