Dive Brief: According to two Federal Reserve survey-based reports released this week, the use of mobile and faster payment services by consumers and businesses in the United States is increasing as these services become more widely available. In the consumer survey, 67% of US householders surveyed last year said they primarily use online and mobile banking services and rarely or occasionally visit a bank branch, up from 63% in 2021 and 61% in 2020. Faster Payment usage has increased to 75% over the past year, up from 68% in 2021 and 62% in 2020. For its business research, which included a survey of 2,000 companies of all sizes, the Fed said that 83% already have some form Use faster payments and 90% We expect to use them within three years. Businesses are taking advantage of these faster payments primarily because they’re cheaper and offer flexibility, they said last year. Insight into the dive:
The research gave the Fed an opportunity to ramp up the launch of its new faster payment system, FedNow, which is expected to launch its services publicly in July. This real-time central bank payment system has been in development for years. Pilot projects involving banks and technology companies have been running in recent months.
“With the shift to a 24/7 economy and the heavy, growing use of faster payments, it’s about time the Federal Reserve’s FedNow service became available in July for financial institutions of all sizes to offer instant payment services to their customers. “Connie Theien, director of industrial relations at Federal Reserve Financial Services, said in a news release on Wednesday about the investigation.
For businesses already using faster payments, including same-day ACH services, mobile payment apps, or digital wallets, the primary use cases are payroll, paying recurring bills, processing an urgent payment, and internal money transfers.
“The combination of supply chain complexities, tight labor markets and rising costs has prompted businesses to focus on more flexibility, more options, and more speed and control in sending and receiving payments,” the Fed’s economic research study said.
Almost all companies (94%) said they still rely on manual intervention to process their payments, which the Fed said underscores the need for more automation in this study.
Of consumers, 70% expect faster payments from their financial institutions and more than half (53%) use some form of non-bank cellular service to make faster payments, the research found.
Meanwhile, some older cohorts are catching up on digital devices. Consumers between the ages of 35 and 54 are now using mobile services to check their balances and make payments more often than consumers between the ages of 21 and 34, the Fed data showed.
The most common consumer use cases among respondents generally involved using online and mobile payments to check account balances, recent transactions, and transfer funds from one account to another.
Despite the Fed’s focus on mobile and electronic payments, consumers’ most likely payment methods over the past year were still cash (75%), credit card (68%), and debit card (63%).
Both studies showed that consumers and businesses still have concerns about fraud when it comes to faster electronic payments. That’s why they look for anti-fraud and notification confirmation features in their services.