The real-time payments ecosystem is expanding in the U.S. Financial institutions remain mindful of fraud risks and determining the best applications. https://bit.ly/3zO4fcF
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✅ Do you want an 'Easy Button'? 👉 The Federal Reserve is set to launch its FedNow Service next year, allowing individuals and businesses to access real-time transactions through their financial institutions. The goal is to revolutionize payments by enabling instant money transfers for any American consumer or business, while also serving as a platform for future innovations in the payments industry. 👇 Read more in the article below.
Federal Reserve's Next 3 Years Include Instant Payments 'Easy Button'
https://www.pymnts.com
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Great article with nice balance on real-time payment perspectives. Here are a few questions I've been thinking about over the last year. 1. When will the FED disclose transaction volumes? 2. Will FIs invest in RTP as well as FedNow? 3. How are FIs thinking about strategic differentiators? 4. How does the intro of the ISO 20022 remittance format in the wire system (2025) intersect with the same capability coming in FedNow for U.S. domestic transactions? What are you thinking about when it comes to the intersection of new payment rails, CX, and industry relevance? What an exciting time to be in the industry! #Payments #Innovation
FedNow at Year One
https://www.digitaltransactions.net
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Javelin's Elisa Athonvarangkul Tavilla shares her perspective on the first year of FedNow, the Federal Reserve’s real-time payment service. She explains how the Fed's marketing effort has boosted awareness and accelerated adoption for other real-time and faster-payment rails like RTP and Same Day ACH. Read now in Digital Transactions: https://lnkd.in/eAvAaRXm
A Year on, FedNow Makes Gains Amid Rising Use And Awareness of Faster Payments
https://www.digitaltransactions.net
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When it comes to the Federal Reserve, most investors care only about when the central bank plans to cut interest rates, and what Fed Chair Jerome Powell has to say about inflation. But the agency is working on another initiative that could have a big impact on two top financial stocks—and it has nothing to do with monetary policy decisions. The Fed launched a real-time payments service last July called FedNow. It allows for instant digital payments at a lower cost than using a bank debit card or getting payments via Automated Clearing House (ACH) transactions. More than 800 financial-services firms have signed up to use FedNow so far, including megabanks JPMorgan Chase, Wells Fargo, and U.S. Bancorp. Mizuho Securities analysts Dan Dolev and Ryan Coyne think that this could be bad news for payments giants Visa and Mastercard. Those two payments-processing giants are the backbone for many debit-card transactions. And while both have their own real-time payment transfer services—Visa Direct and Mastercard Send—Dolev worries that FedNow will eat into that business. “Pricing for FedNow is cheaper per transaction than debit,” Dolev told Barron’s. He added that it’s only a matter of time before more big banks join the FedNow network. Others agree. “Given this was developed by the Fed, we believe it is inevitable that most financial institutions will ultimately integrate into the system,” TD Cowen analysts Moshe Orenbuch and Bryan Bergin wrote in a report about Visa and Mastercard in April. The analysts added that so far, though, “use cases of FedNow in practice are still quite limited.” Are Visa and Mastercard investors nervous about more competition? Shares of both are up about 15% in the past year, which is hardly a disastrous performance. But it’s worth noting that both stocks are trailing the S&P 500 and the Financial Select Sector SPDR exchange-traded fund, which have each gained 25% in the past 12 months. Of course, concerns about growing competition for the Visa-Mastercard duopoly have been growing for some time. The two already compete with the big banks in payments since several of them, including Bank of America, Capital One (which is planning to buy Visa and Mastercard rival Discover Financial Services for more than $35 billion) and JPMorgan Chase, are part of a network that owns the Zelle digital money-transfer service. Visa and Mastercard also increasingly compete with fintechs, such as Venmo owner PayPal Holdings, and Block, which owns both CashApp, and Square, and buy now, pay later leader Affirm. But there are other ways to play the potential growth of the FedNow service. Dolev said that tech companies Fiserv and Fidelity National Information Services are “the pipes connecting consumers to the banks” and stand to benefit from the growth of FedNow and other digital payment services. https://lnkd.in/egyNFB-N
Visa and Mastercard Have a New Rival. It’s the Fed.
barrons.com
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Kudos to the Federal Reserve Bank of Kansas City for this research article on the concentration of market share amongst the "Big 3" Core Providers and the disadvantages this oligopoly pose to smaller financial institutions. From the report: "Potentially unfair contract terms may be another indication of core provider market power. In addition to their core providers’ performance, many DIs are not satisfied with their contract terms. According to the 2020 ABA survey, more than half of the surveyed banks cited “fees charged for implementation with third-party providers” and “fees charged for upgrades” as the most problematic contract provisions (ABA 2020). Although the share of banks that cited these two provisions shrank in the 2022 ABA survey, the two provisions continued to be among the top three most problematic (ABA 2023). These fees can hinder a DI’s ability to innovate without incurring significant costs or penalties (BFKN 2021). Moreover, some contracts stipulate that the core provider has sole ownership of any work related to core functioning, including software, source code, modifications, and enhancements." American Bankers Association Russell Davis Deborah Whiteside Veronica Kelly Justin Gaul, CFA Kristiane Koontz Trey Maust DJ Seeterlin Jaime Manriquez Shana Allen Steve Lewis Steven Schieffelin Gerry Lee Greg Petersen Bryan B. Cheryl Bowers Jim Kisch Barrett Howell, CISSP Kate Gallo Megraw
Market Structure of Core Banking Services Providers
kansascityfed.org
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The Clearing House Annual Conference 2023 was a great success! In case you missed it, read five takeaways from the event as reported on Banking Dive. https://lnkd.in/d-SSsBr9 #TCHAC2023 #RealTimePayments #Payments
5 takeaways from Michael Barr’s remarks at The Clearing House conference
bankingdive.com
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In a new report from RedCompass Labs, it was found that “(63%) of US corporate bankers experience significant or overwhelming demand for instant payments from their corporate customers. Yet, at best, less than a third of US banks are signed up to RTP and FedNow.” What are they waiting for? The demand is there but the needed action is not following up. As long they refuse to act, the gap will persist. #Payments #Banks #RTP
US banks are failing to meet the demand for instant payments
electronicpaymentsinternational.com
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Tick tock! The Clearing House Real Time Payments was launched in late 2017, as most insiders know. TCH being a cooperative organization, where ownership is made up by money-center, super regional and regional banks, who all for the most part have equal ownership stake in the cooperative and derive benefits from the processing done by TCH. Nonetheless, RTP participation can only happen when a bank makes the significant commitment for funding and product development for RTP. The commitment for RTP enablement can be described as providing: 1) funding the acquisition of new technological capability to enable the bank the new back-office operation to instantaneously initiate & receive RTP transactions; 2) funding for product development of digital banking services both for consumer and commercial RTP products; 3) funding to enable the customer service organizations to provide 24/7/365 customer service for RTP. This triad of investments gives any bank pause during nominal business conditions, let alone during a global shutdown for deadly public health crisis. Those banks who are operational have achieved monumentally. The triad of investments involves extraordinary effort to orchestrate a plan in any bank because the business of banking remains hamstrung by the very real bankers hours business model. The notion of "real time" in banks remains a remarkably elusive aspiration. Banks who have found their way to execute on plans to solve the incremental transformation from the antiquated banker hours business model towards a real time digital business model can be identified by their RTP open for business prowess. Are there any banks declaring such prowess? #realtimepayments #paymentsmodernization #paymentshubtechnology #banktransformation
FedNow may have spurred RTP adoption
bankingdive.com
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What are some concrete steps that every financial institution can take now to prepare for any outcome when confronting the payments space? Read this Bank Director article by CSI's Matt Herren: https://bit.ly/3PXMT21
Preparing for Payments Innovation
https://www.bankdirector.com
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RedCompass Labs’ research highlights the challenges US banks face in meeting the rising demand for instant payments, emphasizing the need for modernization and innovation in the financial sector. https://lnkd.in/gNw7T9tr #USBanking #InstantPayments #PaymentModernization #FinancialTechnology #RealTimePayments #ISO20022 #FinancialServices #MarketTrends
US Banks Struggle to Meet Demand for Instant Payments, RedCompass Labs Report Finds
https://thefinrate.com
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