The latest studies from Federal Reserve Financial Services reveal a rapid surge in the adoption of digital, faster, and instant payment services among U.S. businesses and consumers. Particularly noteworthy is the significant growth in the use of digital wallets, with efficiency-driven businesses upping their usage by 31% compared to the previous year, and convenience-seeking consumers showing a 32% increase.
Mark Gould, chief payments executive for Federal Reserve Financial Services, underscores the importance of meeting evolving customer expectations, citing the remarkable growth of the FedNow® Service, which has attracted over 700 participants since its launch last summer.
This shift, particularly evident in consumers’ embrace of digital wallets and online banking, is driving a notable rise in instant and faster payment applications like bill payments, mobile wallet transactions, account transfers, and immediate payroll processing.
Gould emphasizes the pivotal role of tools like the FedNow® Service in fulfilling these burgeoning demands, as financial institutions strive to cater to their customers’ evolving needs.
The surveys also reveal that 86% of businesses and 74% of consumers utilized faster or instant payment methods in 2023, with a significant majority looking to their financial institutions to provide such services.
Shonda Clay, executive vice president for Federal Reserve Financial Services, highlights the positive impacts of instant payments on workers, enabling them to access their earnings promptly, thus averting late fees and facilitating better financial management. Employers, in turn, are witnessing enhanced employee satisfaction and retention through same-day pay schemes, indicating the transformative potential of investment in advanced payment infrastructure.
Key findings from the surveys underscore the leading role of younger demographics, with over half of Generation Z and millennials now using digital wallets, emphasizing the importance of mobile payment capabilities. Additionally, a quarter of consumers express dissatisfaction with the sluggish pace of traditional payments and seek better options for instant money transfers.
For businesses, the appeal of faster/instant payments lies in cost reduction, flexibility in payment methods, and the round-the-clock accessibility of services. Notably, instant payments are seen as beneficial across various use cases, including business-to-business and business-to-person transactions, as well as digital wallet funding, defunding, and earned wage access.
For those interested, the full reports of both the corporate and consumer surveys are available for reference. Conducted by Federal Reserve Financial Services, these surveys shed light on evolving payment trends and preferences, guiding the development and marketing of instant and faster payment solutions such as the FedNow Service and FedACH® Services.
