CHICAGO--(BUSINESS WIRE)--Three of every four businesses now consider it important to offer faster payments, according to a survey released today by the Federal Reserve. Nine in 10 businesses expect to be able to make and receive faster payments within three years – including instant payments, a type of faster payment that credits the payee’s deposit account within seconds of payment initiation.
“Businesses’ appetite for faster payments has clearly accelerated due to growing acceptance of digital commerce during the pandemic,” said Shonda Clay, the Federal Reserve’s chief of customer and industry engagement and sponsor of the survey. “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. Our survey of businesses was designed to uncover insights to help us as an industry deliver instant payment services that meet end user needs.”
The Federal Reserve-sponsored survey conducted in the second half of 2020 tallied responses from more than 2,000 businesses in a variety of industries and with annual revenues ranging from less than $1 million to more than $250 million. A majority of surveyed businesses report using some forms of faster payments, and most expect to use faster payment options for a variety of use cases by 2023 or sooner.
“The FedNowSM 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 when the service launches in 2023,” said Nick Stanescu, FedNow Service business executive.
Other key findings of the Federal Reserve survey include:
- A majority of surveyed businesses have already sent and received some type of faster payments in the past 12 months, primarily via digital wallets, same day ACH and “push to card” services that use debit card networks.
- Nearly two-thirds of those surveyed (and more than three of four large/very large businesses surveyed) indicate that access to faster payments would factor into any decision to switch banks in the future.
- Nearly 75% of micro businesses and 60% or more of all the other businesses surveyed cite managing cash flow and working capital among their top concerns in the current business climate. Coming out of the pandemic, many are focused on offering additional digital/online payment options, ensuring payment timeliness and growing sales and revenue.
- The faster payments capabilities most demanded by businesses support use cases that will help them improve cash flow management, payment operations efficiency, ease of access and security. And certain high-demand use cases, including electronic invoicing and bill pay with remittance details, are best supported by instant payments.
A full report on the survey findings is available at https://fedpaymentsimprovement.org/wp-content/uploads/pandemic-spurs-faster-payments-demand.pdf.
About the Study
The survey was conducted to assess businesses’ current payments practices, potential usage and expected benefits of faster payments. The research was conducted in late 2020 via an online survey of senior business decision-makers identified by third-party research partners to ensure a mix of segments. The online questionnaire elicited 2,010 responses; 32% of respondents were from large/very large businesses, while other respondents were fairly evenly split between medium, small and micro-sized businesses. In addition, 44% of respondents work for service businesses, 36% of respondents work for either manufacturing or retail businesses, and the remainder work in the wholesale segment or other categories. The sample of 2,010 allows for a sampling margin of error of +/- 4% at a 95% confidence level.
About the Federal Reserve and Payments
As the U.S. central bank, the Federal Reserve System provides payment services and seeks to foster the stability, integrity and efficiency of the nation’s monetary, financial and payment systems. In 2013, the Federal Reserve initiated a broadly collaborative effort to enhance the end-to-end speed, security and efficiency of payments in the United States. The 2015 Strategies for Improving the U.S. Payment System paper defined five desired outcomes and strategies for pursuing advancements in speed, security, efficiency and international payments through stakeholder collaboration. For more information, visit FedPaymentsImprovement.org.
“FedNow” is a service mark 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 at FRBservices.org.