Amid the continued push for U.S. instant payments adoption, FIS announced that it is one of the first fintech providers to be certified to enable send capabilities for credit transfers on FedNow.
The U.S. Federal Reserve launched its FedNow instant payments service in July 2023, and roughly 1,000 financial institutions are currently participating. However, with over 9,000 banks and credit unions in the U.S., FedNow is still far from achieving ubiquity.
Additionally, the vast majority of banks supporting the platform are receive-only. Enabling send capabilities is critical for instant payments adoption to gain momentum. FIS noted that its platform can help its financial institution clients fully harness the entire FedNow service for a unified real-time payments solution.
Sending Benefits
According to Chris Como, Head of Cards and Money Movement at FIS, there’s a continued dependence on credit cards and debit cards in the U.S. economy. In a statement, he noted that these payment methods can create payment delays that can “harm customer loyalty when they need to pay loans, rent, or time-sensitive bills on any given day.”
Real-time payments can solve these issues—if end users are able to both send and receive payments. According to FedNow, the send functionality also allows banks and credit unions to achieve faster and more substantial returns on their investments.
Instant payments can reduce the costs associated with processing time-consuming payment methods like paper checks while helping banks and credit unions uncover new revenue opportunities. More importantly, instant payments help financial institutions enhance customer service, helping them retain existing customers and attract new ones.
A Critical Niche
While instant payments undoubtedly fill a critical niche in the payments landscape, FedNow faces plenty of competition. Although the Federal Reserve’s platform may have more financial institutions on board than The Clearing House’s RTP instant payments rail, the more well-established RTP has a higher transaction volume than FedNow.
Both RTP and FedNow, however, lag far behind Same Day ACH, which processed over a billion transactions last year. While not a fully real-time payment method, Same Day ACH has a key advantage—most U.S. financial institutions already support standard ACH, allowing them to easily accept Same Day ACH without requiring significant system or process changes.
