QR Codes are key to unlocking instant payments, but how do they work?
Over 1700 people tuned in for today's FedNow Town Hall to hear the latest on America's newest instant payments rail. Here are the highlights:
The End Game
Ken Montgomery, FedNow Program Executive, emphasized that FedNow is a "multi-year journey" and that they plan to continually enhance the instant payments rail that launched July 20, 2023.
He reiterated the goal is to "bring instant payments capabilities to all Americans."
Early Adopters
Eric Van Bramer, SVP Customer Relations for the Federal Reserve, interviewed 3 Financial Institutions who were live with FedNow at launch - Bob Steen, CEO of Bridge Community Bank, Brad Ganey, COO of Catalyst Corporate Credit Union, and Liana Muller, SVP Emerging Money Movement of U.S. Bank.
- Bob said that working with 3rd parties enabled his bank to implement FedNow quickly and affordably. He encouraged his peers to not be "bystanders" as the number of instant payment use cases continues to grow.
- Brad called instant payments "tablestakes. " Catalyst is working with over 200 credit unions who are actively implementing FedNow or are in discussions about it.
- Liana highlighted two interesting use cases:
- Auto - consumer sells a vehicle online and gets payment in their account before the car has left the driveway.
- Investments - consumers able to move money from account to account instantly.
Usage & Handling Fraud
Minal Gupta, VP of Remote Services at Star One Credit Union, shared that they've transferred over $1.1 million in over 900 FedNow transactions since launch. She also demo'd their impressive mobile app that enables instant payments. They established multiple risk controls such as sending limits (e.g. $5K), real-time OFAC checks, risk scores, and one-time passcodes to manage fraud.
Government Use Cases
Connie Theien, SVP, Payments Industry Relations for the Federal Reserve, interviewed Carl Slabicki, Co-head of Global Payments and Rob Houser, Global Head of Strategy & Product at Conduent, about government use cases.
They highlighted two that are moving forward - Emergency Payments and Transportation (e.g. toll payments).
Emergency payments could include those needed as a result of a hurricane, wildfire or any natural disaster scenario where victims may not have a mail box or are displaced, but need funds in their account immediately.
As for transportation, enabling consumers to pay tolls immediately especially when they may not have a transponder (e.g. when traveling), eliminates the enormous back office support required to handle incoming calls and puts the consumer in control. Technology company, Conduent, can take a picture of a license plate, leverage Request for Payments to send an SMS or email so a consumer has the option to pay instantly.
Interoperability = Intelligent Routing
Both Liane at US Bank and Carl at BNY Mellon acknowledged that many are concerned that FedNow is not interoperable with RTP. But, both banks have connectivity to both rails and offer a single Real Time Payments solution by leveraging intelligent routing that "waterfalls" to same-day ACH if instant payments aren't an option.
Adoption
Nick Stanesco, SVP of FedNow, shared that 66 Financial Institutions are now live on FedNow. That's nearly double the number from launch. And, there are now 20 Service Provides, up from 16 at launch. Some Financial Institutions are able to onboard in as little as 2 weeks.
