Most experts agree that instant payments will eventually become commonplace in the United States. But what’s will drive that shift?
It could well be earned wage access (EWA), which allows employees to access their earned pay before their traditional payday. Payments experts widely agree that this is not only the use case most likely to be adopted soon—within the next year—but also the one with the broadest reach and greatest benefit.
According to Instant Payment Adoption Outlook, a survey from the Faster Payments Council, the use cases with the greatest potential benefits are led by payroll and EWA, followed by B2B payments and government emergency payments. The use cases expected to achieve the broadest reach include EWA, payroll funding, and invoice/supplier payments.
At the bottom of the list were digital subscriptions and point-of-sale transactions, which were seen as offering the lowest benefits and reach. Experts agree that these use cases are unlikely to be activated within the next four years.
Overall, respondents—described as core banking providers and payment processors—estimate that between 70% and 80% of all financial institutions will be able to receive instant payments by 2028. They also estimate that between 30% and 40% of FIs will be able to send instant credits within the same timeframe.
Watching for a Black Swan
While foundational use cases like payroll may drive instant payment adoption, it’s important to consider the possibility of an unforeseen “black swan” event that could suddenly make such payments a necessity for many Americans. Take contactless payments as an example. Experts had predicted their rise for years, yet adoption rates remained in the low single digits—until the pandemic accelerated their widespread use.
“When we had the pandemic, contactless all of a sudden became everyone’s obsession,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “Contactless payments became an everyday household term because nobody wanted to touch anything.”
But it doesn’t take an external shock to trigger such an effect. In Brazil, for example, the government mandated digital accounts for emergency benefits, accelerating adoption of its Pix instant payments program. Similarly, India leveraged its real-time payment system, UPI, for government benefit disbursements. An analogous example occurred in the U.S. under the Clinton administration, where all federal payments—except tax refunds—were mandated to be issued electronically by January 1999, significantly expanding the use of direct deposit via ACH.
“Financial institutions know that instant payments are something that they need, given all the other technologies that we have are immediate and real time,” Tavilla said. “Everything else in our lives is real time now—payments should be too.”
