Project Description

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Faster payments are gaining traction quickly. Analysts anticipate more than $1.86 billion in faster payment transactions in 2020—a 55 percent increase over projected 2019 volumes.1 Businesses and consumers alike are embracing the convenience and ease of new methods like using Zelle®, the RTP® network, and Push to Card.

Strong adoption stems from the numerous advantages that faster payments offer. Businesses can benefit by:

  • Improving your customer experience
  • Reducing processing costs
  • Accelerating cash flow
  • Optimizing working capital

Educate on faster payment attributes

The majority of businesses believe faster payments will have a positive impact on their company, with B2B payments experiencing the biggest boost, thanks to the extensive remittance information each transaction includes.2

As you prepare both to receive and make faster payments, start by educating the organization on how faster payments differ from traditional methods. These five distinctions will matter to both accounts payable (AP) and accounts receivable (AR) teams.

  1. Consumer or business. Start by clarifying with whom you need to make or receive faster payments. Currently, the RTP® network can facilitate B2B faster payment transactions. B2C faster payments are possible using the RTP network, Zelle3, or Push to Card networks. You can receive C2B faster payments with the RTP network.
  2. Immediate and final. As the name implies, faster payments are fast. Lightning fast, in fact. Speeds range from split-seconds to just minutes, and for most methods, the transaction is irrevocable. That makes payment accuracy critical.
  3. No more float. Near real-time speeds eliminate the window between payment authorization by the payee and funds availability for the recipient. This accelerates cash flow for recipients, but may require new forecasting and working capital processes. It also changes the dynamics for early-payment discounts opportunities.
  4. U.S. Dollar only. Today, only U.S. dollar transactions can be processed using Zelle, Push to Card, or the RTP network.
  5. Transaction limits vary. Each faster payment method follows its own criteria for dollar amounts. Check with your financial institution for current limits; as usage grows, the networks are regularly increasing allowed amounts.

Knowing these distinctions will help your business match the right faster payment method to each payment need.

Adapt your treasury processes and systems

Next, convene your treasury and IT stakeholders and evaluate the changes required in your internal systems and processes. Your bank can also serve as an expert resource, with best practices and tools to make adding faster payments as easy as possible.

Wherever possible, look for automated solutions. With the latest digital technology at the core of faster payments, it’s the perfect opportunity to introduce new efficiencies into your operations.

Consider these important areas:

Accounts payable

  • Routing. Faster payments route differently than traditional transactions. Zelle, for example, requires a recipient’s email or mobile phone number, rather than their bank account details. Push to Card works with a debit card number.Make sure your ERP or system of record can store this data securely and comply with industry regulations. You’ll also want to create protocols for when and how staff request and update this customer information.
  • Initiation. Today, most payments occur in batches, sent to the bank or payment processor at set intervals each day. However, to take advantage of the immediacy of a faster payment, you may need to adopt technology that facilitates one-at-a-time origination. Every bank will have its own solutions, but an API interface is one of the most common. This “always on” connectivity link with your bank will enable you to initiate faster payments directly from your systems.
  • Approvals. Because faster payments are immediate and irrevocable, your approval process becomes mission-critical. Discuss how will you ensure accuracy and prevent duplication. Dual controls provide a simple way to check (and double check) important payments. Updating your policies and providing adequate staff training are equally critical.

Accounts receivable

  • Cash application. Faster payments are a great choice for B2B customers with last-minute or deadline-driven payments. But, with immediate payment comes the expectation of immediate cash application. Before you begin accepting faster payments, review your internal receivables workflow. Decide when and how customer account balances and credit availability will update to align with faster options.
  • Customer service. Faster payments give your B2B customers far more flexibility in when and how they can pay you. Real-Time Payments, for example, transact 24/7. With transactions outside traditional business hours, it’s smart to review and update your customer service practices. Deciding your service options upfront will minimize issues if customers have questions or need assistance with faster payment types.

Simple preparations like these can help make for a smooth introduction of faster payments—and a competitive advantage for your organization.

For more information, contact your Wells Fargo representative or fill out the Contact Us form on this site.

1Mercator Advisory Group, Inc., “Faster Payments: U.S. Forecast, 2017–2021,” February 2018
2AFP, “Electronic Payments Survey,” 2019
3Enrollment required.  Payments can arrive as quickly as minutes or may take up to three business days.  Actual times may vary. Zelle is available to bank account holders in the U.S. only. For your protection, Zelle should only be used for sending money to customers and vendors you know and trust.RTP® is a registered service mark of The Clearing House Payments Company L.L.C.Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.