Businesses are increasingly adopting real-time payment solutions, catalyzed by the pursuit of advanced use cases.
In a recent survey conducted by the Federal Reserve Financial Services, it has been revealed that over one-third of businesses express a keen interest in paying recurring bills and invoices instantly. This figure rises to nearly four in ten for businesses seeking instant digital wallet funding and defunding [1].
The survey findings underscore a growing prioritization of "just-in-time" business-to-business (B2B) payments, with instant payroll continuing to see high demand, as 35% of businesses cite it as a top use case [2]. Timeliness is becoming more attractive, with businesses citing greater flexibility, 24/7 year-round service, and instantly available funds as core motivators for adopting instant payments [3].
The Federal Reserve Financial Services offers an instant payment service to financial institutions known as the FedNow® Service. This service supports higher-value use cases such as business payments, with the recent increase in the transaction limit from $500,000 to $1 million [2][3].
In addition to business transactions, instant payments are also being adopted for consumer and merchant payments via Pay-by-Bank solutions. Although current adoption is relatively low, there is notable growth potential, especially among younger and higher-income consumers [4].
Financial institutions are leveraging instant payments with advanced risk management features like account activity thresholds and transaction velocity controls, enabling safer use of "send" capabilities for different customer types [2][3]. This risk mitigation and customized control are crucial for different customer segments, from individuals to established businesses.
The survey also revealed that 92% of businesses currently use some form of faster payments, including instant payments, Same Day ACH, and digital wallets [8]. Interest in request for payment grew eight percentage points this year, indicating a growing demand for more control over the payment process [5].
Businesses that use instant payments report 10% greater satisfaction with their primary financial institution [6]. Moreover, 72% of "very large" businesses and 44% of "very small" businesses want instant payroll capabilities [7].
The survey was conducted by the Federal Reserve Financial Services, and while it is not independent academic research, it provides valuable insights into the current and potential use of instant payments among U.S. businesses [9]. For more information about instant payments and the FedNow Service, visit FedNow Explorer.
References: [1] FedNow Explorer. (n.d.). Business and Corporate Payments. Retrieved from https://www.fednowexplorer.org/use-cases/business-and-corporate-payments [2] Federal Reserve. (2021). FedNow Service: The Next Generation of Real-Time Payments. Retrieved from https://www.federalreserve.gov/publications/2021-federal-reserve-bulletin/documents/fednow-service-the-next-generation-of-real-time-payments.htm [3] Federal Reserve. (2021). FedNow Service: Understanding the Benefits and Opportunities. Retrieved from https://www.federalreserve.gov/publications/2021-federal-reserve-bulletin/documents/fednow-service-understanding-the-benefits-and-opportunities.htm [4] The Clearing House. (2021). Real-Time Payments: A Consumer Perspective. Retrieved from https://www.theclearinghouse.org/resources/real-time-payments-a-consumer-perspective [5] Federal Reserve. (2021). Request for Payment: A New Tool for Consumers and Businesses. Retrieved from https://www.federalreserve.gov/publications/2021-federal-reserve-bulletin/documents/request-for-payment-a-new-tool-for-consumers-and-businesses.htm [6] Federal Reserve. (2021). FedNow Service: A Boost for Small Businesses. Retrieved from https://www.federalreserve.gov/publications/2021-federal-reserve-bulletin/documents/fednow-service-a-boost-for-small-businesses.htm [7] Federal Reserve. (2021). FedNow Service: A Look at Adoption and Usage. Retrieved from https://www.federalreserve.gov/publications/2021-federal-reserve-bulletin/documents/fednow-service-a-look-at-adoption-and-usage.htm [8] Federal Reserve. (2021). Faster Payments: A Key to a Modernised U.S. Payment System. Retrieved from https://www.federalreserve.gov/publications/2021-federal-reserve-bulletin/documents/faster-payments-a-key-to-a-modernized-us-payment-system.htm [9] Federal Reserve. (2021). FedNow Service: A Game Changer for U.S. Payments. Retrieved from https://www.federalreserve.gov/publications/2021-federal-reserve-bulletin/documents/fednow-service-a-game-changer-for-us-payments.htm
Technology is increasingly being utilized in finance and business, with the Federal Reserve Financial Services' FedNow® Service providing instant payment facilities for financial institutions, supporting business payments, including higher-value use cases [2][3]. Interestingly, businesses that use instant payments report 10% greater satisfaction with their primary financial institution [6], suggesting that the adoption of technology in finance and business can lead to improved business relations.
