Welcome to the October 2024 Executive Summary. In this issue, the U.S. Faster Payments Council announced it has released its 2024 U.S. Instant Payments Adoption Quantitative Study, a first-of-its-kind survey of U.S.-based third-party enablers to financial institutions. In addition, the Federal Reserve convened a scams information sharing industry work group of fraud experts, and they recommended creating a solution or establishing an independent information exchange framework to provide a holistic view of scam intelligence. The Federal Deposit Insurance Corporation (FDIC) also released its 2024 Small Business Lending Survey Report (SBLS).
In the news this month, payment apps are making headlines. For instance, Payments Dive revealed a Consumer Reports review that claims that companies providing Zelle, Cash App, Apple Cash, and Venmo payment services are not upfront with users about their liabilities, particularly as relates to scam reimbursements. In addition, according to the Verge news outlet, “Venmo is introducing a ‘set it and forget it’ feature for scheduling payments and requests on a monthly, weekly, or biweekly basis.” The feature will be widely available in the app “in the coming weeks.”
Read on to learn more.
Top Headlines
U.S. Faster Payments Council Releases New Study
The U.S. Faster Payments Council announced the release of its 2024 U.S. Instant Payments Adoption Quantitative Study, a first-of-its-kind survey of U.S.-based third-party enablers to financial institutions. According to the Executive Summary:
A survey of 25 core banking providers and payment processors, supporting 90% of U.S.-based financial institutions (FIs), documents progress in instant payment activation, especially with the ability to receive first.
- Respondents estimate that between 70% and 80% of all FIs will be enabled to receive instant payments by 2028.
- They also estimate that contingent upon anticipated progress outlined in this report, between 30% and 40% of FIs will be enabled to send instant credits by 2028.
- The results also quantify third-party providers’ assessments of use case priorities, benefits, challenges, and opportunities for instant payment adoption.
In addition, the survey identified specific benefits to FIs that are expected to grow as the network matures:
- Innovate and retain: Improved customer retention and innovation for end customers in the near term.
- Differentiate and grow: Helping institutions better attract next-gen customers and deposits in competitive markets in midterm.
- Realize fuller benefits: Growing revenue and improving services to the underbanked as new use cases grow the network.
To view the study results in their entirety, click here.
The Federal Reserve
According to fedpaymentsimprovement.org, a scams information sharing industry work group of fraud experts from the payments industry, convened by the Federal Reserve, recommends that the industry consider creating a solution or establishing an independent information exchange framework to provide a holistic view of scam intelligence from existing sources across payment rails.
“Disconnected efforts to detect and prevent scams allow fraudsters to repeat tactics – with minor variations – on multiple victims,” Mike Timoney, Vice President of Payments Improvement, Federal Reserve Financial Services, pointed out in the article. “Sharing information about these tactics and trends can help individual organizations and the entire industry work together to prevent and mitigate scam attacks.”
According to the Fed, the industry work group released a report in August 2024, recommending that the industry consider a solution or establish an independent information exchange framework to provide a single source for scam intelligence across payment rails. The report includes ideas on how an exchange could be established and evolve.
Check out the full report with recommendations to learn more.
FDIC Issues 2024 Small Business Lending Survey Report
The Federal Deposit Insurance Corporation (FDIC) released its 2024 Small Business Lending Survey Report (SBLS). According to the FDIC, the SBLS uses a nationally representative sampling of U.S. banks that provides a window into their lending practices and how they support the credit needs of small businesses across the country.
With insights from over a quarter of U.S. banks, the survey revealed how institutions approach loan approvals, geographic markets, competition, and the use of FinTechs to serve small businesses, including start-ups. The FDIC’s survey found that while most banks adopt new technologies, small business lending still hinges on personal relationships and hands-on attention from local branch staff.
As stated in the FDIC news release:
- Approximately half of U.S. banks have used or considered using financial technology in their small business lending process. However, nearly all banks emphasized in-person and high-touch practices for developing relationships with their small business customers while using technology to help with regulatory compliance, data management, and servicing small business loans after loan approval.
- Nearly all banks make small business loans of at least $1 million, and half of banks make loans up to $3 million to small businesses. In addition, banks generally retain the risk of small business loans on their balance sheets.
- Small and large banks emphasize different types of information when making small business loans, notably smaller loans. Small banks use more "soft" or difficult-to-quantify underwriting information gathered through relationships than large banks. Especially for smaller loans, large banks tend to focus more heavily on using "hard" quantitative information from credit bureaus when evaluating loan applications.
- Small business loan approval times are fast, especially for small loans at large banks. Three in ten banks, including more than half of large banks, can approve a small and straightforward loan within one business day. Three-in-four banks can approve a small and simple loan within five business days; three-in-four banks approve their typical small business loan within ten business days.
Download a copy of the 2024 Small Business Lending Survey Report to learn more.
Payments Apps
P2P Payments Tools Lack Transparency, Consumer Group Says
“The companies that provide Zelle, Cash App, Apple Cash, and Venmo payment services are not being upfront with users about when they will reimburse scam victims, Consumer Reports found when the advocacy organization reviewed the user agreements for those services,” according to the Payments Dive.
Payments Dive noted that most of the agreements that the Consumer Reports reviewed did not include details on the companies' scam policies. Little has changed in these agreements since 2022, despite regulators' focus on payment scams, the group said in a summary of its research posted online.
“At a minimum, we think companies have a responsibility to transparently share policies and inform consumers what user’s liability might be,” Stephanie Landry, the report's author and a program manager for financial fairness at Consumer Reports told Payments Dive. “We’re not finding a lot of that in the policies.”
According to the Federal Trade Commission, Americans lost approximately $2.7 billion to imposter scams in 2022 and 2023, up from $2.3 billion in 2021 and $1.2 billion in 2020.
Venmo Gets Payment Scheduling
According to the Verge, “Venmo is introducing a ‘set it and forget it’ feature for scheduling payments and requests on a monthly, weekly, or biweekly basis.” The feature will be widely available in the app “in the coming weeks,” Venmo reportedly told the news outlet.
Use cases include setting up automatic payments between roommates for rent, utilities, or other shared expenses or sending recurring reminders to those who frequently forget to pay on time. According to the Verge, it’s also available for Venmo Teen accounts, allowing families to schedule allowance payments or plan for birthday gifts.
Users will receive an email and push notification reminder one day before a scheduled payment. Users can also set an end date for scheduled payments and requests. Alternatively, users can manually cancel any ongoing recurring payments or requests through the Venmo settings page when they are no longer necessary.
NEACH
Have you checked out NEACH’s Wrestling Payments podcast? This podcast is for professionals at banks, credit unions, and FinTechs responsible for managing ACH and payment operations. In each episode, members of NEACH guide conversations to help professionals examine the challenges of modernizing payment operations. Ultimately, the stories uncovered through guest interviews and solo episodes will highlight industry trends and identify how organizations can build their payment operations for the future.
You can learn more and subscribe to NEACH’s Wrestling Payments podcast here.
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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.
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