Financial institutions can leverage the FedNow® Service to allow their customers to send and receive payments instantly, delivering benefits to both consumers and businesses.
Individuals can use instant payments to precisely time payments, reducing the risk of late fees. For businesses, using instant payments can improve cash flow management, increase the efficiency of corporate payments and streamline reconciliation processes.
Below are just a few instant payment use cases that your financial institution can offer — on its own or in partnership with other organizations — by enabling the FedNow Service:
- Me-to-me transfers: An individual moves money between accounts at different financial institutions and can access that money right away.
- Consumer-to-business payments: A parent pays his child’s monthly preschool tuition shortly after his paycheck settles in his account, just before the payment is due.
- Business-to-consumer transactions: An insurance company can quickly disburse a payment to a customer after a claim is processed.
- Business-to-business payments: A restaurant owner pays her new specialty supplier for fresh local ingredients as soon as they are delivered.
- Real estate transactions: A home buyer transfers an earnest money deposit to an escrow account as soon as an offer is accepted.
- Payroll payments: A business pays its employees for the hours they work after each shift, versus waiting for a set payday.
- Public sector payments: A state university sends a financial aid disbursement to a student.
- Brokerage transactions: A brokerage client transfers money from his primary checking to his managed brokerage account to take advantage of fast-moving market trends.
- Wallet funding/defunding: An individual moves money from a digital wallet back into their bank account.
These are just a handful of ways that customers of financial institutions can use instant payments. With each of these transaction types, the money is transferred in seconds any time of day, any day of the year, and the recipient has access to the funds immediately. How will you innovate with the FedNow Service?
For more information about instant payment use cases and the FedNow Service, visit the Use Case Arena on FedNowExplorer.org (Off-site).
