With faster payments becoming more popular, Nacha and the U.S. Faster Payments Council (FPC), two major players in the payments space, have announced that they will be collaborating to ensure that financial institutions, businesses, and other stakeholders have the information they need to adopt the right faster payments solutions for their organization.
At Nacha’s Smarter. Faster. Payments 2019 event in May, the two groups revealed that they will be partnering to create the Faster Payments Playbook, an educational resource intended to aid financial institutions and other audiences as they develop a faster payments strategy.
PaymentsJournal sat down with Scott M. Lang, senior vice president, Association Services at Nacha, and Kevin Christensen, a current board member and former acting executive director of the FPC, an organization launched out of the Fed’s Faster Payments Task Force, to discuss these developments.
Since the conference, the FPC’s Board of Directors elected its inaugural officers and, separately, payments industry expert Kimberly Ford joined the organization as its first executive director.
“A perfect partner”
A look at Nacha’s involvement in faster payments through its Payments Innovation Alliance, as well as the goals of the FPC, reveals why a partnership between the two is a natural development.
Nacha’s Alliance, with its broad understanding of the payments environment, is playing a crucial role in helping organizations gain clarity on the topic of faster payments. Its Faster Payments Project Team was formed in June 2018 and currently consists of more than 60 organizations.
“The Payments Innovation Alliance is a membership group supported by Nacha that brings together diverse industry stakeholders,” explained Lang. He noted that these stakeholders range from credit unions to government agencies, and everyone in between, including processors and consultants.
All of these diverse players “work together, collaborate and develop tools or other initiatives that can help create opportunities for the [payments] marketplace, to move it forward or remove some barriers that [may be] hindering progress,” described Lang.
The wide breadth of experience and expertise represented in the Alliance, and its desire to improve the payments industry, attracted the FPC.
“The U.S. Faster Payments Council is a new industry association that was formed in November 2018, and its mission is to allow anyone to pay anyone at any time, with near-immediate funds availability,” explained Christensen. “So to that mission, we’re really trying to make sure that we have ubiquity, or create ubiquity, within the faster payments system.”
To realize this goal, the FPC decided to collaborate with Nacha.
“I think Nacha is just a perfect partner,” explained Christensen. “What they’ve been able to do within the Alliance [and] with some of the other things that they’ve done, it just seemed like a real, natural fit for us to work together.”
In addition to the Faster Payments Playbook, another project developed by the Alliance is the ACH Quick Start Tool. The tool is designed to help small and medium-sized businesses learn how to use the ACH Network to pay or get paid by other businesses.
The ACH Quick Start Tool “demystifies ACH payments,” said Lang. “[It] lays out the options for [businesses], explains [the ACH process], gives them tips [of] things they need to consider, and then points them to resources.”
Lang believes that helping businesses make the transition to making and receiving payments via the ACH Network will occur as people learn more about the Network’s many benefits, ranging from improved control over the timing of payments to increased security compared to paying by a paper check.
The Playbook: “A decisioning and educational tool”
Meanwhile, according to a May press release, the Faster Payments Playbook “will be a co-branded industry resource” developed by Nacha and the FPC “that will address faster payments developments and opportunities for stakeholders.”
Put simply, “It’s a decisioning and educational tool,” explained Lang. “The idea is that you first set a foundational level of education. There are a lot of different types of faster payments solutions — a lot of different types of providers.”
To set that foundational level of understanding, the Alliance released in March the Faster Payments 101, an educational primer designed to impart foundational understanding of faster payments and the momentum behind its adoption in the U.S. The 101 resource is an updated version of the document originally developed by Nacha and various other stakeholders in 2017.
The Playbook “walks an organization through the different, various steps to not only identify and understand what the different faster payments solutions are, but how to develop a strategy around that, and selecting which solution, or solutions, you may or may not want to support,” continued Lang.
Although helping an organization develop a faster payments strategy might seem rather elementary, it’s actually a much-needed service.
“We found that only 34% of [institutions] even had a payment strategy,” said Christensen. “And so really the work that the Alliance has already done on creating the [Faster Payments 101] educational piece is very timely to help educate the financial institutions, and then the tools themselves will really help build on.”
The first iteration of the Playbook is focused on informing financial institutions, specifically these regional and community banks, and also credit unions — while a later version will be designed to educate business end users.
“I think it’s going to be just a fabulous resource for institutions to utilize,” said Christensen.
With the potential of faster payments ubiquity on the horizon, all of the players involved want to help hasten the transition, and ensure that the interests of all sides get factored into the equation.
“We’re early in the [financial institution version of the] Playbook right now, and it seemed like the right opportunity to partner, to collaborate, with the Faster Payments Council, so we can get it right,” said Lang.