In Part I of our two-part series, I focused specifically on Corporate One's member credit unions and their experiences with real-time payments.
Now, let’s gain a comprehensive view of real-time payments by expanding the scope to industry-wide trends.
Real-time payments are revolutionizing the financial services industry, providing faster and more efficient transaction methods. Various studies have highlighted the evolving use cases among credit unions and financial institutions, showcasing the diverse applications of real-time payments.
Cornerstone Advisors Study: Top RTP Use Cases for Credit Unions
A recent study by Cornerstone Advisors identified the most common real-time payment use cases for credit unions. These use cases reflect the growing demand for speed and convenience in financial transactions:
• Account-to-account transfers: Facilitating instant transfers between accounts, enhancing liquidity and financial management.
• Last-minute consumer payments: Allowing consumers to make urgent payments, avoiding late fees and penalties.
• Payroll (or expedited payroll) payments: Enabling employers to disburse salaries quickly, improving employee satisfaction.
• Recurring bill pay: Streamlining the process of paying recurring bills, ensuring timely payments, and reducing administrative burdens.
• B2B payments: Enhancing business-to-business transactions by providing faster settlement times and improving cash flow management.
The Clearing House’s Top RTP Use Cases for Credit Unions
The Clearing House, which operates the RTP® network, has also identified key use cases among credit unions. These use cases highlight the versatility and broad applicability of real-time payments:
• Account-to-account transfers: Similar to the Cornerstone study, this remains a top use case, emphasizing its importance in financial operations.
• Wage & Gig Economy access (early payroll deposits): Allowing employees to access their wages before the scheduled payday, providing financial flexibility.
• Business-to-consumer payments: Facilitating payments from businesses to consumers, such as refunds or rebates, with immediate effect.
• Person-to-person (P2P) payments: Enabling individuals to transfer money to each other instantly, supporting personal financial transactions.
• Other: Including various other applications that benefit from the speed and efficiency of RTP.
Federal Reserve’s Key Transaction Types on the FedNow® Service
The Federal Reserve’s FedNow Service, another instant payment rail launched in 2023, has seen strong adoption across various transaction categories. These categories demonstrate the wide-ranging impact of instant payments on different financial activities:
• Microdeposit account verification: Ensuring quick and reliable account verification through small, instant deposits.
• Digital wallet funding: Allowing users to instantly fund their digital wallets, thereby enhancing the usability of digital payment platforms.
• Emergency payroll payments: Providing a mechanism for employers to make urgent payroll payments, ensuring employees receive their wages promptly.
• Real estate escrow payments: Facilitating the quick transfer of funds in real estate transactions, improving the efficiency of the escrow process.
• Online marketplace seller payouts: Enabling online marketplaces to disburse payments to sellers instantly, improving cash flow and seller satisfaction.
The adoption of real-time payments is transforming the financial services landscape, offering numerous benefits, including increased speed, efficiency, and convenience. As credit unions and financial institutions continue to embrace real-time payments, the range of use cases will expand, further driving innovation and enhancing the overall financial system. By understanding the top RTP use cases and industry trends, credit unions can strategically position themselves to meet evolving member demands while staying competitive. Is your credit union ready to take the next step with real-time payments? Corporate One is here to help—contact us today to explore how real-time payments can benefit your institution.
This is Part II of a two-part series.