Facing a dynamic and increasingly on-demand, online environment, a majority of businesses (83%) and consumers (75%) are already using faster payments, and most (66% of businesses and 61% of consumers) say they are likely to use faster payments more often in the future, according to new studies released by the Federal Reserve. In addition, 7 in 10 businesses and consumers say they prefer accessing faster payment services through their primary financial institution.
Businesses see instant payments as a solution to evolving needs, while consumers view instant payments as a necessity in an always-on, online world.
Businesses seek flexibility and choice with faster payments
As U.S. businesses navigate supply chain complexity and other economic obstacles, 62% noted cash flow management as one of their most impactful challenges and reported a need for greater flexibility and speed in their payment options. One in five businesses surveyed also indicated that speed and timeliness were the most critical features of faster payments that are needed for their businesses’ success.
Driven toward faster payment options by key features such as the ability to automate payments and flexibility of funds, businesses are looking to leverage these payments to lower costs and help manage cash flow.
Other key survey findings:
- Payments being too slow (causing delays in processing) was the top challenge identified by businesses (28%), highlighting the need for improved cash flow.
- Nearly half of businesses (45%) believe faster payments will lower their costs, mainly through more efficient processing with remittance data attached.
- Three-quarters of businesses indicated it is important that their bank offers instant payments, especially true among larger businesses (86%-90%).
Consumers of all ages turn to mobile apps for banking and payments
Consumers continue to prefer online banking options, with use of mobile payment apps increasing beyond expected groups such as millennials and Generation Z. Mobile payment options were used by 74% of U.S. consumers in 2022, up from just 10% in 2013, and Generation X users (ages 35-54) caught up with millennials in use of mobile devices for banking activities.
Following this trend toward online banking, over half of consumers (53%) are now using non-bank mobile apps to make instant payments.
Other key survey findings:
- Consumers ages 35-54 now use smartphones more often than younger consumers (21-34) for activities such as checking account balances, making bill payments and account-to-account transfers.
- Payments are becoming more embedded, as the percentage of consumers using one or more payment apps increased by about 50% between 2021 and 2022.
- Consumers noted a variety of situations where they could leverage instant payments, including person-to-person transfers (57%), account-to-account transactions (32%) and last-minute bill payments (30%).
- Nearly 7 in 10 (69%) of consumers think it’s important for their primary financial institution(s) to offer faster payments.