Pub. 18 2021 Issue 2

12 “INSTANT” IS COMING TO PAYMENTS By William J. Schoch, President & CEO, Wespay I f asked the meaning of “IP,” the expected results include intellectual property, internet protocol and for baseball fans, innings pitched. However, bankers quickly co-opted this acronym to mean “Instant Payments,” referencing the trend of immediate money movement. Most bankers are looking to this new capability to enhance consumer and business relationships and, simultaneously, compete with FinTech providers offering an expanded range of financial services. We are in the early days of Instant Payments, but the market size of early U.S. adopters and the global migration to similar types of payment platforms indicate that this is more than a passing trend. Most community banks are not in this initial wave of adoption, so planning and coordination with trusted solution providers will be critically important. Also important will be the evaluation of potential use cases of the payments service and how those align with your target client segments. For these reasons, organizations such as Wespay, the Faster Payments Council and the Federal Reserve diligently work to help community financial institutions understand these new payments networks and recognize the potential benefits to your clients. The Definition Wikipedia defines Instant Payments as “a method of exchanging money … allowing for almost immediate transfer of money between bank accounts, instead of the more typical one to three business days.” This definition is based on the European Central Bank’s (ECB) 2019 white paper. In the U.S., the Federal Reserve acted as an industry catalyst, more than five years ago, in developing the Faster Payments Task Force, an industry consortium commissioned to help prepare U.S. organizations for faster payments. One of the deliverables of this group was an effectiveness criteria document that defined the vision of the future state of payments domestically. This document anticipates completing payment functions in seconds, with the entire end-to-end money movement occurring within minutes. Clearly, the evolution of payments in the U.S. mirrors the European vision.