The adoption of digital, faster, and instant payment services by U.S. businesses and consumers is on the rise, as highlighted in recent studies released by Federal Reserve Financial Services. In 2023, there was a significant increase in the use of digital wallets, with efficiency-focused businesses seeing a 31% uptick and convenience-minded consumers experiencing a 32% rise.
This shift towards digital wallets and online banking is driving an increase in instant and faster payment use cases such as bill payment, mobile wallet funding and defunding, account-to-account transfers, and immediate payroll for employees.
Mark Gould, Chief Payments Executive for Federal Reserve Financial Services, emphasized the importance of tools like the FedNow® Service in meeting the growing demand for faster and instant payment services. With over 700 participants since its launch last summer, the FedNow Service is playing a crucial role in helping financial institutions cater to their customers’ evolving needs.
The surveys conducted revealed that 86% of businesses and 74% of consumers utilized faster or instant payments in 2023, with a majority looking to their financial institutions to provide these services.
Shonda Clay, Executive Vice President for Federal Reserve Financial Services, highlighted the benefits of immediate payments, such as helping workers avoid late fees and improving employee satisfaction and retention through same-day pay.
Key findings from the surveys include the leadership of younger consumers in embracing digital payment methods, challenges faced by one in four consumers with slow payment speeds, and the cost-saving and flexibility benefits for businesses utilizing faster/instant payments.
Businesses cited various use cases that benefit from instant payments, including business-to-business, business-to-person, and account-to-account transactions. Moreover, many businesses see the potential of instant payments in digital wallet funding, defunding, and earned wage access.
For detailed reports of the corporate and consumer surveys, visit the Business Research Brief and Consumer Research Brief links. Federal Reserve Financial Services, which also provides instant or faster payment services like the FedNow Service and FedACH® Services, conducted the surveys.
As the U.S. central bank, the Federal Reserve System offers a comprehensive suite of payment and information services to financial institutions through Federal Reserve Financial Services. This suite includes various services like the FedNow Service, FedACH Services, Fedwire Funds Service, and more, aimed at ensuring the stability, integrity, and efficiency of the nation’s monetary, financial, and payment systems.
In conclusion, the trend towards digital, faster, and instant payments is reshaping the landscape of financial transactions, with both businesses and consumers increasingly relying on these convenient and efficient services for their financial needs. Visit FRBservices.org for additional information on Federal Reserve Financial Services.
