The Federal Reserve continues to make strides towards its goal of preparing the industry for the launch of its FedNowSMService in 2023. Most recently, the Fed announced the launch of its FedNow Service Provider Showcase, an online resource created to connect financial institutions and businesses interested in adopting the FedNow Service with service providers offering instant payment solutions.
Also in this month’s issue, Fiserv released the 7th edition of its annual payments survey, Payments Transformation: Emerging Stronger. The report explores financial institutions' views on several key areas, including future operating models, digital currencies, market developments, and the top payment project priorities for 2022, to name a few.
For more on these and other stories, read on.
The Federal Reserve
FedNow Service Provider Showcase
On March 8, the Federal Reserve announced the launch of its FedNow(SM) Service Provider Showcase (Off-site), an online resource designed to connect financial institutions and businesses looking to adopt the FedNow Service with service providers offering instant payments solutions. According to the release, “74 providers have submitted fact sheets and videos highlighting products and services that support FedNow Service implementation.”
The solutions reflect a diversity of instant payment offerings by payment processors, core banking system providers, mobile and online banking platform providers, payment hubs, bill pay/presentment service providers, and others.
"There is no 'one-size-fits-all' approach to instant payments, and flexibility surrounding implementation and adoption is a critical component of the FedNow Service," said Nick Stanescu, Senior Vice President and Business Executive of the FedNow Service, in the release. "We are committed to collaborating with the industry to develop an ecosystem that will support the end-to-end instant payments experience, and the showcase suggests we're off to a good start."
The Service Provider Showcase remains open for submissions. Interested service providers may join the FedNow Community to submit materials for inclusion. New submissions meeting guidelines and criteria (Off-site) will be added regularly.
ISO 20022 Remittance Information Guide
The Fed announced that the Accredited Standards Committee X9's ISO® 20022 Market Practices Forum released the ISO 20022 Remittance Content Market Guide. According to an article on FedPayments Improvement, the guide works to “clarify what ISO 20022 remittance information to use with business-to-business (B2B) payments.”
The article stated that the guide also supports IS020022 implementation while seeking to simplify integration into accounts payable (AP) and accounts receivable (AR) systems through real-world examples. In addition, the guide includes the data content and structured format needed to automate e-remittance information.
For more on the guide and its information, visit the FedPayments Improvement website.
Nacha: Same Day-ACH Expansion
On March 18, Nacha increased the Same Day ACH per payment limit to $1 million. According to the news release, “The $1 million threshold is expected to create new use cases as well as expand existing uses for this faster payment method, including vendor and supplier payments for businesses, insurance claims, tax payments, and payroll funding.”
“The growth of Same Day ACH in just over five years has been phenomenal as the payments community has welcomed this faster payment method,” Jane Larimer, Nacha President and CEO, said in the release. “Nacha has consistently heard requests to increase the dollar limit. Two years ago, it very successfully went to $100,000. Now, Nacha, the ACH Operators, and banks and credit unions across the country are meeting the need for a $1 million limit.”
The Clearing House
Also in the news, transaction volume on EPN, the ACH network from The Clearing House (TCH), increased 9.6% in 2021, outpacing the broader ACH market as financial institution customers continued the shift to electronic payments that accelerated during the pandemic, according to a release issued by TCH.
The release goes on to say:
Overall, 2021 U.S. ACH network volume increased 8.7%1 as businesses and consumers switched to electronic payments. During that time, EPN carried approximately 50% of overall ACH U.S. commercial volume and 55% of the volume from the 50 largest financial institutions. About 300 financial institutions are processing with EPN. With the upcoming NACHA rule change that increases the value limit for Same Day ACH transactions to $1 million, volumes across U.S. ACH networks should continue to rise in 2022 and beyond.
“The increasing ACH volume on TCH’s network reflects the shift to electronic payments the economy has seen during the past few years,” Jason Carone, Senior Vice President of ACH Product Management for The Clearing House, stated. “EPN also carries half of the commercial ACH volume in the United States, a number that continues to grow as participants turn to TCH to handle their continually increasing electronic payments volume.”
Fiserv Releases Annual Payments Survey
Fiserv released the 7th edition of its annual payments survey, Payments Transformation: Emerging Stronger. The report “highlights the resilience of financial institutions and their ability to clearly assess and understand emerging and disruptive trends,” states the company on its website.
The report explores financial institutions' views on several key areas, including future operating models, digital currencies, market developments, and the top payment project priorities for 2022, to name a few.
Here are a few key highlights from the report:
- Future Operating Model: When asked which options describe the ideal operating model for their financial institution, 52% of participants cited full-service banking, 35% said banking as a service, 10% indicated orchestration of an ecosystem (financial institution and FinTech partnerships), and 3% said a provider of market-leading services (to other financial institutions and FinTechs).
- Digital Currencies: Responding to the question, "Are you in the planning or implementation stage to introduce digital currencies?" 75% of those surveyed stated they were researching their options, 15% said they were piloting this year, and 10% stated they had low interest, not currently pursuing.
- 2022 Payment Project Priorities: When asked what their payment priorities were for 2022, participants responded by citing payments modernization as number one, followed by instant and real payments, cross-border international payments, real-time fraud and financial crime, and digital client experiences.
Innovating with Real-Time Payments
CalOptima to Implement Real-Time Claims Payments for Providers
CalOptima, a county-organized health system providing publicly funded health care coverage for low-income children, adults, seniors, and people with disabilities in Orange County, California, announced its five-year strategic vision to remove barriers to healthcare by implementing same-day treatment authorizations and real-time claims payments for providers.
The Board also approved a $100 million investment in technology advancements that will allow CalOptima not only to provide same-day treatment authorizations and process real-time provider claim payments but will also facilitate sharing critical data with community partners by developing a state-of-the-art Health Information Exchange program to break down silos and enhance care for members, according to the release.
U.S. Bank and Driveway Embrace Real-Time Payments
“U.S. Bank and Driveway have collaborated to pay car sellers immediately with real-time payments, making Driveway the first online car dealership to pay customers over the RTP® network,” reported Fintech Finance News reported. “Customers selling a car on Driveway.com can now have the payment deposited instantly into their bank account after a sale is complete and before the vehicle even leaves their driveway.”
Previously, customers waited 24-48 hours to receive payment via ACH or several days for check payments. According to Fintech Finance News, Driveway approached U.S. Bank in 2021 to develop a payment solution to reduce friction and the time it took for online car sellers to receive payment. U.S. Bank worked with Global Treasury Management Innovation Studio to identify and test the best solution for Driveway.
According to the news source, Driveway customers will have access to real-time payments following a pilot, which is now underway in the Portland area.
NEACH—Your Strategic Partner
NEACH remains your strategic partner, providing you with the news, education, and resources you need to stay competitive in today's rapidly evolving payments landscape.
Toward that end, we invite you to join us at Foxwoods Resort Casino for two days of exploring the U.S. payments system, with sessions on Faster Payments, Risk & Fraud, Operations & Quality, and Compliance. Enjoy keynote and general session speakers, networking events, and more. Space is limited for the in-person event. Register here to reserve your seat.
Unable to attend in person? Join our one-day virtual conference experience. Our exciting virtual model removes travel and geography as barriers to participation. You can register for the virtual conference here.
We look forward to seeing you there!
AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.