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How Credit Unions Can Drive the U.S. Instant Payments Revolution

Rami Cassis, CEO, ieDigital and Connect FSS

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The U.S. is currently in the middle of a financial services revolution.

The shackles of cumbersome, lengthy money transfers are being thrown off and replaced by a long-awaited instant payments service, allowing Americans to send and receive funds immediately, 24 hours a day, seven days a week.

The benefits of this cannot be overstated. Previously, financial services customers within the US were somewhat disadvantaged when compared with their peers in countries such as the UK, Brazil, India, and most countries within the European Union, where such services have been commonplace for many years. Instead, people within the US have had to put up with a delay of several days when transferring funds to family, friends or to settle an outstanding bill.

Credit unions are proving to be an important component in this change. Let’s examine the role they are playing, and why instant payments within the US are long overdue.

The move to instant payments.

The Federal Reserve announced that its FedNow system went live in the middle of last year, allowing any financial institution in the U.S., regardless of size, to offer instant payments to its customers. Funds moving between financial institutions will allow end-users access to this money in real-time, at any time.

The FedNow service joined other instant payments services, including Zelle and The Clearing House, collectively answering a massively increasing demand for instant payments. Indeed, the United States real-time payments market is expected to register a CAGR of 10.12% from 2022 to 2027. Furthermore, the digitization and rapid adoption of real-time payment platforms in almost every industry such as retail, e-commerce, healthcare, and education have fuelled the growth of the instant payment market.

Additionally, we have witnessed a rapidly increasing move to cashless and contactless payments and the spreading of awareness about alternative payment methods. These were already becoming common even before the advent of the global Covid pandemic, an event which accelerated the growth of the instant payment market even further.

The benefits are easy to see for consumers and businesses alike. Individuals can instantly receive their salaries and use them the same day, and small businesses can more efficiently manage cash flows without processing delays.

So, the demand for instant payments is now well and truly entrenched. Against such a backdrop, credit unions have a perfect opportunity to seize the moment and lead the way with instant payments functionality. 

Credit unions and future instant payments standards.

There are more than 5,000 credit unions across the US, which are perfectly positioned to play a significant part in the instant payments’ revolution. From their sheer reach to the vast number of customers they serve, they are in pole position to set the golden standard when it comes to combining instant payments technology with groundbreaking customer service functionality.

We are already seeing credit unions seizing the moment and using the rise of instant payments as an opportunity to revamp their own customer services functionality. Several credit unions, both large and small, are already creating a personal user experience for their members. At its core, these usually include fully customised digital banking applications with true functional and design parity across web and mobile channels.

In preparation for the rise in instant payments, credit unions are increasingly investing in the ability to compress all different payment mechanisms, including A2A, P2P and Bill Pay into a single member experience that is clean, crisp, visually appealing, and easy to use. By selecting the appropriate systems, their members can carry out tasks including scheduling recurring P2P payments with the same screens, the same experience as a recurring bill payment or a recurring transfer.

Appealing to the younger generation

As instant payments become more embedded in the financial system of the US, customers will increasingly expect to use their financial institution's mobile app, website, and other interfaces to send instant payments quickly and securely.

This is why the most forward-looking credit unions are already actively planning and investing in the tools that will position them strongly for the future. This is likely to resonate with the younger generation, who could well become an essential customer group.

Currently, a low proportion of the younger generation use a credit union. Figures vary wildly, depending on which survey you go with, but figures range from just 4% of Gen Z and 5% of Millennials, to 26% of Generation Z and 14% of millennials.

Many prefer digital-first challenger banks or even financial products provided by their favorite brands rather than traditional financial institutions. However, a heady combination of instant payments, mobile app functionality and interactive online tools could well appeal to them. Certainly, many credit unions are already investing in the tools to tempt them in.


The ability for customers to use instant payments is gaining rapid traction across the US – and it is high time this was the case. Many other parts of the world have taken it for granted for a long time, now it is time for the US to join them.

Despite the introduction of major services such as FedNow joining other instant payments providers, the sector is still new. Credit unions are in prime position to seize the moment and shape the future of this space, by offering their customers – both present and future – the sophisticated tools which will take full advantage of the new instant payments functionality.

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