Like everyone else, American consumers are looking for faster ways to make payments, the results of a survey by the Federal Reserve Banks suggest. Overall, 80% say they are interested in more immediate ways to pay businesses, with around 70% saying the option of faster payment capabilities from a financial institution is a vital satisfaction driver.
“From recurring payments to last-minute bill pay, consumers are looking for faster payment options that give them more control over the timing of their transactions with businesses,” said Connie Theisen, senior vice president and head of industry relations for the Federal Reserve System. “These findings suggest that providing consumers with safe, efficient instant payment methods for business transactions needs to be a key industry priority.”
With instant payments, a payee’s account is credited within seconds of payment initiation, giving them immediate access to funds and allowing payers to know precisely when their money has reached its destination. This can ease the concern of late fees and allow them to pay bills exactly when they are due.
According to the survey, the demand for faster payments spans age groups and has intensified in the wake of the COVID-19 pandemic. Person-to-business prices (P2B) top the list of likely use cases for faster payments (77%), followed by person-to-person (P2P) and account-to-account, both at 62%. The findings align with a survey of businesses published by the Federal Reserve Banks in the fall of 2021, which showed that nine out of 10 companies expect to be able to make and receive faster payments in the next three years.
“The Federal Reserve’s FedNowSM Service will allow financial institutions of all sizes to offer safe and instant payment services for their customers when it launches in 2023,” said Nick Stanescu, FedNow Service business executive. “In addition to the growing demand for faster payments to businesses, the survey shows P2P continues to be one of the strongest use cases for instant payments, which validates our direction for the FedNow Service.”
Close to 70% of consumers make and receive payments via mobile devices, while more than 60% want real-time views of account balances and the immediate posting of transactions they make. Five out of six use a fintech app or digital wallet to complete transactions at least some time, including 71% of the 55-plus set.
The survey also found that the COVID-19 pandemic was a notable driver for changes in consumer behavior, prompting many to place greater importance on online commerce, contactless payment, fraud monitoring, paying down debt and increasing savings.