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Advances in technology have changed your customers’ expectations for speed and convenience. Today, consumers and businesses want to send and receive money in an instant, and they’re turning to alternative payment services that can do just that.

In fact, nearly two-thirds of businesses indicate that access to faster payments will factor into any decision to switch banks in the future, and nine in 10 businesses expect to be able to initiate and receive faster payments by 2023.1

ACI Worldwide will help you keep pace with the competition and satisfy customer needs by using an instant payments platform like the Federal Reserve’s upcoming FedNow® Service launching in July 2023.

Preparing for instant payments implementation requires some planning, and it’s important to take action now. Here are four initial steps to help you get ready for instant payments.

Step 1: Get to know instant payments

If you’re just getting started with instant payments, you can gain a deeper understanding of how they work and the opportunities they provide by visiting FedNow Explorer, which has a wealth of information on instant payments. Here you can explore the world of faster payments, evaluate instant payment opportunities and learn how you can embark on an instant payments transformation.

Once you have a baseline understanding of instant payments, you can review service offerings and capabilities of the FedNow Service itself. The FedNow Service Readiness Guide covers topics such as the FedNow payment flow, participant options, ISO® 20022 message specifications and more.

Step 2: Assess customer behavior

Even if your customers aren’t asking about instant payments directly, their behavior might provide an indication of their interest in these types of products. For example, do you know how much money your customers have transferred from their accounts at your financial institution to an online payments provider like a digital wallet? Or how much of your small business customers’ account inflows are coming from these providers?

There are many ways to get a sense of your customers’ payments behavior. If your financial institution is a FedACH® Services customer, a good place to start is the ACH Originated Entries Detail Report and the ACH Received Entries Detail Report, available via the FedPayments Reporter Service for FedACH Services. These reports can help you assess the destination and source of your customers’ money. You can gain an understanding of the current and future demand for instant payments with this information.

Step 3: Evaluate needs and opportunities

Once you understand the instant payments landscape and your customers’ behavior, you can start thinking about the ways you can leverage instant payments.

For one, you can focus on improving customer experience. Instant credit transfers could make it easier for your consumer and business customers to move money, particularly to make more timely payments, solve transactional delays and transfer funds between accounts. In addition, notifications of payments received and payments sent can put customers’ minds at ease. Improving customer experience makes it easier to stay competitive and retain and attract customers.

Is there the potential to offer premium services? A bill presentment and bill pay service using instant payments may be very attractive, particularly to your small and mid-size business customers who will then have the tools to transfer cash between accounts, send bills or invoices using request-for-payment capabilities, and streamline supplier payments and accounts payable/receivable reconciliation. A premium instant payroll option could also be attractive for businesses to pay gig workers and offer timely employee payroll payments, which can set retail customers apart from others.

And don’t forget: your financial institution can derive the same efficiencies and cash flow benefits as your business customers. For example, you might consider leveraging instant payments to reimburse employee expenses, disburse 401(k) loans or receive customer loan payments.

Step 4: Begin conversations with key stakeholders

Launching a new product takes time and planning, and instant payments are no exception. As your financial institution prepares for instant payments, share your ideas with internal stakeholders and external third-party vendors to understand what is feasible in the near and longer term.

If your financial institution is planning on partnering with a payment processor/aggregator to offer instant payments, now is the time to begin discussions with our team. With ACI + FedNow, our organization offers secure, third-party support to help financial institutions manage and process transactions. This includes integrated, scalable fraud management services, deployment options from on premise to SaaS, and managed services with one scalable integration. With a choice of solutions, from last mile connectivity through to full payments orchestration and value-added services such as core banking and liquidity management, ACI offers the options to meet your needs.

Access our Guide to FedNow or speak with an ACI expert today.

Finally, financial institutions already working with the Federal Reserve can connect with their Federal Reserve Bank’s relationship manager, who can answer questions and support FedNow Service implementation. To find your relationship manager and other contacts, go to the Find Your Contacts section of FRBservices.org® and enter your ABA number.

Learn more

The information in this blog post is not all-encompassing, but it can help you get started. As your organization moves further along in its preparations, you will need to assess your systems and technology to understand the full impact of a real-time instant payments environment. For more information, visit FedNow Explorer and review the FedNow Service Readiness Guide.

“FedNow” and “FedACH” are service marks of the Federal Reserve Banks. A list of marks related to financial services products that are offered to financial institutions by the Federal Reserve Banks is available on FRBservices.org. “ISO” is a registered service mark of the International Organization for Standardization.

1Federal Reserve, Businesses Look to the Future with Faster Payments (August 2021)

Payments Expert

ACI Worldwide powers electronic payments for financial institutions, retailers and processors around the world with its broad and integrated suite of electronic payment software.