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Faster/instant payments use is on the rise among businesses and consumers

According to new Federal Reserve Financial Services surveys, U.S. businesses and consumers are rapidly adopting digital, faster and instant payments. Overall, 86% of businesses and 74% of consumers said they used faster or instant payments in 2023.

Use cases of interest

U.S. businesses and consumers indicated they are interested in using faster and instant payment services for a variety of transaction types. Both consumers (27%) and businesses (44%) indicate that faster payments would be beneficial for paying bills, as well as for transferring money between accounts (30% and 28%, respectively). Businesses and younger consumers (55% of Generation Z and 43% of millennials) also indicate that earned wage access would be a beneficial use case for instant payments.

Younger customers’ use of digital wallets is soaring

Overall, use of digital wallets increased for both businesses and consumers by 31% and 32%, respectively. Younger consumers are leading the move to digital, faster and instant payments. More than half of Gen Z (ages 18-25) and millennials (ages 26-41) now use digital wallets, and 80% of these younger consumers say it is important to be able to make payments by mobile device.

More findings related to faster and instant payments

The surveys revealed that most businesses (74%) prefer that faster payment services be provided by their primary financial institution. Similarly, eight in 10 consumers (79%) prefer to use a traditional bank for payments, but they also increasingly are open to using non-bank payment solutions to meet their payment needs. Additional findings include:

  • Managing cash flow continues to be a top strategic priority, indicated by 55% of businesses, just behind driving operational efficiency (59%).
  • Businesses are primarily using faster and instant payments because it helps them reduce cost (48%) and provides flexibility to pay and be paid as customers prefer (39%). They also pointed to the 24/7 aspect of instant payment services (35%) as a key driver for using them.
  • Six in 10 (61%) of consumers stated that convenience and ease of use are the most desirable qualities in payments.
  • Paying friends and family (55%), transferring money between accounts (30%) and paying bills (27%) continue to be the main use cases for instant payments among consumers.

Full reports of the corporate and consumer surveys can be found here: Business Research Brief (Off-site, PDF), Consumer Research Brief (Off-site, PDF).

The surveys were conducted by Federal Reserve Financial Services, a collaboration of the 12 Federal Reserve Banks. FRFS provides an instant payment service to financial institutions, and thus the survey, and the statements and findings contained in this article, are not independent academic research.