Greynier Fuentes is Vice President of Sales and Digital Strategy at Veritran.
Real-time bills have become an especially hot topic as the pandemic has dissipated. For years, consumers and businesses have not found faster, digitized payment strategies easy, exacerbated by calls for safe, contactless Covid-19 payment strategies.
For businesses, classic payment strategies tend to be slow and make it difficult to assess their monetary situation, while consumers need to take advantage of the leap forward in convenience and security that real-time invoices bring. A next-generation corporation committed to simplifying banking experiences, these are trends that our team is constantly keeping their finger on the pulse. Real-time invoices are becoming a must-have tool for gaining a competitive advantage. So why hasn’t the money sector fully seized this opportunity yet?
When it comes to modernizing their technology, many banks say their consumers are concerned about the “cost, complexity, and perceived lack of quality solutions. “But we’re seeing a shift, triggered through the Federal Reserve’s instant payment system, FedNow, which began launching in July 2023. In the U. S. , at the time of writing, there are also 3 other real-time payments companies that accounted for billions of real-time payment volumes last year: Venmo, Zelle, and TCH RTP.
This new payment paradigm that allows banks and credit unions to send and obtain transactions on behalf of their consumers in seconds is increasingly becoming a reality. The result will be fast budgeting and transactions, 24 hours a day, seven days a week. This means paychecks will arrive faster, the user experience will improve, and businesses and Americans will have a more accurate view of their money flow.
According to a study, when it comes to buying goods and facilities from a company, 80% of consumers are interested in faster payment options. While the United States, after all, recognizes this call and responds to it, it has traditionally been slow. Deliver the virtual payment strategies that consumers have been asking for for years and that other governments around the world have already implemented. Compared to other countries, the U. S. is considered “behind” when it comes to generation payments.
Globally, countries from India to Brazil have already effectively implemented national real-time payment systems, and there are lessons to be learned that U. S. banks deserve when they think about taking advantage of the real-time payment opportunity.
Pix, an instant payment solution implemented through Brazil’s central bank, has been successful, amassing more than $2 trillion in payment volume in 2022, just two years after its launch, and used in more than 700 monetary establishments and more than 120 million users.
There are some lessons to be learned from Pix’s good fortunes as banks and the money services industry in general on how to best take advantage of FedNow’s launch. The launch of Pix has allowed smaller banks to gain a market share on deposits and an inflow of retail deposits compared to larger banks. This demonstrates the desire for all banks to have real-time payment systems to enable small banks and network banks to thrive, as well as create a healthy banking ecosystem.
If banks and credit unions need to meet customer expectations and opportunities presented through real-time invoices, offering customers and businesses the safer, faster invoices they demand, now is the time to act.
Consumer bills will continue to be one of the key drivers of technology adoption. And while direct-to-consumer bills can now be obtained through FedNow, monetary institutions should start thinking about how to make real-time bills available in the future. future.
As we saw during the height of the Covid-19 pandemic, real-time bills had a massive effect by implementing stimulus checks and small business loans. Instead of sending, receiving, and depositing paper checks, the government was able to deposit checks directly into recipients’ bank accounts, making all the difference for those who needed budget temporarily. In the future, this immediacy will allow banks to temporarily obtain and deposit transferred invoices such as tax refunds, insurance checks, and much more for their customers.
Finally, making real-time bills as affordable and secure as imaginable will be critical to ensuring their long-term adoption and use.
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