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Real-time payments platform provider Pidgin Inc. has published an eBook detailing key steps financial institutions should be taking to prepare for real time payments.
The eBook, published just ahead of the debut of Federal Reserve’s FedNow real-time payments network this month, details how financial institutions can use real-time payments to create more value for customers, the technology required to manage real-time processing, and use cases and product offerings best suited to financial institutions’ customer demographics.
The need for financial institutions to support real-time payments is key as 46% of consumers say they are likely to open a new account with a banking service provider that supports real-time payments, according to 451 Research.
Pidgin recommends that financial institutions evaluate the biggest pain points for each key customer demographic and determine how real-time payments can overcome those obstacles. For example, financial institutions can send a reminder to consumers that a bill payment is due and that it can be made instantly, thereby helping the consumer avoid a late fee. Known as request for payment, it will be available in FedNow and is in development for The Clearing House Payments Co. LLC Real Time Payments network.
Other use cases for consumers include using real-time payments to fund newly opened accounts immediately or reloading prepaid cards and digital wallets, according to the eBook.
The eBook also recommends that financial institutions evaluate their digital capabilities to determine how real-time payments will impact customer-facing touchpoints such as online banking and mobile banking applications. In addition, financial institutions may need to update teller or other customer-support touch points to initiate instant transactions and dispute investigations, submit request for payments, and access information about transactions in real time, according to the book.
Finally, Pidgin recommends that financial institutions and businesses support multiple real-time payments networks, such as The Clearing House’s RTP network and same-day ACH in addition to FedNow. Supporting multiple real-time payment networks ensures transactions will not be routed solely based on the speed of the transaction, but also cost. By supporting multiple real-time payment networks, financial institutions can deliver real-time payments quickly and at the lowest cost possible, according to the eBook.
“As new use cases for faster payments are identified and adoption grows, financial institutions must choose a payments technology that will effectively serve their needs, both now and in the long term,” Pidgin chief executive and founder Abhishek Veeraghanta says in a statement. “The upcoming launch of FedNow means instant payments will gain traction across the country, and as adoption grows, accountholder expectations will evolve and new use cases will be revealed.”
Several major processors in the payments industry have already become FedNow-certified including FIS Inc., ACI Worldwide Inc., Tyfone Inc., and Jack Henry & Associates Inc.
