For much of 2020 and continuing through this year, businesses have responded to uncertainty with agility and innovative solutions. Improving payments has been a primary area of focus. In a survey sponsored by the Federal Reserve during the COVID-19 pandemic, three in four businesses now consider it important to offer faster payments. And nine in 10 businesses expect to be able to make and receive faster payments within three years, which coincides with the timeline for the FedNowSM Service, a new instant payment infrastructure coming in 2023.
Conducted in the second half of 2020, the survey offers a look into readiness and interest in faster payments as businesses navigated the COVID-19 environment. The 2,000 businesses that participated in the study spanned a variety of industries and had annual revenues ranging from less than $1 million to more than $250 million. Respondents provided information on their organizations’ payment priorities, familiarity with and usage of different types of faster payments and perspectives on how instant payments will impact their businesses.
The survey found that nine in 10 businesses want to use faster payments for quicker access to funds and the ability to post immediately and automatically. They also want immediate notification of payment and remittance details with the payment. In ranking top use cases for faster payments, nearly half of all businesses indicated payroll (48%) and payments to major suppliers (44%), followed by recurring bill pay (33%) and internal account transfers (32%).
Additionally, more than 90% of businesses consider having a built-in account validation tool that enables users to validate the identity of payers and payees important as a key fraud prevention feature.
The FedNow Service is developing capabilities to address business needs for safe, instant, data-rich payments and collaborating with financial institutions and business solution providers to implement them in 2023.
FedNow Service Business Executive
Federal Reserve Banks
The survey also revealed that businesses are placing greater value on faster payments. In fact, nearly half of respondents indicated that the pandemic is causing them to speed up their plans for faster payments adoption, which includes instant payments.
Businesses’ appetite for faster payments has clearly accelerated due to growing acceptance of digital commerce during the pandemic. Businesses are calling for consumer-to-business and business-to-business payments that facilitate quicker access to funds, the ability to post payments immediately and automatically and timely notification of payments. These survey insights can help us as an industry deliver instant payment services that meet end user needs.
Chief of Customer and Industry Engagement
Federal Reserve Banks
Learn more about the survey findings on the FedNow Research page.
Learn more about the FedNow Service
For more information on FedNow Service features and functionality, visit FedNow.org. You can also stay up to date on our instant payments initiatives by joining the FedNow Community (Off-site) or by signing up to receive FedNow Service emails.
