Two in three of U.S. businesses say they are likely to use instant payments if offered by their primary financial institution, according to survey results issued Thursday by the Federal Reserve Financial Services (FRFS).
Also, according to the survey results from the FRFS (which provides payment services under the Fed, including the FedNow instant payments service), businesses using instant payments reported 10% greater satisfaction with their primary financial institution than businesses that do not.
Other key findings of the survey, according to FRFS, include:
- Nearly 4 in 10 businesses (38%) want instant digital wallet funding and defunding.
- More than one-third (34%) want to pay recurring bills and invoices instantly.
- Prioritization of “just-in-time” B2B payments is being increased by 29% of businesses, as well as urgent same-day transactions for customers (also 29%).
- Interest in request for payment grew to 22% this year (up from 14% last year), as offerings which integrate financial services like payment functionality into non-financial platforms become more common.
- Businesses showed interest in both large (17%) and small disbursements (11%), which could include legal settlements and refunds, respectively.
The survey results show that instant payroll continues to see high demand; 35% of businesses of all sizes citing it as a top use case. While only 3% of businesses now use instant payroll, the survey found that 72% of “very large” businesses and 44% of “very small” businesses want instant payroll capabilities for their organization.
“In addition to standard payroll, expedited payroll (17%) has been receiving greater attention from businesses seeking to leverage instant payment benefits,” according to the survey report. “The FedNow Service can enable businesses to use instant payments for off-cycle payroll, like reimbursements and emergency payroll, both of which fall under the expedited umbrella.”
Overall, according to the report, banks and credit unions are using instant payment use cases for their customers and members using FedNow. Key transaction types that financial institutions say they are making over the FedNow network include off-cycle payroll and earned wage access, digital wallet defunding, real estate escrow payments, auto loan disbursements, online marketplace seller payouts and more.
A report issued April 16 by FRFS noted that more than 1,300 banks and credit unions headquartered in all 50 states are now live on FedNow. Small and midsize financial institutions, including community banks and credit unions, make up more than 95% of participants on the network, according to the report.
During the first quarter of the year, the report states, more than 1.3 million transactions were settled on FedNow. That, according to the report, is a 43% increase over the prior quarter. Consumers and businesses sent an average of $540 million through the service per day, FRFS said.
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