3 Key Ways FedNow is Disrupting the Financial Services Industry
Much has been written about how convenient FedNow will be once its rollout is complete. Yes, it's a way for credit union members to send and receive real-time payments in a matter of seconds, avoiding the time-consuming processing they've endured up to this point.
But it is so much more than that.
In fact, even calling FedNow a "major shift" is an understatement. Designed with a focus on the modern user experience, FedNow is poised to revolutionize the financial services industry. It will introduce a new era of convenience and efficiency, empowering members through instant payments, minimized fees, and the adoption of "Requests for Payment." This transformation will leave a lasting impact on the industry.
Unleashing the Power of Instant Payments
Perhaps the most important change that FedNow offers for credit unions and their members has to do with adding another option for situations requiring urgent payments.
Two ideas are relevant here. The first is that people embrace credit unions for a personalized level of service and unparalleled flexibility in terms of how they take care of their financial business. The second is that sometimes payments are literally urgent--members cannot afford to wait for traditional payment processing times.
Thanks to FedNow, real-time payments are now available to all, because of a trusted solution that is backed by the federal government.
Slashing Overall Fees
By its nature, FedNow is also expected to help both financial institutions and their members save money on things like credit card processing and other transaction-related fees. Everyone from large retailers to e-commerce businesses to restaurants and even gas stations will immediately find FedNow a cost-effective option that then allows them to pass those savings onto consumers.
According to one recent study, organizations are expected to cut their transaction expenses from debit and credit card transaction fees alone by between 1.5% and 3.5%. So not only is FedNow a convenient option for everyone, but it's also an affordable one, too.
Embracing "Requests for Payment"
Another exciting change that the FedNow system offers is the "Requests for Payment" feature. This can dramatically streamline payment processing for a number of industries. Take commercial real estate, for example. Right now, a business has to send out a rent statement to a tenant, wait for the payment to come in via a check, and wait for that check to manually process before getting access to their money. Multiply that process by the potentially hundreds of clients they have and that's a lot of time just sitting around waiting.
Now, that same company can simply send out an electronic request, at which point those funds become available nearly instantly. This is part of the reason why FedNow is expected to see strong adoption among those in the B2B sector in particular.
Introducing the FedNow Integration for Credit Unions
We at FLEX are thrilled about the upcoming changes that the 2023 FedNow rollout will bring. We have already begun preparations to seamlessly integrate FedNow into our services for credit unions upon its release. Our aim is to offer your credit union the full benefits of this real-time payment technology, minimizing any potential challenges or drawbacks you may encounter. To learn more about our progress and the exciting transformations that await your credit union, click the button below for further details.