The Faster Payments Council (FPC) held its 2024 fall member meeting on September 30 and October 1 at the Hyatt Regency Denver, Colorado Convention Center. NEACH, an active member of the FPC, engaged with industry leaders and experts at the national level, gathering valuable insights to share with its members to ensure you have the information you need to make informed, strategic decisions. Additionally, I serve as Vice Chairperson of FPC's Financial Inclusion Workgroup, where we focus on leveraging faster payments to bridge the gap between diverse population segments.
What follows are highlights from the fall meeting.
The 2024 Faster Payments Barometer Results
The following information is being shared confidentially with NEACH members in advance of the FPC's public release of the Barometer findings, scheduled for December.
The meeting opened with a panel discussion examining the 2024 Faster Payments Barometer results. Of the 449 survey respondents, nearly half were from financial institutions.
The data revealed strong interest in adopting faster payments, with 84% of financial institutions describing them as a "must-have." However, when it came to the type of adoption, 76% of participants expressed interest in "Receive Only" payments, while 24% favored "Send and Receive" capabilities. This preference may stem from the lower fraud risks associated with "Receive Only" payments, whereas "Send and Receive" involves credit-push transactions, which come with higher risk.
The primary barriers to adoption, ranked by importance, included implementation costs, risk, lack of ubiquity and interoperability, 24/7 processing, and challenges with rules and standards. Despite these obstacles, financial institutions showed interest in certain value-added services, particularly multi-factor authentication, standardized processes, recurring payments, and requests for payment.
Additionally, the data shows a notable difference in perception: 77% of financial institutions believe the U.S. is making satisfactory progress in adopting and innovating faster payments. In comparison, only 46% of FinTechs and other non-traditional institutions agree. This gap may push FinTechs to accelerate their innovations and product development.
Finally, smaller financial institutions might consider partnering with FinTechs to provide their customers and members with innovative, faster payment options. This would empower smaller financial institutions to compete more effectively with larger financial institutions and serve as a differentiator, helping smaller FIs attract and retain customers and members.
Financial Inclusion and Cross-Border Payment Trends
In another session at the FPC Fall Member Meeting, experts discussed trends in financial inclusion and cross-border payments.
To better understand and address financial inclusion, the Boston Fed surveyed 245 individuals who indicated they used alternative financial services (retail bill pay service, check cashing, money orders, payday loans, or earned wage access) in the past 12 months. Additionally, the Boston Fed conducted ten in-depth follow-up conversations with survey respondents to understand the depth of AFS users' experiences when navigating their financial lives and examine the impact of real-time payments on their daily financial lives.
Here's what they learned:
- Survey respondents already use instant payments but at alternative financial services providers, although almost all have bank accounts.
- Additionally, they are paying high fees for access to these instant payments.
- They stated they would prefer to use their bank accounts for these transactions if offered for free.
While this preliminary data doesn't specify cross-border payment volumes, these transactions represent an important use case. Current networks supporting cross-border payments include SWIFT and Blockchain peer-to-peer platforms. SWIFT payments typically take several hours to a full day to settle at the recipient's bank, whereas Blockchain peer-to-peer payments can settle within minutes.
As the FPC envisions the future of faster payments, the potential for expedited cross-border transactions through individual financial institutions is clear-underscoring both the demand for speed and the opportunity for greater financial inclusion, especially when considering the immigrant population.
Artificial Intelligence
Finally, a panel discussion on artificial intelligence explored potential payment scenarios. Although there were more questions than answers, a few things were certain: AI will continue to gain ground in the payments space and attract regulatory scrutiny as its adoption by financial institutions expands.
As adoption grows, AI is poised to become a critical competitive advantage, making it essential for institutions to develop clear policies governing its use. Even if AI isn't part of your current roadmap, there's a strong chance employees are already experimenting with it-whether drafting procedures or creating social media content. If your team is using AI or likely will be using it, it's crucial to have a policy to manage its impact and risks.
As AI continues to evolve, NEACH will keep its members informed with updates and relevant use cases.
NEACH Advocacy and Education
Whether advancing faster payment adoption, supporting financial inclusion and cross-border payments, or exploring the intersection of AI and faster payments, the NEACH team remains committed to keeping you informed on critical developments in the payments landscape. Our active participation in forums like the FPC and other national platforms allows us to stay ahead of trends and influence the evolving payments ecosystem in ways that support your needs.
For more information or to share your insights, please get in touch with me. In the meantime, explore NEACH U for valuable educational resources in today's rapidly changing environment.
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AUTHOR: Mary Mumper-Morrison, AAP, APRP, CAMS, NCP
Director, Education
As the Director of Education for NEACH, Mary serves as the Director of Education for NEACH and as an Advisor of its subsidiary, NEACH Payments Group (NPG). She is focused primarily on addressing compliance and risk issues.
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