The Second Day At AFP Raises The Question: Does The US Need Faster Payments?
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The Association for Finance Professionals (AFP), taking place in Nashville, Tennessee, saw quite intriguing debates on the Convention’s second day when the topic of Faster Payments emerged. However, some have argued that the US maybe doesn’t need Faster Payments.
The Faster Payments Problem
On the second day of the convention, a panel consisting of BNY Mellon’s Sumner Francisco, PTap Advisory’s Peter Tapling, Finzly’s Karuna Kathir, and Walmart’s Sarah Arnio, discussed the adoption and benefits of faster payments.
They also touched upon the differences between rails such as instant payments, same-day ACH, and push-to-card transactions. The panel pointed out that around 75% of accounts in the US can be reached via Faster Payments. Also, while organizations such as Walmart are leveraging it, there are still remaining challenges surrounding high cost, especially when compared to solutions like ACH.
On top of that, there is a noticeable lack of understanding of value in terms of efficiency and speed. The session was made to be a call for corporates to explore Faster Payments and engage with their banking partners.
Addressing the audience, Francisco said that BNY was among the original players who remitted the very first real-time payments back in 2016. The firm was also the one who sent out the very first Request to Pay instruction.
With that in mind, Francisco said that BNY’s position is to be at the forefront of the emerging payment types, which includes everything that is considered Faster Payments. However, others are not so plugged in, which has been the standard across the board in the US.
Why is Faster Payments Slow To Get Implemented?
The panel addressed this, explaining why Faster Payments adoption was so slow. According to Kathir, there are three reasons — simplification, the lack of availability of RtP and FedNow, and education.
“One is simplification. As professionals, we don’t care how the money is delivered. We care that the money is delivered. The moment we keep adding more and more rails to it, it’s confusing. The current systems have organically grown; now for RtP and FedNow, that doesn’t work. The second problem is that RtP and FedNow are not available to all accounts, which means they put doubt in everybody’s mind as they are unsure which accounts they can reach and what accounts they cannot reach. The third is education.”
Arnio joined in by saying that ubiquity is important for a corporate, as it is not enough to only reach 50% of accounts to be able to promote it and make developers implement it. Arnio added that a firm like Walmart has to reach 95% of Americans at minimum, and that is an issue. The Faster Payment network cannot reach the majority of potential customers.
