The US push for real-time settlement, and what's at stake for key industry players... In the US, when customers make payments via banks, they're completed in two ways: via wire transfer, or through the Automated Clearing House (ACH). ACH transactions, which are less expensive for customers and which accounted for 18% of total noncash US payments volume in 2012, can take up to five days to settle because of the way that they are processed. That's problematic, because it interferes with consumer demand for convenience and could slow the supply chain or make it more challenging for banks and businesses to get paid in the way they need to conduct operations. As a result, the US Fed looked into the ACH system in 2013, and found that there was no "ubiquitous, convenient, and cost-effective way for US consumers and businesses to make fast payments between banks. In response, the Fed, NACHA, and private institutions have begun to find ways, together and separately, to modernize the US payments system in order to increase convenience and catch up to many of the country's trade partners. The Fed has formed a task force, which will resolve potential solutions, while NACHA and private institutions are pushing banks to hit a set of three same-day settlement deadlines through late 2016 and into 2017. Such a system will particularly benefit high-growth spaces in the electronic payments ecosystem, like P2P and B2B payments, which could magnify its impact over time. Though it's likely the system could grow ACH volume by making it a more appealing option in these high-growth areas, it could become a hindrance to banks. That's because the implementation is costly and time-consuming — the Fed find that the business impact is net-neutral to negative for these firms. Instead, the parties that reap these benefits are providers of services in these high growth areas, like mobile bill pay firms or P2P vendors, which means that banks are actually aiding their competitors. That means that Faster Payments could ultimately enhance the impact of digital disruption in the payments ecosystem, rather than mitigate it. In a new report from BI Intelligence, we look at why the US needs a Faster Payments system, explain how the country plans to implement it, evaluate the different areas that are most likely to be impacted by Faster Payments, and determine which parties benefit from such a system and which are hindered by it. Among the big picture insights you'll get from this report, titled Faster Payments: The US Push for Real-Time Settlement, and What's at Stake for Key Industry Players:  | | | - Sluggish settlement of payments in the US is pushing NACHA, the national electronic payments trade group, and the Federal Reserve to reform the system. US payments made via ACH can take three to five days to settle.The Fed's Faster Payments Task Force and NACHA are looking to implement a same-day settlement program in the US by 2017 in order to increase consumer convenience.
- The number of transactions affected by faster payments will increase over time.Four key areas — P2P, B2B, C2B, and B2C payments — will gain the most from such a system. And these areas, which comprised 12% of US payments volume in 2014, will grow rapidly over time, therefore magnifying the impact of such a system.
- Faster payments implementation will be a mixed bag for banks, because of additional costs associated with the burden of implementation. And the platform is likely to actually boost third-party providers, like P2P app vendors or mobile bill pay firms, by giving them an easy way to increase efficiency, engagement, and volume, without a substantial rise in transaction costs.
This exclusive report also: - Explains how the US payments system works and why it needs to be modernized
- Defines Faster Payments and lays out how the country plans to implement such a system
- Explores different high-growth areas in the payments ecosystem and the impact Faster Payments could have on them
- Evaluates whether or not such a system will be useful for banks and financial institutions
- Determines the beneficiaries of Faster Payments and the impact it may have
- And much more.
The Faster Payments Report is how you get the full story. To get your copy of this invaluable guide to the payments industry, choose one of these options: - Bundle and save 91% today when you purchase the Ultimate Fintech and Payments Reports Bundle. You will gain immediate access to this report and 38 others on some of the most important topics impacting the financial technology space. >> BUY THE BUNDLE AND SAVE 91%
- Purchase the report and download it immediately from our research store. >> BUY THE REPORT
The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the path to faster payments. |
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