If you have been involved with business payments in the U.S. for the last 20 years or more, FedNow is an impressive accomplishment. Making instant payments 24/7, 365 days a year – wow! That used to take a week or more if paying by check or involve hefty fees if paying by credit card or wire.
However, for many consumers, especially those in the Gen Z or Millennial category, instant payments are exactly what they expect. They are surprised to learn that it is not always possible.
So, from all perspectives, FedNow is a big deal! Let’s look at the basics, who benefits, and why Velo Payments streamlined onboarding will pair perfectly with FedNow to create the best possible experience for both our clients and their payees.
What is FedNow?
For anyone new to the topic, FedNow is a real-time payment system that enables financial institutions to send and receive payments instantly, 24/7, 365 days a year. This makes payments faster and more efficient and should also reduce fraud and errors inherent in older, manual processes.
FedNow is currently in the implementation phase, with an official launch scheduled for July 2023. This initiative is long overdue as the U.S. lags many countries around the world in enabling real-time payments.
How Will FedNow Help Businesses?
All businesses require timely payments to manage their cash flow. For start-ups, this can be especially true! Knowing “the check is in the mail” is not helpful if you need to make payroll.
FedNow makes it easier for suppliers to receive payment promptly, building stronger relationships between businesses and suppliers. Businesses can also see real-time updates, enabling them to track payments more effectively.
The Impact of FedNow on Banks
FedNow will help level the playing field for banks by offering every participating financial institution, from the smallest to the largest, anywhere in the U.S., the opportunity to provide a modern instant payment solution. It can be a competitive advantage for early adopters, especially those trying to win new small business clients.
Many early adopters have declared their intent to begin using the service in July, including a diverse mix of financial institutions of all sizes, the largest processors, and the U.S. Treasury.
Rob Ames, head of digital delivery for Salem Five, a bank with $6 billion in assets and 33 retail branches, explains, “Our customers expect ‘one click, and it’s done’ experiences, and that’s the reason we’re focused on real-time. Real-time payments are integral to the future of Salem Five. The infrastructure we’re putting in place today will enable innovation and product development for years to come, and we will be ready.”
According to Suzy Morris, Senior Vice President and Head of Treasury Management at Peoples National Bank, “The more financial institutions connecting to the network, the better the opportunity for the industry to transact on it.”
Why FedNow is Great for Velo Payments’ Clients
Our entire company is focused on “Simply Better Business Payments,” so the launch of FedNow aligns perfectly with our vision and mission. With Velo Payments, businesses can leverage electronic ACH payments to replace slow, costly checks.
Payors can be set up in minutes, and a sophisticated backend system ensures all compliance and anti-fraud requirements are followed.
According to Peter Strandell, President of Velo Payments, “FedNow is a perfect complement to what we offer and will eliminate even more of the delays inherent in the current U.S. payment system. Along with our streamlined onboarding and our bank-grade security, payors and recipients can feel confident that Velo is moving their money both safely and quickly.”
So for all these reasons, I think FedNow is a big deal! You can reach our team at Sales@VeloPayments.com. Let's continue the discussion!
To learn more about FedNow, check out the roadmap here: https://explore.fednow.org/