Future of US Payment Systems: Expert Insights on Smarter and Faster Innovations

In today’s fast-paced financial landscape, the importance of real-time payments is becoming increasingly evident. Recent discussions among industry leaders highlighted the strategic advantages of connecting to instant payment rails, focusing on commercial use cases like payroll and disbursements, alongside the crucial role of API connectivity.

Exploring Real-Time Payment Use Cases

Bridget Hall, the leader of real-time payments for the Americas at ACI Worldwide, emphasized various use cases for real-time payments. One notable mention was the integration of tax returns into the conversation around instant payments. Hall stated:

“It’s not necessarily about paying your taxes faster, although you want to make sure you’re paying on time.”

Challenges and Progress in Credit Unions

Melissa Ashley, the president and CEO of Corporate One Federal Credit Union, recognized the progress made by providers in facilitating same-day transactions. She noted the importance of ensuring that all teams—including operations, accounting, IT, and compliance—are adequately prepared for this transition. Ashley remarked:

“It’s not like other implementations; you’re doing it for the first time.”

The Enhanced User Experience of Real-Time Payments

Jim Colassano, Senior Vice President of Product Development at The Clearing House, discussed the shift towards improving user experiences in banking. He highlighted how instant payments can enhance customer satisfaction:

“When I’m sending money to my brokerage account and two seconds later, I see a pop up in my brokerage account… That’s an experience I want.”

Project Readiness and Implementation Timelines

Mark Ranta, Senior Manager of Payment Technology Transformation at Ernst & Young, addressed the evolving landscape of payment projects. He emphasized that:

• Readiness is the number one factor for successful implementation.
• Transitioning from traditional systems like FedWire or ACH is now much quicker, moving from multi-year projects to just a few weeks or months.

Core Payment Rails: Resilience and Relevance

A panel discussion later in the day examined the ongoing significance of core payment rails, including wire transfers, ACH, and cheques. Despite advancements in technology, these traditional methods continue to play a vital role in financial transactions. Key points from the discussion included:

• Wire transfers are essential for modernization and transparency.
• ACH’s adaptability remains significant, with the potential for faster payments.
• Cheques and cash continue to be relevant, as they maintain public trust.

Weekends and 24/7 Processing Opportunities

Allison Shonerd, Managing Director and Head of Global Digital Disbursements at Bank of America NA, discussed the Federal Reserve’s initiative to extend net settlement services over the weekend. She highlighted both opportunities and challenges:

“This speaks to the desire to become more towards 24/7, increasing availability and giving banks more windows to process wires.”

Operational Challenges in Weekend Processing

Shonerd also raised concerns regarding operational challenges, such as managing fraud and compliance during these expanded hours. Devon Marsh, Managing Director of ACH Network Rules and Risk Management at Nacha, added that:

“There is settlement risk in making things available over late Friday afternoon.”

The Future of Payments: Cash and Cheques

Tony Gerevics, Managing Director of Operations Industry Relations at JP Morgan Chase & Company, concluded by stressing the importance of traditional payment methods. He explained:

“Cash is a type of instrument that is held in times of financial crises… the ultimate instant payment.”

In summary, while new technologies are reshaping the payments landscape, the relevance of traditional methods like cash and cheques remains steadfast. The industry continues to adapt, finding ways to leverage both modern instant payment solutions and established payment rails to meet evolving consumer needs.

For more insights on the future of payments, visit ACI Worldwide and explore their resources on real-time payment solutions.