Is It Time for Real-Time Payments?

Transcription

1 Is It Time for Real-Time Payments?

2 Time to Get Real Where have real-time payments been all our lives? You understand the value instantly. Money moves from one party to another seamlessly, virtually, right now. You can pay your kids, your mother, your disgruntled roommate, your gardener and accountant all in less time than it will take for them to start complaining. And if they owe you? Then payment can t happen fast enough, right? This e-book is about real-time payments as a valued feature, a competitive differentiator and a real, (almost) ready option for credit unions, thanks to a new real-time payments network created by CO-OP Financial Services in partnership with FIS and its PayNet technology. Who prefers instant payments? 75% of business payees 69% of consumers Beginning with real-time P2P Pay Anyone payments on the Sprig by CO-OP app, real-time payments are about to get real for credit unions. In the coming months, also look for real-time P2P payments you can integrate into your own mobile and online apps, the ability for members to receive P2P payments via CO-OP AccountConnect, and a white label version of Sprig you can brand yourself. Is it time to consider real-time payments? We think so. To find out why, read on. (Source: The Fed) 2

3 Tick Tick Tick We have no time. In a world where it seems like every single thing can happen in an instant, payments too often happen slowly. With paper checks and ACH transfers it can take days to put money into an account to say nothing of clunky, prolonged delivery methods. When you need $10 from each little league player to buy a coach s gift for tonight s banquet, or when your kid is across town with a flat tire and needs money for a fast fix, you want to transact now. According to a Consumer Action survey: 64% of respondents plan to use P2P payments to reimburse friends or family 57% would use P2P to pay a small bill 49% would use it to pay a large bill, such as rent Consumers want fast payments, and they want them from the institutions they trust: 63% want FI-based P2P transfers (Consumer Action) 55% of consumers want real-time payments from their financial institutions (FIS) 42% want the money to be available immediately (FIS) [Technology] speeds up our internal clock. You press a button and you expect instant access. Dr. Phillip Zimbardo, Professor Emeritus of Psychology, Stanford University 3

4 Made for Millennials Real-time payments offer real advantages to almost any consumers, but they may be particularly suited to Millennials, who value mobile and digital technology, the empowerment of self-service, channel integration and personalized me experiences. Already fused to their phones, Millennials are not wedded to old modes of payment nor are they determined to build PFI relationships. Instead, they ll go where the service is best, even if that means seeking out non-traditional alternatives and multiple institutions. There are more 22 year-olds today than any other age group in America. 4

5 Shouldn t real-time payments already be the standard? From a consumer perspective, yes. From an industry perspective, plenty of barriers exist. But it s precisely this gap between consumer expectation and what the industry currently offers that defines the opportunity. Credit unions can take the lead here and enjoy a true point of differentiation. Isn t the Fed spearheading its own faster payments initiative? Yes. The problem with the Fed s faster payments initiative is that it s unlikely to deliver fast results. Not only are we years away from a working network, we may be years away from agreement on how to proceed. This isn t a fault with the Fed: Working on this kind of massive scale is slow going. But if the objective is faster payments, faster results seem desirable. What about same-day ACH? After a bit of a false start in 2010, the Fed began a push for same day ACH settlement in April Some credit unions are currently participating in this opt-in service. But until the Fed mandates same-day ACH, it will likely be several years before all financial institutions participate. Worth noting: Same-day payment is not the same as real-time. Aren t debit card transactions real-time payments? Debit transactions occur in two forms: signature debit and PIN debit. Signature debit, the larger share of today s debit transactions, ride on the credit card rails. They clear and settle overnight. PIN debit does occur in real-time through the EFT networks. However, PIN debit is a card-based transaction and does not facilitate person-to-person payments. Speeding Past the Competition 5

6 CO-OP is investing in a real-time payments network because we believe real-time payments are essential to your success. What drives this belief? Consumers want speed. Slow payments are out of sync with our instant reality. Adapt or die. Disruptions are coming. The payments space is in flux. Payment innovations, mobile commerce, nontraditional competition these are already in the mix. Disrupt now or be disrupted. Revenue models are challenged. While credit unions rightly defend current sources of revenue, aren t new revenue ideas a welcome change? While real-time payments represent a premium service, what opportunities might emerge? Advantage: Yours You can plug in now and so can your members. Though it s fun to consider the financial products of the future, your strategy must include new products you can get members using now. These are the gateways to future products like mobile wallets and they re the key to current engagement. 6

7 Real-Time, Cardless Payments Using a real-time network means: Real-time authentication Funds available immediately Guaranteed settlement Ubiquity New value, new potential revenue Security 7

8 How Will Your Members Plug into Real-Time Payments? Recipients don t need to sign up in order for real-time P2P payments to work. They simply receive a message, input their information and receive their funds. Credit unions will have the opportunity to offer members real-time payments in a variety of ways: P2P Pay Anyone payments on Sprig by CO-OP P2P Pay Anyone payments as a standalone API you can integrate into your own mobile and online programs Members will also have the opportunity to receive P2P payments via CO-OP AccountConnect P2P Pay Anyone payments on Sprig White Label you can brand as your own. 8

9 Need More? Download A Network of Now! Payments in Real Time. Learn more about the market for real-time payments and how CO-OP s real-time network powered by FIS PayNet will function. Experts from CO-OP, FIS and Mercator Advisory Group weigh in on the opportunity at hand. Both the recorded webinar and companion slides are available by clicking here. See Sprig in action: Click here. From our friends at FIS: Real-Time Payments Resonate with Consumers, a white paper that offers insights and original data on this emerging market. Click here. And from our friends at Mercator: Get a thumbnail on research released in the Mercator Note P2P Payments: Financial Institution vs. Third Party Digital Solutions in this press release. Click here. Consider the larger value of speedier payments in Imagining a Real-Time Payment System, an American Banker story featuring CO-OP s Caroline Willard. Click here. Read a fast case for fast payments in this post on CO-OP s Insight Vault blog. Click here. 9

10 2014 CO-OP Financial Services CF14350 CO-OP Financial Services 9692 Haven Avenue Rancho Cucamonga, CA CO-OPFS.ORG