Advantages of new instant payment options

Since FedNow came online in 2023 to join the RTP network, the consensus has been clear: We’re witnessing the beginning of an exciting era of streamlined, modernized B2B payments.

Forward-thinking financial institutions are quickly adopting the networks to receive payments for account holders, and they see these new payment rails as a way to provide businesses with a cost-effective, reliable, end-to-end payment pathway that delivers:

  • Ability to keep remittance data coupled with the payment throughout the payment journey
  • Streamlined accounts payable and accounts receivable processes
  • Greater control over cash flow through the capacity to precisely manage payment timing through payment scheduling (Example: A payment due on the 15th could be scheduled to happen at 11:59 p.m. that day, regardless of day of week)
  • Instant payment transfer (Example: Send/receive an instant payment when payment is due on delivery rather than waiting on a wire to clear before a truck can be unloaded)

RTP and FedNow deliver around-the-clock instant settlement while supporting the ISO 20022 messaging standard. Because they allow for embedded remittance messaging within payment transfers, they’re the first electronic payment systems to allow an instant, “conversational” payment process between payer and payee without putting the onus on the payer to begin that process. 

For example, using these new instant payment rails, businesses can send a Request for Payment with bill information attached, and the payer can choose to instantly pay their outstanding balance, pay part of it, or schedule a payment for later — all while conveying that information within the digital remittance. No separate invoice communication method is needed to convey pertinent payment data. This intrinsic data coupling can greatly reduce the risk of unapplied payments and, once ERP and accounting system providers support instant payments, dramatically streamline workflows for accounts payable and accounts receivable staff.

Debbie Smart 

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