Instant Payments Help New Payments Ecosystems Blossom

Faster payments take center stage this coming year, as FedNow, the U.S.-based instant payments network, gets up and running.

But as Wells Fargo Head of Enterprise Payments Strategy Ulrike Guigui recounted to PYMNTS’ Karen Webster, instant payments have been around since before the pandemic. And ahead of FedNow, faster payments’ green shoots have been steadily emerging to help forge many-sided, connected ecosystems linking banks, corporates and consumers.

Real-Time, Data-Rich Rails

Back in 2019, Wells Fargo launched the ability to send payments across The Clearing House’s RTP® network for corporate customers. Then, as now, Wells Fargo’s API for the RTP network enables corporate customers to send payments directly from their enterprise software or treasury workstation.

And since launch, Guigui said earned wage access and corporate disbursements have been notable standouts. Financial institutions (FIs) have been able to finance automatic purchases by disbursing those funds directly into accounts — and with the recent transaction limits raised to $1 million, large value transactions will continue to get faster.

As Requests for Payment (RfP) continue to grow, bill payment and presentment will gain traction, she said.

The value inherent in real time rails lies not just with the speed and finality of settlement, but also with the ability to send along a rich trove of information via the ISO 20022 standard. This data, making its way across the pipes, will be useful in helping Wells Fargo’s retail and corporate clients find the best ways to pay, Guigui said.

The conversation came against the backdrop where Wells Fargo revamped its mobile app with new optionality. With the recent launch of Virtual Assistant, Fargo (powered by Google Cloud’s AI) consumers will be able to have the tools on hand to help make the best payments judgements.

Moving Toward Payments Optimization

“When we look at where the digital experience is headed,” said Guigui, “it’s to let [Wells Fargo] do some of the thinking about the proper rails and the plumbing in the background — and let the consumer just focus on what they’re looking to do.”

And, as part of the transaction itself, individuals should not have to weigh the benefits of one payment type over another (e.g., ACH vs. check, wire vs. RTP), losing time in the process.

“Ideally, we would be making that suggestion for the individual,” she said, “and making the rail decisions to optimize the payments at the back end.” The consumer who needs funds to move instantly and is willing to pay a fee can opt to do so — the less urgent payments can settle over traditional rails over the course of a few days. It all boils down to need and use case, said Guigui.

Getting there, for Wells Fargo, means pulling in disparate data points about the consumer’s overall financial picture. There remains some infrastructure to be built out, she said.

“The underlying assumption is that plumbing is in place and everybody is connected to all of the rails,” she told Webster, “and that’s not always the case.” Once instant payments are extended across all bank accounts, payments optimization for the consumer will be greatly expanded.

“We can use our own data to differentiate ourselves and retain our customers,” she said. Wells Fargo, she added, has built a developer platform that, with APIs and connections to data aggregators, allows the right consumer-level information to be pulled in at the right time.

“Integrating all of these payment rails and the financial information so I can have a better view of my financial situation and make the right decisions — that’s really where you can help the consumer,” she told Webster. “I think it’s very important to focus on solving actual customer problems.”