Faster and real-time payments are generally considered a benefit for the consumer payments world. But with the U.S. finally making inroads in its faster payments initiatives, it’s now time to see whether faster payments will make their way into the B2B sphere too.
Released last week, December’s PYMNTS Faster Payments Tracker™, powered by NACHA, tracks progress of faster payments initiatives throughout the U.S. Recently, the first transaction using the Real-Time Payments system operated by The Clearing House was successfully completed, and more financial institutions have announced their planned support for the scheme.
Meanwhile, the U.S. Federal Reserve made its own progress in exploring how the nation’s regulatory environment can support faster payments progress while maintaining security, while NACHA offered up some new data on same-day ACH volume growth in the country.
They’re just a few of the latest developments covered in the Faster Payments Tracker, and there are clear implications for peer-to-peer (P2P) and consumer-to-business (C2B) transactions. But a clear indication of how these developments could impact the B2B payments space remains elusive.
NACHA’s latest statistics on same-day ACH transactions found nearly 2 million same-day ACH debits were made in only the first 11 days of the service, averaging more than 178,000 transactions per day. Together, they accounted for about $1.5 billion in funds transferred using Same Day ACH, an average of $650 per transaction. But B2B payments weren’t driving that volume: Consumer-to-business payments, rather, made up 94 percent of this activity, said NACHA, with B2B transactions accounting for the remaining 6 percent.
Another faster payments service in the U.S., Zelle, could be an unexpected focus of corporate payments’ role in payments acceleration.
Zelle, which relies on cooperation from an array of financial institutions and FinTechs across the U.S. to support instant payments, has typically been viewed as a peer-to-peer payment service, with banks able to link their customers to Zelle’s instant payments capabilities via their smartphones. But as Zelle racks up more partnerships, the potential for corporate payments to take part in these capabilities is on the rise.
Zelle recently announced a partnership with D3 Banking Technology, which will see financial institution clients of D3 able to provide Zelle services via the Zelle API. Zelle is also reportedly working with IBM to heighten FIs’ access to its services via IBM’s Financial Transaction Manager solution.
With more FIs linking customers to Zelle, there is greater opportunity for corporate bank customers to get in on the action. In its largest step into corporate payments yet, Zelle also revealed its collaboration with U.S. Bank to provide corporate clients the ability to use Zelle for payment disbursement to consumers. The disbursements via Zelle’s service may not address B2B payments, but it is a step in the direction of enabling corporates to make faster payments.
Another development highlighted by the latest Faster Payments Tracker comes from Mastercard, which recently launched a new blockchain API to enable banks and merchants to link their own customers to a payments solution. Mastercard touted the solution’s ability to support faster payments as well as a host of other improvements, including cross-border efficiency and transparency.
Ken Moore, Mastercard Labs executive vice president, noted that the solution could be particularly beneficial in the B2B payments use case, supporting a reduction in risk and an increase in speed for scenarios like trade finance and cross-border supplier payments. The API is a clear vote of confidence on Mastercard’s part that corporates want, and will use, faster payments services.
Earlier this month, The Clearing House’s Real-Time Payments system was picked up by yet another financial institution, Fifth Third Bank, which will work with FIS to link its corporate and consumer customers to the faster payments capabilities starting early next year. Again, it’s an indication that financial services players are confident faster payment technologies will see demand from corporates.
But so far, if NACHA’s latest figures are any indication, corporate uptake of real-time payment capabilities remains slow. As is typically the case with corporate payments, B2B transactions could slowly but surely follow consumer payments trends in faster payments uptake; only time will tell.