Increased access to immediate payments and growing demand continue to drive forward the migration of payments from just “faster” to immediate. With the launch of the industry’s second immediate payment rail in 2023, the Federal Reserve’s FedNow^®  Service, now is the time to consider integrating instant payments into your credit union’s suite of products and services if you haven’t already done so.

To that end, it is important to have a basic understanding of the benefits and use cases that will likely be relevant to your members so you can identify the payment experiences you should invest in.  

Benefits of immediate payments

Immediate payments offer many benefits not only for consumers but also for financial institutions. Some of these benefits include:

• Additional data. The contextual data surrounding a payment has been missing from every previous payment system. Immediate payments offer the ability to attach information about the payment that doesn’t detach throughout the process, which will be helpful during payment processing and reconciliation.
• Speed. The speed of immediate payments sets them apart from faster payments like Same Day ACH as payments are reduced from hours or minutes to seconds.
• Immediacy. Immediate payments facilitate real-time authorization, real-time posting, and real-time clearing or settlement.
• Irrevocable. Immediate payments are irreversible, enabling immediate final settlement to the payee.
• Revenue growth. A variety of use cases are supported with immediate payments and offer opportunities for your credit union to streamline business functions and create new products.

Let’s look at some of these use cases in the next section.

Examples of use cases

There are numerous ways immediate payments can help financial institutions remain competitive and be in the best position to support their members' needs. The following are a few of the most popular use cases and reap benefits for both businesses and consumers, but of course, not every use case may be applicable to every credit union.

Business to Consumer (B2C)

• Insurance disbursements
• Rapid merchant settlement
• On-demand wages (gig economy)
• Pay advance
• Instant refunds
• E-marketplace payouts
• Loan disbursements
• Humanitarian aid

Person to Person (P2P) and Account to Account (A2A)

• Domestic P2P
• Cross-border payments
• Cash-out
• Credit card bill pay
• Tipping
• Brokerage account transfers

Business to Business (B2B)

• Payments to suppliers, trucking firms, drivers,
• indirect dealer disbursements
• Mortgage closings without exchanging checks
• Cross-border payments

For a more comprehensive look at additional use cases, download our infographic.  

As each credit union experiments and experiences immediate payments, they will learn what is most valuable to their specific credit union. And that’s the greatest benefit of this new payment option— that there is so much opportunity to enhance how credit unions serve members, streamline their business functions and generate new products and revenue.

Additional information about the benefits of and use cases for instant payments can be found here: Exploring the benefits of instant payments: A primer.