Fed Surveys Find Lasting Appeal for Faster, Digital Transactions

Consumers and businesses — running the gamut of transaction types and across demographics —  are pivoting toward faster and digital payment options.

Overall, as detailed in two reports by Federal Reserve Financial Services, last year saw a 31% increase in digital wallet use by businesses, and a roughly commensurate 32% increase in consumer usage.

“These changes, particularly consumers’ use of digital wallets and online banking, are leading to increases in instant and faster payment use cases such as bill payment, mobile wallet funding and defunding, account-to-account transfers, and immediate payroll for employees,” the Federal Reserve said.

Majority Use Faster Payments

As many as 86% of businesses and 74% of consumers said they used faster or instant payments last year. One in 4 consumers said they’d prefer to leverage instant payments to help manage their finances.

And on the commercial side of the equation, of the firms that have been using instant payments, 92% say they have been beneficial for business-to-business (B2B) payments, and account-to-account payments, at 40% of the Fed’s respondents. In the business survey, faster and digital payments tie in with managing cash flow, cited by 55% of businesses, topped only by operational efficiency at 59%.

The Fed’s Consumer Research Brief found that 57% of consumers expect to use faster payment options more extensively in the future.   Among the top use cases to benefit from instant payments are online shopping and last-minute bill payments, according to the Fed.

The Fed linked to the “2024 Global Digital Shopping Index: U.S. Edition,” citing the joint efforts by Visa Acceptance Solutions and PYMNTS as “highlight[ing] the growing incidence of digital payments and the breaking down of boundaries between online and in-store shopping experiences.”

Gen Z and millennials are most interested in earned wage access, cited by a respective 55% and 46% of those demographic cohorts.

Just this week, PYMNTS Intelligence noted that various verticals are being transformed by instant payments, including the restaurant industry; 74% of businesses surveyed sent instant payments in the last year. Moreover, 40% identify an instant option as their most used form of payment.

Forty-four percent of restaurant small and mid-sized business (SMBs) with more than $1 million in annual revenue cite an instant payment method as their most-used payment rail. Elsewhere, we noted that 41%  of truckers who have received their income and earnings disbursements through instant payment methods.

And coming into the end of 2023, studies in collaboration with Ingo Payments, which surveyed more than 3,900 consumers across the U.S., found that when given the opportunity to receive instant payments, 72% of respondents say “yes.” The data show that 62% of consumers said they would opt for instant payments if given the chance.