All posts by Kristen Jason

Director of Product Marketing Kristen is responsible for marketing strategy and content for Alacriti while staying abreast of industry trends. She offers over 17 years of marketing experience, including 8 years of experience in financial technology and payments. Kristen holds a Bachelor of Science in both Psychology and Business Administration from Florida A&M University and a M.B.A from the University of Central Florida.

Alacriti Blog

The Payments Hub Explained: Alacriti’s Unique Definition and How It Differs

April 16, 2024 Kristen Jason

The term ‘payments hub’ is commonly used in the financial services industry. A payments hub represents the central nervous system of a financial institution’s payment processing capabilities. This technology acts as a fulcrum for various payment methods, facilitating seamless transactions across different rails, such as ACH, the RTP® network, the FedNow® Service, and wire transfers. However, the definition of ‘payments hub’ can significantly vary depending on the source.

Traditional products in the market tend to focus on specific rails, providing infrastructure to connect with services like the Federal Reserve Banks for FedNow or The Clearing House for RTP. These solutions include message generation, parsing, delivery, network compliance, and, sometimes, basic posting capabilities. Yet, they may lack comprehensive operations or the ability to automate and orchestrate end-to-end processes within and across rails.

Alacriti’s approach goes beyond just transactional capabilities; it brings forth a comprehensive suite of operations. We sat down with Praveen Vinnakota, our Senior Vice President and Payments Platform Lead, to discuss what ‘payments hub’ means at Alacriti.

Q: Praveen, can you start by telling us what a payments hub is, especially in comparison to individual payment rail products such as ACH or wire?

A: Yes. Typically, when you buy a payment product like ACH or wires, you’re getting specific functionalities. But a payments hub encompasses those individual rails, offering a centralized system that addresses a wider array of functions, like rule-based orchestration, automation, routing, business rules and fraud checks aggregation, compliance, and message translation.

Q: What are the advantages of a centralized operations capability?

A: It allows for real-time interaction with payments as they’re processed and sophisticated reporting that isn’t just after-the-fact data dumps. It provides visibility and control over transactions across different payment rails within one interface. Additional operational advantages include automating risk checks, enhancing liquidity management, and facilitating easier reconciliation. This turns a financial institution’s payment processing from a potentially cumbersome, siloed operation into a streamlined, efficient, and centralized model.

Q: So what differentiates Alacriti’s payments hub from a product that enables processing for a single payment rail like ACH or RTP?

A: With Alacriti, we don’t just sell a single rail; we provide a comprehensive payments hub that includes all necessary functionalities. This means we:

Offer the infrastructure for connecting to payment networks
Offer the infrastructure for connecting to your existing banking systems
Ensure network compliance
Include message types and validations that go beyond just basic posting
Provide you cross-rail visibility, reporting, and analytics

Q: How is Alacriti’s payments hub different overall?

A: What sets Alacriti’s payments hub apart is its inherent flexibility. For instance, in transaction processing, it can distinguish between virtual and physical accounts, manage business rules on the fly, and even engage with directory services for methods like Zelle or PayPal. Moreover, the system is designed to maximize STP (Straight-through processing) rates, which is especially critical for instant payments like RTP.

Q: Could you elaborate on the specific functions that are included with Alacriti’s payments hub?

A: We offer the following features:

Orchestration and Automation: It can connect and automate different services in a rule-based, configurable framework, significantly reducing manual processes.
Routing Decisioning: It allows for the smart directing of payments based on various contexts, a feature that becomes increasingly crucial as financial institutions work with multiple rails, each with its own rules, limits, and hours of operation.
Operations and Reporting: Alacriti’s solution provides centralized operations with real-time transaction and rails visibility and responsive reporting capabilities.
Integrations: It supports comprehensive integration with a multitude of systems, including online banking, core systems for posting, and data lakes for analytics.

In short: our payments hub includes rule-based orchestration, routing, compliance adherence, integrated fraud and risk checks, exception resolution, etc. We handle network certifications, various message types for different rails, and validations to ensure transactions are correct. We also embed functions that would typically be separate, creating a seamless and integrated experience.

Q: How does Alacriti’s payments hub manage exceptions and operations?

A: Unlike basic rail solutions, our hub has sophisticated exception handling and centralized operations. We provide stand-in processing, support rule-based rejects and returns, auto post reversals, and intelligently manage retries and exceptions in real-time, offering a robust and dynamic system that goes beyond the capabilities of individual rail products.

Q: When a financial institution uses Alacriti to connect only to RTP or FedNow, are they essentially using the payments hub as well?

A: Exactly. Even if you implement one rail, like RTP or FedNow, it’s delivered with our hub’s capabilities. We don’t just offer the rail; we offer a full payment solution. Our payments hub benefits the client by improving the payment process and overall operational efficiency, allowing them to easily modernize their payment systems at their own pace.

Q: If you just have one rail on Alacriti’s payments hub, why is it easy to add new rails?

A: Think of Alacriti’s payments hub like a set of building blocks. Even if a bank starts by choosing only one type of block, like RTP or FedNow, which are just different ways to move money quickly, they still get the whole box of blocks to play with. If, later on, they decide they want to add more blocks to their construction (which means using different ways to send money), they can easily snap on these new pieces without having to rebuild everything from scratch. It’s designed to be easy to add what they need when they need it.

Q: What additional value does the payments hub bring to a single rail like wires?

A: Even with a single rail, the hub adds immense value by integrating various functions and systems. It makes the entire payments process more efficient, whether that’s through better exception handling, automated integrated document management, streamlined operations, or more intelligent routing. For example, we can bring fraud and AML data into the transaction level and integrate with digital banking providers for fully automated self-service wires and a unified agent room for all wire operations.

Q: You mentioned operational efficiencies with wire. Can you give a specific example?

A: With our hub, for instance, we can automate wire transactions that used to take 30 minutes per wire manually. This automation not only speeds up transactions and reduces the chances for human errors but also improves the member experience—which is critical for financial institutions.

Q: We have some very large clients, such as Navy Federal Credit Union. How are you able to tailor Alacriti’s payments hub with huge financial institutions?

A: Our flexibility allows us to integrate with systems effectively. We are able to automate processes that would otherwise be manual and time-consuming, saving a significant amount of operational time and resources.

With increasing demand for instant payments and enhanced user experiences, Alacriti’s payments hub positions itself as not just an option but a necessity for financial institutions aiming to stay at the forefront of innovation and customer satisfaction. The payments hub offers not just an operational tool but a strategic asset, enabling banks and credit unions to enhance their service delivery and operational efficiencies significantly.

Learn how to evaluate payments hub vendors in our buyer’s guide: Payments Hub Comparison Template: How to Evaluate Vendors.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

Earned Wage Access: A Use Case for Instant Payments

April 9, 2024 Kristen Jason

The usage of instant payments has been accelerating. Financial Institutions (FIs) are increasingly focused on implementing the RTP® network and the FedNow® Service, which promises to enhance the speed and convenience of transactions for both consumers and businesses.

The emergence of the FedNow Service has raised questions about its integration into the existing financial ecosystem, which already includes established players like the RTP network. Larger banks have signaled a strategic but cautious approach towards adopting FedNow, acknowledging the inevitability of its implementation while also balancing the successful deployment of RTP. The challenge for FIs is to explore the best path to integrate new payment rails without disrupting the existing, revenue-generating structures. For smaller institutions such as community banks and credit unions, there is a gradual and organic growth in FedNow usage, similar to the early days of the RTP network.

In the realm of instant payments, Earned Wage Access (EWA) has become an increasingly important topic. EWA services offer employees access to their earned but unpaid wages before the scheduled payday. These services have risen in popularity, positioning themselves as financial wellness tools rather than lending services. The distinction is critical since it steers the service away from regulatory scrutiny typically associated with payday loans.

Financial institutions exploring partnerships with EWA providers are also considering the impact on cash flow and the overall customer experience. The challenge with EWA is multifaceted, involving regulatory compliance, integration with payroll systems, and the financial literacy of the end users. As FIs evaluate EWA solutions, they are keenly aware of the need to maintain transparent operations that align with consumer protection standards.

Financial institutions are also preparing for the significant changes associated with the upcoming Fedwire transition to ISO 20022, a global standard for more robust data-rich payments. The switch represents a major overhaul for thousands of institutions, with far-reaching effects across the global payment infrastructure.

In light of these changes, there is a compelling need for strategic investments in payments technology. FIs are prioritizing spends and evaluating vendor relationships to ensure that they can support the demands of faster payments and intelligent routing. These institutions seek the right partners who can navigate the complexities of modernization while delivering value to their customers.

As the industry progresses, the agenda for FIs continues to evolve. Topics such as cross-border payments and their inherent challenges of speed, transparency, and cost efficiency are becoming more prominent. The demand for better cross-border payment solutions is particularly rising among mid-market corporates, where digital, real-time financial services are expected to grow.

Earned Wage Access is just one use case for instant payments. Read more in The Sky’s the Limit: How Financial Institutions, Businesses, and Consumers Can Leverage Real-Time Payments to Add Value, Convenience, and New Streams of Revenue.

Alacriti Blog

What is CFPB Section 1033 and How Will it Affect Financial Institutions?

April 2, 2024 Kristen Jason

In October 2023, The Consumer Financial Protection Bureau (CFPB) proposed a groundbreaking rule, commonly referred to as Section 1033 or the Personal Financial Data Rights rule, which will impact how consumers interact with their personal financial data. This rule, rooted in the Dodd-Frank Act, is a cornerstone of the open banking movement, granting consumers unprecedented control over their financial data. As the CFPB gears up to finalize this rule in the fall of 2024, it’s crucial for financial institutions to understand its implications and prepare for the shift towards a more open and consumer-centric banking model.

Key Features of CFPB 1033

Consumer Empowerment: Section 1033 aims to empower consumers by giving them the right to access and share their financial data (e.g., information associated with their credit card, checking, prepaid, and digital wallet accounts) with third-party service providers, such as fintech companies, at no charge. This access is expected to foster innovation, enhance competition, and provide consumers with more tailored financial products and services.

Data Privacy and Security: The rule places a strong emphasis on data privacy and security. Financial institutions and third-party service providers will be required to adhere to strict guidelines regarding the collection, use, and retention of consumer data. Consumers will have the right to revoke data access at any time, and third parties will be prohibited from using the data for purposes beyond those explicitly authorized by the consumer.

Standardization and Interoperability: The CFPB’s proposal encourages the development and use of standardized formats for data sharing, promoting interoperability among different financial services providers. This standardization is expected to reduce barriers to entry for new players and facilitate a smoother integration of services.

Consumer Protections: The rule is designed to protect consumers from excessive fees and predatory practices. It aims to ensure that consumers can easily switch between financial service providers without being penalized or subjected to hidden fees.

How CFPB 1033 Will Impact Banks and Credit Unions

It’s important to note who will not be affected. The requirements are to be implemented in phases, so larger providers must comply before smaller ones. Also, community banks and credit unions that have no digital interface with their accountholders would be exempt.

The CFPB has supervisory authority over banks, thrifts, and credit unions with assets over $10 million. In addition, they have supervisory authority over non-depository mortgage originators and servicers, payday lenders, private student lenders of all sizes, and larger participants of other consumer financial markets. These markets include consumer reporting, consumer debt collection, student loan servicing, international money transfer, and automobile financing.

Technology and Infrastructure: Financial institutions will need to invest in technology and infrastructure to facilitate secure data sharing and comply with the new standards. This may include developing APIs (Application Programming Interfaces) and enhancing cybersecurity measures.

Compliance and Legal Challenges: Institutions will have to navigate the legal and regulatory complexities of the rule, ensuring compliance while balancing consumer privacy and data security concerns. For instance, consumers will have the right to revoke access to their data. The data access must then be ended immediately, and the deletion the default.

Business Model Adaptation: The shift towards open banking will require financial institutions to reassess their business models. They may need to explore new revenue streams, partnerships with fintech companies, and innovative products and services to remain competitive.

Customer Relationship Management: As consumers gain more control over their data, institutions will need to focus on building trust and providing value to retain customers. This could involve offering personalized financial advice, improving customer service, and enhancing transparency.

By prioritizing consumer rights and data security, CFPB 1033 may serve to usher in a new era of open banking that fosters innovation, competition, and consumer empowerment. However, the challenge is that financial institutions must proactively adapt to these disruptive changes.

Stay informed of more industry trends with the article, Real-Time Payments for SMBs and Corporates.

Alacriti Blog

ACH Modernization: Insights from the Experts

March 12, 2024 Kristen Jason

Automated Clearing House (ACH) modernization stands out as a pivotal area of development in payments. In a webinar hosted by Banking Exchange, industry experts Alex Romeo, Operations Strategy Vice President at Federal Reserve Financial Services, and Paul Steinbrecher, Director of Payments Consulting at Alacriti, discussed the future of ACH systems. Here, we capture the insights shared during the Q&A session where financial institution executives raised their questions about the future of ACH.

Industry Agnosticism: A Core Principle

One of the first questions addressed to Romeo sought to identify if certain sectors or industries might benefit more from ACH modernization efforts than others. Romeo emphasized the industry-agnostic approach inherent in ACH network changes. Whether it’s introducing same-day ACH, weekend processing, or extending same-day processing windows, the goal is to uplift the entire ecosystem. This inclusive approach ensures that enhancements benefit all participating organizations equally.

Integration with Modernized ACH Infrastructure

When asked about integrating current systems with a modernized ACH infrastructure, Steinbrecher highlighted the role of open API infrastructure. Alacriti’s Orbipay Payments Hub solution facilitates custom-built experiences on top of the ACH network’s APIs, accommodating a wide array of unique use cases. Steinbrecher emphasized Alacriti’s commitment to providing tailored support for financial institutions, whether for new account funding, loan disbursement, or other specialized needs.

Support Across the Board

The audience wanted to know the types of banking services supported by modernized ACH connections. Steinbrecher clarified that their capabilities are designed to cater to both consumer and business use cases, including both Origination and Receipt of Entries (ODFI and RDFI) for debits and credits. This comprehensive support signifies the ACH network’s adaptability to diverse banking requirements.

Weekend Processing

A great question about the possibility of ACH processing during the weekend provided a glimpse into the future of ACH. Romeo outlined the ongoing discussions among key stakeholders, including Nacha and ACH operators like the Federal Reserve and the Clearing House. Romeo didn’t rule out the possibility, explaining that those are early conversations that Nacha and both ACH operators are having. However, one important consideration is that ACH is still a batch store and forward system rather than Real-Time Gross Settlement (RTGS). So, Saturdays are predominantly used for system maintenance, testing, etc. Romeo explained that perhaps ACH could open up earlier on a Saturday, and it is a Nacha ACH network enhancement roadmap item.

The Resilience of Batch Processing

The enduring reliance on batch processing for ACH transactions prompted queries about its continued viability. Romeo defended the batch store-and-forward system’s efficiency and reliability, proven over decades of substantial volume growth and critical roles during events like the pandemic relief payments. The system’s endurance, coupled with the emergence of instant payment channels, suggests that the ideal strategy is to maintain the ACH’s foundational infrastructure while embracing new technologies where they add the most value.

To explore how ACH continues to evolve and remain a key payment network, watch the full webinar, Advancing into the Future: An Exploration of ACH Modernization, hosted by the Banking Exchange and featuring the Federal Reserve Financial Services and Alacriti.

Alacriti Blog

The FedNow Service: Community Bank Executive Questions Answered

February 13, 2024 Kristen Jason

An ICBA-hosted webinar provided valuable insights into the FedNow® Service, the Federal Reserve’s real-time payment and settlement service, which launched in July. With Siobhán O’Malley from Federal Reserve Financial Services and Mark Majeske of Alacriti as key speakers, the webinar addressed critical questions about the service’s integration, customer impact, and fraud mitigation strategies. In this blog, we address the topics raised by community bank executives during the Q&A session.

Understanding FedNow’s Approach to Fraud Mitigation

A major concern among community banks revolves around fraud prevention in real-time payment systems. O’Malley highlighted the FedNow Service’s risk and fraud mitigation services. She also emphasized the flexibility offered to financial institutions, allowing them to start with ‘receive only’ options and gradually adopt more functionalities. Features like the ability to control and limit transaction volumes and negative lists are integral parts of the service’s security framework. Mark Majeske noted the necessity for banks to update their fraud systems, especially for instant payments.

Handling Real-Time Posting with Batch-Based Core Systems

Majeske addressed how banks using batch-based core systems could manage real-time posting. Alacriti’s solution involves accepting batch files and parsing them based on required speed and cost, ensuring compatibility with existing banking processes. He also mentioned their capability to convert ISO 20022 data for banks not yet compliant with this standard, ensuring seamless integration.

Comparing Costs with Traditional ACH Payments

O’Malley pointed out that FedNow’s pricing points were transparent. The service’s pricing structure includes a $25 monthly servicing fee, similar to other Federal Reserve payment rails. In contrast, for ACH there is a $50 month origination fee and a $40 receipt monthly fee. However, FedNow costs $0 to receive transactions on the network, so in other words, transactions received to a credit union are free. Send transactions are $0.045 per transaction.

Request for Payment Capabilities

Regarding the request for payment (RFP) capabilities, institutions enrolled as ‘receive only’ can initiate RFPs but cannot respond. For a full customer experience, community banks can connect with Send, Receive, and RFP capabilities.

Staffing Requirements for 24/7 Operations

Many questions surrounded staffing needs for round-the-clock operations. Majeske shared insights from his experience, noting that most banks did not hire additional staff for FedNow. The system’s automated nature reduces the need for constant human oversight. However, banks might consider on-call support for after-hours issues.

The FedNow Service is a big opportunity for community banks to enhance their payment capabilities and offer real-time, secure transactions to their customers. While the integration of this service involves various considerations—from fraud prevention to operational adjustments—it also provides numerous benefits, including a competitive edge. Community banks can go to FedNow Explorer for tools and resources from the Federal Reserve to prepare for instant payments.

For more information about FedNow, please go to Alacriti’s FedNow guide, which answers common questions such as ‘What’s the difference between the FedNow Service and the RTP network’, and ‘How does FedNow work?’.

Alacriti Blog

Decoding the FedNow Service for Community Banks

February 1, 2024 Kristen Jason

The FedNow® Service launched in July. However, there are still a lot of misconceptions for those who have not connected to the new rail. The ICBA webinar FedNow in Focus: Maximizing Real-Time Payments for Community Banks, featuring Siobhán O’Malley, National Account Program Manager at Federal Reserve Financial Services, and Mark Majeske, addressed the common questions that community banks have about the FedNow Service.

Understanding the FedNow Service

The FedNow service enables financial institutions of every size in every community across the U.S. to provide safe and efficient instant payment services around the clock, every day of the year. It offers immediate settlement and credit push characteristics, immediate availability of funds, and powerful remittance capabilities. The service operates 24/7, 365 days a year, making it the first always-on payment trail offered by the Fed.

The benefits of the FedNow service are significant. It provides financial institutions the opportunity to stay competitive and meet their customers’ current and future expectations and demands. Moreover, the service enables a variety of use cases and supports a neutral platform for payments, allowing for choice and flexibility in how institutions connect to it.

The use of the ISO 20022 messaging standard in the service paves the way for nationwide access to instant payments and supports interoperability through routing. Additionally, the service has robust risk mitigation capabilities, including transaction limits, a negative list feature, and reporting requirements for fraud prevention.

FedNow Service Participation and Use Cases

As the FedNow Service continues to gain traction in the market, community banks must understand the different participation types and high-value use cases available. When considering participation in the FedNow network, financial institutions have the flexibility to choose from various options. They can opt for Receive Only, both Send and Receive, or Send and Receive with Requests for Payment. These options enable financial institutions to tailor their participation based on their specific needs and risk tolerance.

By selecting the appropriate participation type, financial institutions can unlock a range of high-value use cases within the FedNow network. Instant payments have the potential to address real payment challenges across different sectors. Some notable high-value use cases for FedNow include on-demand payments for businesses, immediate payroll processing for employees, me-to-me or account-to-account transfers, and real estate closings.

During the webinar, a polling question was posed to the audience, seeking insights into their plans for addressing the need for the creation of instant payment use cases. The results revealed that 100% of the respondents indicated a preference for third-party service providers to provide use cases, highlighting the significance of external partnerships in driving the development and implementation of instant payment solutions.

Maximizing ROI with FedNow Real-Time Payments

Real-time payments with FedNow can offer a significant return on investment (ROI) for community banks and other financial institutions. There are several ways to decrease costs with the FedNow Service, such as lower transaction costs and reduced customer service inquiries due to the instant confirmation of transactions. Additionally, the automated end-to-end solution of FedNow allows for the movement of funds and data, which presents opportunities for cost reduction and process efficiencies. Moreover, driving growth with FedNow can be achieved through monetization such as charging a fee for outbound FedNow transactions, offering a premium expedited version of payments while leaving other payment methods, such as ACH, as free options. The rapid movement of funds facilitated by FedNow also allows for improved client experience, instant data and cash flow projections, and enhanced process efficiencies.

Enhancing Client Experience and Real-Time Data Projections

The implementation of FedNow is important for an improved customer experience. With the immediacy of the FedNow Service, customers are provided with immediate confirmation and information regarding their transactions. The ability to project cash flow more accurately and efficiently is a key advantage of instant payments, allowing businesses to better manage their finances. In addition, the transfer of data allows businesses and financial institutions such as community banks to make data-driven decisions and projections in real time.

Key Preparations for Launching Instant Payments

When launching instant payments, it is crucial to make strategic considerations and align operations with business objectives. The FedNow Explore site provides a wealth of resources to fill knowledge gaps on instant payments. It is important to assess existing customer support capabilities and partner with entities to offer 24/7 support.

Community banks can consider strategic partnerships that can support their instant payments adoption with solutions such as Orbipay Payments Hub. These partnerships can assist in connecting directly to the FedNow network and enable the bank to leverage a service provider for instant payments.

To learn more about how real-time payments should fit into your community bank’s payment strategy, watch the full webinar FedNow in Focus: Maximizing Real-Time Payments for Community Banks.

Alacriti Blog

The Future of Real-Time Payments in Banking

January 16, 2024 Kristen Jason

When it comes to payments, the need for immediacy has never been more pronounced. Financial institutions of all sizes are grappling with the integration of instant payment systems, a trend underscored by experts in a recent American Banker-hosted webinar featuring Jim Colassano from The Clearing House, Jim Maimone from Citizens Bank, and Mark Majeske from Alacriti.

The Clearing House’s (TCH) RTP® network is at the forefront of this progress. As Colassano explained, with 375 financial institutions onboard and a growth rate of about 10% quarterly, the network is a testament to the sector’s commitment to real-time payment solutions. TCH’s RTP network, a collaborative effort of 24 of the largest U.S. banks, is the first new payment rail introduced in the U.S. in 50 years, which is significant in itself.

Real-Time Payments Use Cases

Real-time payments (RTP) has brought forth a diverse range of use cases, from A2A transfers, loan funding, and gig economy payments to B2B transactions, payroll processing, and insurance claims. The scope of RTP is expansive and continues to grow, while catering to different segments and needs. Maimone’s insights into the varied applications of these use cases in businesses highlight the network’s flexibility and adaptability. He emphasized the importance of aligning RTP with specific business processes, tailoring the technology to fit unique requirements, thus enhancing efficiency and effectiveness.

The Future of Real-Time Payments for Banks

Looking to the future, both Maimone and Colassano envision a broadening scope for RTP. As Maimone pointed out, education is key to this expansion, especially as younger generations with expectations of immediacy enter the market. The potential for RTP to streamline and speed up business transactions is vast, potentially shrinking costs and transforming the way businesses handle their finances.

One critical aspect of this transformation is the adoption of the ISO 20022 standard, a global methodology for data transmission in financial services. The standard simplifies complex transactions and is increasingly being integrated into enterprise resource planning (ERP) systems globally. The compatibility of ISO 20022 with international transactions adds another layer of efficiency and seamlessness to RTP.

The technical aspect of connecting to the RTP network, as Maimone recalled from Citizens Bank’s experience, is relatively straightforward. However, adapting to a 24/7 operational environment poses operational challenges. This shift requires not only technical integration but also a reevaluation of traditional banking operations, particularly in the context of fraud prevention and customer service.

A notable aspect of the RTP network, as Colassano highlighted, is its safety features. The network is designed as a credit push-only system, ensuring that funds cannot be pulled out of an account without authorization. This design significantly reduces the risk of fraud and unauthorized transactions, a crucial consideration in today’s digital-first banking environment.

As financial institutions progressively join the RTP network, many start with a “Receive Only” approach. This method allows for a simpler integration process and offers immediate benefits like receiving instant payments from various sources, including gig economy platforms and larger banks. The next step, often facilitated by third-party service providers like Alacriti, involves enabling institutions to originate payments, further expanding their capabilities within the RTP network.

The journey towards a mature RTP offering is marked by continuous innovation and the addition of value-added services. Features like Request for Pay (RfP) Bill Pay, Document Exchange, Immediate Cross-Border (IXB) transactions, and DDA tokenization are set to redefine the payment experience. These functionalities not only enhance the security and efficiency of transactions but also cater to the evolving needs of businesses and consumers in a real-time economy.

Majeske from Alacriti provided insights into the ease of connecting to the RTP network through their Orbipay Payments Hub. The cloud-based, ISO 20022 native hub is designed for seamless integration with banking cores and offers smart routing capabilities. This flexibility allows financial institutions to quickly adapt to new payment rails, as well as offer the optimal rail for each transaction—eliminating unnecessary costs.

In conclusion, the growth of real-time payments is an irrevocable trend shaping the future of financial transactions. With a focus on security, fraud prevention, and enhancing customer experience, financial institutions are searching for innovative solutions and strategic partnerships. The transition to instant payments underscores a commitment to meeting the modern consumer’s and business’s expectations of immediacy and efficiency.

For a deeper dive into Unlocking Real-Time Payments Strategy and Technology, watch the full webinar hosted by American Banker with insights from industry leaders at Citizen’s Bank, The Clearing House, and Alacriti.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

How the Evolution of EBPP Affects Credit Unions

January 15, 2024 Kristen Jason

Electronic Bill Presentment and Payment (EBPP) is impactful for all financial institutions, but is especially so for credit unions. This technology not only streamlines billing processes but also profoundly impacts member engagement and satisfaction. In a webinar, The Evolution and Opportunities of EBPP for Credit Unions,” Stuart Bain, SVP of Product Management at Alacriti, delved into the past, present, and future of EBPP. His insights covered trends in consumer bill payments, opportunities for credit unions, loan payment fraud prevention, impact on member conversion, the role of AI, and the significance of the TCH’s RTP® network and FedNow® Service.

The Transformation of EBPP

EBPP’s journey began in the 1990s. Initially, uptake was slow due to limited internet access. The early 2000s saw a surge in adoption as internet usage became more widespread. Initially, EBPP solutions were mostly in-house developments by large billers, focusing on ACH payments with occasional card transactions. These solutions were often siloed and lacked integration, making customer support challenging and lacking a unified view of payments.

However, as consumer expectations shifted towards real-time interactions, EBPP providers responded by integrating additional channels into their bill pay solutions. This evolution led to more comprehensive platforms that included various payment channels like web payments, call center solutions, and IVR systems. The result was a unified, more efficient EBPP system offering insights into customer payment preferences and behaviors.

Emerging Trends in Consumer Bill Payments

Consumer bill payments are, of course, now dominated by electronic methods. A shift away from traditional checks to ACH, credit, and debit card payments is evident, with electronic methods comprising the bulk of transactions. 2023 Datos Insights data shows that 16.8 billion bills are paid annually in the U.S. adding up to a total of $5.4 trillion. Electronic payment methods comprise the bulk (~83%). This shift aligns with consumer expectations for convenience, speed, and flexibility in payment options.

For credit unions, this trend presents both challenges and opportunities. The diverse payment preferences of consumers mean that credit unions must offer a variety of payment options to meet member needs. The rise of real-time payments, fueled by networks like TCH’s RTP® network and the FedNow® Service, is reshaping expectations, with consumers increasingly valuing the immediacy of transactions.

Opportunities and Challenges for Credit Unions

For credit unions, embracing EBPP is not just about technology adoption; it’s a strategic move to enhance member satisfaction and retention. Nearly half of consumers view the ability to pay bills online as important when choosing their institution, which includes not only the ability to pay accounts at the institution, but also the ability to pay accounts at other institutions from inside that solution. A robust EBPP system can transform the loan payment experience, offering members convenient, secure, and immediate payment options. This transformation can lead to increased loyalty, more business opportunities, and improved financial performance for the credit union.

The opportunities that come from a modern EBPP solution go beyond a great member experience. Another way that a modern EBPP solution can help is by managing loan overpayments and fraud. For example, bust-out fraud on credit cards where people overpay a card with a low limit to try and get access to those funds, knowing that the ACH payments they’ve made are going to result in insufficient funds. A good bill pay solution can help address these issues with dynamic payment limits based on an amount owed or a credit line and prevent these overpayments from being scheduled in the first place.

Another benefit of bill payment modernization is a reduction in processing costs. The increase in online bill payments can result in the reduction of call center volume and even transaction costs when it’s easier for members to pay with a banking account (ACH-funded payments).

However, the journey is not without challenges. Credit unions must navigate the complexities of integrating various payment channels, ensuring compliance with evolving standards like PCI DSS and NACHA, and addressing the ever-present risk of fraud. At the same time, credit unions have to provide a seamless and intuitive user experience—especially on mobile platforms. These challenges can be met with a modernized EBPP solution.

The Role of AI and Real-time Payments

AI (artificial intelligence) and real-time payments are two critical components shaping the future of EBPP. AI, particularly in the form of chatbots, can enhance customer service by handling routine inquiries and payment transactions, thereby freeing up valuable human resources for more complex tasks. Meanwhile, real-time payment networks are setting new standards for payment speed and reliability.

Request for Payment (RfP), a capability that’s only possible on real-time networks, offers a secure, reliable method for high-risk transactions, ensuring irrevocable and immediate transfer of funds. This feature is particularly relevant for sensitive transactions such as loan payoffs or new account funding.

The Road Ahead for EBPP

Bill pay is a key member touchpoint, and for some, it may be the only touchpoint. If it’s hard to make a payment or they can’t get through to make a payment, they’ll be dissatisfied and it may deter them from opening new accounts. If they’re offered the opportunity to take out another loan, they may think of the difficulty of making a payment and decide elsewhere. Conversely, a good online loan payment experience may lead to opportunities to expand that relationship.

EBPP is poised for further evolution. The integration of new technologies such as AI and the widespread adoption of real-time payment networks will continue to influence how credit unions serve their members. These advancements will not only enhance operational efficiencies, but also provide a more satisfying member experience overall. As credit unions move forward, the key will be to balance technological innovation with a deep understanding of member needs. By doing so, credit unions can leverage EBPP not just as a tool for efficient billing but as a strategic asset to foster stronger, more enduring relationships with their members.

To explore the history and future of EBPP and gain insights into its most important aspects, watch the full webinar, The Evolution and Opportunities of EBPP for Credit Unions hosted by NACUSO and featuring Alacriti.

Alacriti’s Orbipay EBPP is a customizable electronic billing and payments solution for businesses and financial institutions of all sizes. Orbipay EBPP offers convenient and flexible choices that include all the payment channels, payment methods, and payment options expected from a modern digital bill pay experience. For more information, please contact us at info@alacriti.com.

Alacriti Blog

Understanding the Complexities of EBPP: A Q&A Session with Stuart Bain

January 8, 2024 Kristen Jason

The realm of Electronic Bill Presentment and Payment (EBPP) has expanded, offering a robust mechanism to present electronic bills and facilitate digital payments. This evolution caters to the changing preferences of consumers. However, with these advancements come challenges. Members might not always resort to a consistent method of payment, making it a task for credit unions to provide a seamless payment experience, tailored to each member’s unique preference.

Recently, NACUSO hosted a deep-dive webinar titled, “The Evolution and Opportunities of EBPP for Credit Unions.” The session featured Stuart Bain, Alacriti’s Senior Vice President of Product Management, who delved into the past, present, and promising future of EBPP. The webinar shed light on pivotal facets of the EBPP ecosystem: the changing patterns in consumer bill payments, revenue opportunities for credit unions, strategies for loan payment fraud mitigation, and the impact of real-time payments.

At the end of the webinar, credit unions were able to ask Stuart Bain questions directly. Here is what was discussed:

Q: How do you envision the connection between indirect channels and direct channels to enhance the payment experience for both the payee and payor?

Stuart Bain: The future is likely to see an evolution in how payments made outside of a biller’s website are handled. Current systems, such as online banking bill pay solutions, often revolve around files without authentication. However, there’s a growing trend towards real-time connections between institutions. We’re exploring options with companies like BillGO, which would support authenticated payments through online banking. The “request for pay” concept, though still nascent, is on the rise and will offer consumers a more streamlined and versatile experience in making payments across various channels.

Q: How popular do you foresee the “request for pay” system becoming?

Stuart Bain: As of now, the adoption of this system is still limited to commercial transactions. The real momentum will kick in once over 70% of institutions embrace this method, likely around 2024. However, the primary drivers will be adoption at the financial institutions and subsequent consumer education. It may not replace ACH debits but will find its niche in certain scenarios, such as dealing with returned payments.

Q: Which channel do you find is most frequently used for bill payments?

Stuart Bain: While the enrolled web experience, where members sign in for services like recurring payments, remains the most used in terms of sheer volume, the “guest experience” leads in terms of member interaction on a monthly basis. This guest route is also where we see significant mobile phone usage. However, certain client outliers might lean more towards call center payments, depending on their customer demographics.

Q: Upon acquiring your solution, how should credit unions introduce it to their members?

Stuart Bain: Effective outreach is crucial. Successful implementations often feature a prominent “Make a Loan Payment” page on the public website, explaining the available options. This is vital for those with a large indirect customer base, as the online banking experience might not resonate as much. Other effective communication means include emails, texts, outbound mailers, or bill statement messages. If the QR code technology is employed, it can be included in these communications to facilitate quick payments without entering online authentication credentials.

To learn more, watch the full webinar, where Stuart Bain provided a comprehensive overview of the Evolution and Opportunities of EBPP for credit unions. The insights shared not only showcased the current landscape but also the trajectory of the future of payments for credit unions.

Alacriti Blog

The Surge in Popularity of Real-Time Payments in SMB and Corporate Markets

January 3, 2024 Kristen Jason

The shift towards real-time payments is becoming increasingly prominent, especially for small and medium-sized businesses (SMBs) and corporates. Recent data presented by Erika Baumann, Director of Datos Insights’ Commercial Banking & Payments practice, to Alacriti captures a significant trend: a staggering 94% of businesses are poised to make substantial investments in payment systems within the next two to three years. This shift, unprecedented in the industry, coincides with a critical phase where financial institutions are deliberating over strategic vendor selections and business case development. Concurrently, fintech companies are stepping in to fill the voids left by these institutions.

Baumann’s research indicates that the drive for diverse and numerous payment methods has been a major catalyst for this change. In just a short span, the adoption of faster payment methods has jumped from about 9% to nearly 50%, with real-time payments (RTP) and push-to-card transactions leading the charge.

Where Businesses Need Help

A notable discrepancy exists between the implementation of real-time payments by banks and their actual usage by businesses. Many companies are either seeking financial institutions equipped with the necessary capabilities or are directly collaborating with fintechs for more intelligent and automated payable solutions. SMBs, particularly the smaller ones, are somewhat behind in adopting these advancements due to various factors, including oversight by financial institutions and misconceptions about SMBs’ needs and capabilities. However, real-time payments are quite critical for SMBs as liquidity issues can be a major hurdle. The ability to receive real-time payments is vital for this segment.

The diversity in payment methods reflects the evolving requirements of businesses, with a growing demand for flexibility and choice in payment solutions. In 2021, 36% of businesses were using different payment methods for different use cases. Now it’s 75% of businesses.

The U.S. Market Opportunity

In the United States, there is a significant market opportunity for financial institutions adept at deploying effective real-time payment solutions, as seen by the increasing real-time payment usage among SMBs. Only 8% of SMBs have no plans to consider using real-time payments in the coming year, whereas 40% are currently contemplating it, and 18% are already using it.

Disintermediation

The banking industry has experienced a shift favoring regional and super-regional banks. During the pandemic, many businesses moved towards the Big Four banks due to their automation capabilities. However, the recent regional banking crisis led to a diversification of business deposits among various financial institutions, including previously unused ones. Baumann noted that 5% of businesses have completely disintermediated their bank, relying solely on fintechs for cash management and payment needs, a trend even affecting the Big Four.

Fintech Partnerships

An increasing number of businesses are partnering with fintechs for core cash management or payment needs. This trend indicates that payment functionality is a substantial market opportunity for fintechs to outperform traditional financial institutions. Financial institutions are recognizing the loss of payment volumes to fintechs, driven by factors like ease of submitting payment files, better reporting, and access to faster payments.

Opportunities for Traditional Financial Institutions

Despite the trend towards fintechs, many SMBs express a preference for their traditional FIs, provided they offer comparable services. This preference underscores a significant market opportunity for FIs to reclaim business lost to fintechs. FIs lagging in robust payment functionality should focus on partnerships and integration to meet market demands.

Is evaluating or implementing a payments hub on your roadmap in 2024? Download this checklist of important factors to consider to help you navigate the process smoothly.

Alacriti Blog

Payments Hub Solutions: A Guide for Financial Institutions

December 15, 2023 Kristen Jason

All financial institutions, whether banks, credit unions, or neobanks, must adapt swiftly to emerging payment trends. One monumental shift has been the move towards digital, integrated, and instant transaction processing. As consumers demand a seamless payment experience, financial institutions need a holistic approach. This is where payment hubs make a pivotal difference in payment strategy optimization.

What is a Payments Hub?

A payments hub is a centralized platform designed to handle a diverse range of payment types. From traditional wire transfers to newer real-time payment rails such as the FedNow® Service and the RTP® network, payments hub solutions amalgamate these varied rails while connecting to the bank’s existing systems, such as their core billing system, digital banking, fraud, and risk systems, etc.

Why Financial Institutions Need a Payments Hub

For banks and credit unions, a payments hub proves to be a valuable asset, offering a multitude of benefits. Imagine simplifying the complexity of multiple payment systems. Here are some advantages that a payments hub offers:

Unified Experience: With consumers using an array of payment methods, financial institutions must offer a unified, user-friendly platform. A payments hub ensures that customers have a consistent experience across all transaction types.
Operational Efficiency: Handling different payment methods individually can be operationally difficult, particularly for reporting. Payments hubs automate many of these processes (e.g., intelligent routing), making operations more efficient and cost-effective.
Real-Time Processing: Modern consumers expect and appreciate instantaneous transaction processing. Payments hubs can facilitate these rapid transactions.
Regulatory Compliance: Centralized payment systems aid in ensuring all transactions are compliant with the latest regulations and rules, reducing the risk of costly missteps.
Future-proofing: To stay ahead, financial institutions need a system that can evolve and accommodate new payment methods and standards such as ISO 20022. Modern payments hubs are architected with flexibility at their core.
Enhanced Customer Personalization: With more efficient payment processing and a deeper understanding of customer behavior, financial institutions can offer a smoother and more personalized experience to their clients.

Selecting the Ideal Payments Hub Solution

If you’re a decision-maker in a financial institution looking to adopt a payments hub, consider the following:

Integration Capabilities: Will the hub integrate with your current infrastructure? The ability to connect without major overhauls is crucial.
Configurability: Every financial institution is unique. Can the solution adapt to suit your specific needs?
Security: The foundation of any financial system is its security. Ensure that the hub boasts top-tier security features and compliance certifications.
Support and Maintenance: A solution is only as good as its post-sales support. Assess the vendor’s commitment to assisting with the system’s lifecycle—from implementation to updates.
Cost: While evaluating the cost, balance it against potential operational savings and the enhanced customer experience it offers.

Many financial institutions continue to structure their operations around specific payment channels, leading to isolated back-office functions and fragmented customer behavior data. Implementing a payments hub enables financial institutions to reconfigure their back-office departments into adaptable, multifunctional teams that can increase their capabilities, manage complex payments, and integrate new payment methods. With careful selection and implementation, financial institutions can remain relevant and responsive in a dynamic market.

Are you ready to evaluate payments hub providers? Explore this comprehensive guide that covers all the factors you should consider: Payments Hub Comparison Template: How to Evaluate Vendors.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

Unraveling the Future of FedNow for Credit Unions

November 15, 2023 Kristen Jason

*Originally published on CUInsight.com

The world of payments is ever-evolving, and a significant leap in that trajectory is the move towards real-time payments. A recent webinar hosted by Credit Union Times delved deep into this topic, and toward the end, webinar attendees were able to ask their questions directly to Dan Gonzalez, VP of Customer Relations at Federal Reserve Financial Services, and Mark Majeske, SVP of Faster Payments at Alacriti. Here are some of the top questions, and what we learned from the Q&A session.

Q: What are some of the specific fraud mitigation tools put in place for the FedNow® Service?

A (Dan Gonzalez): The FedNow service will offer several tools for fraud mitigation:

Mandatory reporting of any fraud to the service, which then notifies both parties involved in the transaction.
Creation of negative lists to allow credit unions to block certain payments either in or out.
Introduction of dollar limits, initially set at $500,000 per transaction, but institutions can set their own maximum limits based on comfort levels.

Q: Does the Fed list, which service providers support, send capabilities?

A (Dan Gonzalez): The Fed lists certified service providers but doesn’t break them down by capabilities. The FedNow Explorer website does showcase vendors supporting the FedNow service, where they list their capabilities.

Q: With the introduction of real-time payments, how has the gap between receiving and sending capabilities evolved?

A (Mark Majeske): The time between wanting to receive and then send has shortened considerably. While both actions might not occur simultaneously, the interval between them is decreasing.

Q: Why wouldn’t institutions need to staff 24/7 to monitor and manage their accounts in real-time?

A (Dan Gonzalez): Initially, most credit unions will primarily receive funds, which means money is coming into their accounts. Managing liquidity is more critical when sending money. The challenge is more about ensuring enough money is available for outgoing transactions than monitoring incoming ones.

Q: Considering that some platforms offer free real-time payment services, is it viable for institutions to charge for the same?

A (Mark Majeske): While some platforms might offer free services to end-users, there’s intrinsic value in expedited payments. Financial institutions can potentially adopt a model where standard transfers remain free, but expedited ones come at a cost.

Q: Can international payments be made using the FedNow Service?

A (Dan Gonzalez): Initially, the service is domestic-only. While future capabilities may consider international payments, no timeframe has been set for this expansion.

Q: Are payments through the FedNow Service one-time or can they be scheduled in advance?

A (Mark Majeske & Dan Gonzalez): While the system can operate both ways, once a transaction hits the network, it processes instantly. Any scheduling needs to happen at the user interface level before the transaction is sent to the network.

Q: Given that transactions are irrevocable, how are institutions addressing issues like account takeover and potential fraudulent transfers?

A (Dan Gonzalez): The onus of confirming transactions lies with the sender. Once funds are received, the receiving institution isn’t obligated to return them. However, institutions need to be prepared and ensure that the transactions are valid before sending.

To get insights, strategies, and actionable steps to ensure your credit union is ready for the FedNow Service, watch the full webinar, The FedNow Service is Coming: Is Your Credit Union Ready?, featuring the Federal Reserve and Alacriti.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

Unveiling the Future of Payments: A Credit Union Perspective on Instant Payments

October 26, 2023 Kristen Jason

*Originally published on CUInsight.com

In today’s fast-paced world, the demand for instant payments has never been higher. Credit unions, often known for their dedication to their members and their communities, are not exempt from the growing need for real-time payment solutions. The launch of the FedNow^® Service has sparked a crucial conversation within credit unions about the implications and opportunities of embracing instant payments. In a recent Callahan-hosted panel discussion, credit union leaders and payments experts shared their insights into this transformative journey and what it means for credit unions and their members.

Monetizing External Transfers

The discussion commenced with Alkami’s Jeff Bucher sharing an essential use case for faster payments—external transfers. Many financial institution clients have users with accounts at multiple financial institutions, and the ability to link these external accounts to their primary account is a top priority. This consolidation allows users to keep most of their funds in one place while retaining easy access to transfer funds between accounts at other institutions.

Alkami offers a straightforward linking process through instant account verification or trial deposits/micro-deposits. Together, with Alacriti’s instant transfer technology, consumers can seamlessly transfer funds to accounts at other financial institutions through the RTP^® network, the FedNow Service, or Visa Direct. By enabling these instant transfers, credit unions can explore monetization opportunities, such as offering a convenience fee, typically ranging from $1 to $1.50 or a percentage of the amount transferred.

Instant Payments Use Cases

One of the key takeaways from the discussion was the diversity of use cases for instant payments. Bucher highlighted A2A transfers as a compelling starting point, providing a simple yet impactful way for users to move funds instantly between their linked accounts at other financial institutions without waiting for ACH processing. The discussion also touched upon B2B and B2C transactions, highlighting the importance of these use cases in the evolving payments landscape.

For P2P (Person-to-Person) payments, platforms like Zelle, Venmo, PayPal, and Google Pay already serve as faster payment options. C2B (Consumer-to-Business) transactions primarily revolve around bill payments, although this category has declined over time due to the emergence of other payment options.

Debunking Common Myths About Faster Payments

The panel also took the opportunity to address common myths and misconceptions surrounding faster payments:

Myth 1: Faster Payments Are Only for Consumers

Mark Majeske from Alacriti debunked this myth, emphasizing that businesses will increasingly adopt instant payments to streamline processes like invoicing. Requests for Payments (RFPs) will become more prevalent, changing how businesses handle transactions.

Myth 2: FedNow Eliminates the Need for Other Payment Rails

Majeske clarified that FedNow and RTP are not interoperable, meaning that businesses are exploring options to use both for sending and receiving payments. Visa Direct can also fill gaps when dealing with institutions that are not on FedNow or RTP.

Myth 3: Faster Payments Will Replace ACH and Wire Transfers

Majeske assured that while instant payments may reduce the reliance on ACH and wire transfers, they won’t eliminate these traditional methods. There’s room for everyone, with instant payments focusing on speed and 24/7 availability.

Myth 4: Smaller Financial Institutions Are Incapable of Implementing Faster Payments

Cassandra Tucker from ABNB Federal Credit Union disagreed with this myth, highlighting that smaller credit unions have much to gain from embracing instant payments. These institutions can compete effectively by offering digital-first solutions and staying ahead of technological advancements.

The Importance of Identifying Use Cases

Amanda Ott from Veridian Credit Union stressed the significance of identifying an organization’s specific use cases. Before implementing instant payments, credit unions should:

Understand their use cases
Evaluate ROI
Assess costs and consider potential fees

This process allows credit unions to prioritize use cases and plan for a strategic instant payments rollout over time.

Identifying use cases early on provides a roadmap for integration, ensuring a smooth transition to real-time payments. Ott emphasized the need to design a comprehensive business plan that includes priority levels for use cases and timeline goals.

Fraud Management and Current Systems

The panel addressed the issue of fraud management, emphasizing that credit unions should not assume their existing enterprise fraud systems are adequate for faster payments. Due diligence is essential to evaluate current fraud systems and tools. Panelist Amanda Ott mentioned the importance of enhancing fraud prevention and detection capabilities while not impeding the goal of faster payments.

Resource Allocation for Implementation

Cassandra Tucker challenged the notion that smaller credit unions lack the resources to implement and maintain instant payment systems. Choosing the right partner can alleviate many of the implementation challenges, making it feasible for credit unions of all sizes to embrace real-time payments.

The Urgency of Implementation

While acknowledging that credit unions have other priorities, Amanda Ott stressed the urgency of implementing instant payments. She shared how external factors, including fintech relationships, had motivated her credit union to act quickly. Alacriti’s payments hub, with its short time-to-market approach, makes it possible for credit unions to go live within 90 days of core integration.

The Future of Payment Networks

Looking ahead, the panelists expressed a belief that the money movement network would continue to expand and diversify. Rather than limiting themselves to one or two payment networks, credit unions should strive to provide a comprehensive suite of payment options. Intelligent routing and seamless backend handling of transactions would be essential to meet member needs effectively.

Blockchain and Faster Payments

Blockchain technology, often associated with cryptocurrencies, was briefly discussed as a potential tool for future payment networks. Panelist Mark Majeske highlighted that the suitability of blockchain would depend on the specific use case and its alignment with the payment network’s objectives.

Alacriti’s Payments Hub: A Solution for Credit Unions

The discussion also shed light on Alacriti’s payments hub, which offers smart routing and integration with various banking cores. This cloud-based platform allows credit unions to consolidate payment processing across multiple payment rails, including ACH, Fedwire Funds Service, TCH RTP network, Visa Direct, and the FedNow Service.

One of the notable strengths of Alacriti’s solution is its short time-to-market, enabling credit unions to go live within 90 days of core integration. Additionally, collaborative sessions with other credit unions facilitate knowledge sharing and process improvement, and credit unions have an opportunity to influence the product roadmap.

In conclusion, the journey towards embracing instant payments is critical for credit unions. As the payments landscape continues to evolve, credit unions must adapt to meet the growing demands of their members. By understanding the use cases, addressing misconceptions, and leveraging technology solutions like Alacriti’s payments hub, credit unions can position themselves at the forefront of the real-time payments revolution. The future of payments is fast, and credit unions should be ready to make it even more convenient and efficient for their members.

For more, watch the webinar, Instant Payments: A Credit Union Perspective, featuring Amanda Ott, Digital Integration Analyst at Veridian Credit Union, Cassandra Tucker, Director of Operations at ABNB Federal Credit Union, Mark Majeske, SVP Faster Payments at Alacriti, and Jeff Bucher, Senior Product Manager at Alkami.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP^® network, Visa Direct, and the FedNow^® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

Instant Payments: Market Survey (Infographic)

September 12, 2023 Kristen Jason

In May 2023, BAI-hosted a panel discussion where Reed Luhanten, Executive Director at the U.S. Faster
Payments Council (FPC), Keith Gray, Vice President, Strategic Partnerships at The Clearing House, and Mark Majeske, SVP Faster Payments at Alacriti discuss the use cases of real-time payments. During the webinar, participants were asked to take a survey to reveal their thoughts surrounding instant payments. There were a total of 34 respondents (25 banks and 9 credit unions). Here are the results:

Download PDF

Alacriti Blog

Elevating Digital Banking: The Power of Bill Pay in Credit Unions

August 9, 2023 Kristen Jason

How Credit Unions Can Reposition Bill Pay at the Center of Their Digital Experience

Bill pay is an essential feature for credit unions, but it is often not given the attention it deserves. Modernizing the user experience involves enhancing the visibility and accessibility of bill pay on digital platforms, diversifying bill pay features to meet the needs of modern banking consumers, and implementing advanced bill pay solutions. By doing so, credit unions can increase user satisfaction, streamline operations, and stay competitive in a rapidly evolving financial landscape. In this blog, we will discuss how credit unions can reposition bill pay at the center of their digital experience.

The Importance of Bill Pay

Bill pay is a valuable service for members. It allows them to pay their bills on time and avoid late fees. Additionally, bill pay can help to increase customer satisfaction and retention. An Aite-Novarica survey of over 2,000 banking consumers revealed 87% of individuals feel that being able to meet most of one’s financial needs is very or extremely important, and 82% feel that having one’s best interest at heart is very or extremely important. In addition, digital payments have grown in usage and are now a primary driver of daily interactions and member engagement. In a study from Co-op Solutions in partnership with EY and Mastercard, 45% of respondents cited engagement as the top reason for maintaining a primary relationship with their financial services provider. This statistic is especially important considering that credit union members have on average 3x the number of financial relationships as non-credit union members.

Repositioning Bill Pay

There are a few things that credit unions can do to reposition bill pay at the center of their digital experience. First, they need to make bill pay easy to find and use. This means prominently displaying bill pay on their website and mobile app. They should also make sure that the bill pay process is simple and straightforward.

Second, credit unions should offer a variety of bill pay features. 89% of consumers want more payment options from their bill pay solution. This includes recurring payments, automatic payments, and the ability to pay bills from multiple accounts. The average banked U.S. consumer has 15 accounts held across 4.4 financial services providers (this includes financial institutions, credit card companies, P2P providers, and BNPL). The banking environment is competitive and these features allow for members to easily manage their bills and save time.

Third, credit unions should use a modern bill pay solution. A modern bill pay solution can help credit unions to improve the user experience, increase efficiency, and reduce costs. A poll during Alacriti’s webinar with Aite-Novarica was taken in which respondents were asked about how modern they considered their current loan pay experience. The results of a poll indicated a significant shift towards online and digital channels for bill payments compared to five years ago. With the average person having multiple financial relationships, financial institutions have a high likelihood of not being the primary financial institution for their customers and members. Simply “getting the job done” will no longer be sufficient to attract and retain members. There are a number of different bill pay solutions available, so credit unions should choose ones that meet their specific needs.

Benefits of a Modern Bill Pay Solution

There are a number of benefits to using a modern bill pay solution. These benefits include:

Improved user experience: A modern bill pay solution can make it easier for members to pay their bills. The user interface should be easy to navigate and the process should be simple and straightforward. It is important to offer modern payment options such as Apple Pay, but also the flexibility of recurring payments or guest pay.
Increased efficiency: A modern bill pay solution can help credit unions to increase efficiency. The solution should automate the bill pay process as much as possible. This includes posting payments in real-time, lessening the need for calls to see if payments were received. This frees up staff time so they can focus on other tasks.
Reduced costs: A modern bill pay solution can help credit unions to reduce costs. The solution should be able to integrate with other systems, such as the credit union’s core banking system. This can help to reduce the need for manual processing. For example, Florida Credit Union identified payment modernization needs. With the help of Alacriti, they were able to offer a better variety of digital channels for bill payments with integration into their core and online banking provider. This greatly reduced their cost—they reported lowering their cost per transaction by over 50%.

Conclusion

Repositioning bill pay at the center of their digital experience is more than a smart move for credit unions—it’s a necessary adaptation to enhance member satisfaction, cultivate loyalty, and drive financial growth. By implementing a modern bill pay solution, diversifying bill pay features, and ensuring a user-friendly interface, credit unions can cater to evolving member expectations, stay competitive in the dynamic banking landscape, and affirm their roles as primary financial institutions. This strategic shift not only makes bill pay a more valuable and convenient service, but also aligns credit unions with the future trajectory of digital banking.

To learn more, watch the webinar, Repositioning Bill Pay at the Center of the Credit Union Digital Experience.

Alacriti Blog

Demystifying the Top 5 Misconceptions about the FedNow Service

August 8, 2023 Kristen Jason

The FedNow^® Service, the first new payment rail introduced into the Federal Reserve system in over 40 years, is launching this summer. However, there remains a considerable amount of misinformation and misconceptions surrounding this new payment rail. In a recent webinar, Joni Hopkins, Vice President of the Product and Relationship Management Group at Federal Reserve Financial Services, and Mark Majeske, Senior Vice President of Faster Payments at Alacriti, addressed the top ten misconceptions prevalent in the market about the FedNow Service. Here, we will review five of the misconceptions discussed during the webinar, providing clarity and understanding for financial institutions and stakeholders.

Misconception #1:

My credit union has to offer both Send and Receive and all use cases to see a value.

Hopkins dispelled this misconception by emphasizing the flexibility of the FedNow platform. Credit unions have the autonomy to decide whether they want to offer Send and Receive capabilities or focus solely on Receive functionality. The recommendation is for every credit union to, at a minimum, explore the Receive Only option. This approach allows credit unions to gradually expand their offerings based on their members’ needs and preferences. Majeske shared that he’s seen a number of financial institutions start out with Receive Only and build to Send as they recognize what their members need and when they need it. It comes down to use cases and if members want to use something they’re seeing in the marketplace, like getting payroll faster.

Misconception #2:

I don’t have to create use cases for faster payment products—other FIs will.

Hopkins clarified that while financial institutions don’t necessarily have to create their own use cases, they will inevitably discover relevant use cases within their specific market context. It is crucial for financial institutions to maintain a close relationship with their members, actively seeking feedback to understand their evolving requirements. Hopkins also mentioned that the U.S. Treasury has already participated from the beginning. “On day one, when we launch, the U.S. Treasury will be with us in this journey for FedNow. They’ve been part of our pilot program and have announced that they will be bringing agencies to the table. So I encourage everyone to at least think of the Receive side. The risk is also a lot lower for Receive Only.” Majeske agreed. “Your members will find use cases that other financial institutions have put in place, and they’re going to want to use them. As a member, if you see friends that are able to get payroll two days faster, and your credit union is not offering that capability, that may be an issue. For example, in the gig economy, we’re seeing Uber drivers that want to be paid as soon as possible. Perhaps you can let other financial institutions come up with use cases in the beginning, but over time you’ll find that your members are going to like what they’re seeing and using. You want to keep very close ties with those members to understand what their needs are.”

Misconception #3:

A brand new fraud system for instant payments is a must.

Hopkins addressed concerns regarding fraud prevention, stating that financial institutions can choose to add new tools but are not obligated to build an entirely new system. The FedNow Service will offer fraud prevention capabilities, including transaction limits and negative lists, to manage risks and reduce fraud exposure. Financial institutions can leverage their existing fraud systems and explore integration options to enhance security. Majeske recommended that financial institutions look at systems to layer onto existing solutions that are more practive and can decision transactions in seconds. They should be designed specifically with real-time payments in mind.

Misconception #4:

Processing real-time payments is more expensive than processing Same Day ACH.

Hopkins reassured financial institutions that the pricing for the FedNow Service is comparable to existing payment methods such as ACH, checks, and wires. Moreover, in 2023, fees for Receive Only transactions will be waived. The focus should shift from cost considerations to the speed and availability of the service, ensuring the appropriate payment rail is selected for specific use cases. “On the Send side, you’ll see that it is $0.045—so a fairly inexpensive option. This is going to give institutions another option for how they’re going to send their payments for their members. This may be something that they do internally or something they offer out to their members directly. But it is a great tool because there’s so many things that can happen that make sense in both the instant and the ACH world,” said Hopkins.

Misconception #5:

I have to staff my credit union 24 hours a day, 7 days a week once we sign up for FedNow.

Hopkins addressed staffing concerns, emphasizing that similar to ATMs, real-time payments do not require credit unions to operate around the clock. However, having contingency plans in place and establishing communication channels for support is essential. The Federal Reserve will provide 24/7 customer service, which helps address staffing concerns for credit unions. “I’ve had the opportunity to launch a number of banks into instant and faster payments. I know of very few institutions that have added staff as a result of adding instant or faster payments. At Alacriti, we design a working relationship where we do all the heavy lifting for you, and you don’t have to have people there on the weekend, either for the transaction or for fraud. It’s not necessary because all of this is systemic and built around efficiency,” Majeske shared.

Next Steps:

To proceed with the FedNow Service, financial institutions are advised to contact their Federal Reserve Relationship Manager and visit explore.fednow.org to research and explore various use cases. The following steps were recommended by Hopkins:

Identify and validate real-time solutions: Determine whether to use the core system or a payment provider like Alacriti.
Make connectivity decisions: Connect directly to the Fed through Fedline Advantage or higher or via a payment provider (the provider must also be coming directly to the Fed).
Establish settlement decisions: Decide whether to continue using existing settlement methods or explore alternative options.
Determine Send/Receive strategy: Assess whether to opt for Receive Only or both Send and Receive functionalities.

Majeske provided insights into Alacriti’s involvement and contributions to the success of the FedNow Service. As participants in the pilot program, Alacriti has completed a full end-to-end transaction in the test system and integrated the FedNow capability into their Orbipay Payments Hub. Alacriti’s differentiating factors include being cloud-native, ISO 20022 compliant, and utilizing various APIs to integrate with a multitude of cores. They adopt a partnership approach, assisting financial institutions in managing their success in instant payments.

Credit unions have the freedom to determine their desired level of involvement with real-time payments. No matter the level, by embracing the FedNow Service, financial institutions can enhance their payment capabilities, better meet their members’ needs, and drive innovation in the rapidly evolving financial landscape.

Read about how Veridian Credit Union’s take on credit unions and instant payments in FedNow Certification Aligns With Veridian CU’s Mission And Growth Strategy.

To learn more about the misconceptions in the market related to the FedNow Service real-time payments rail, watch the full webinar, Top 10 Misconceptions about the FedNow Service, featuring the Fed and Alacriti.

Alacriti Blog

The Importance of Digital Customer Service in Banking to Businesses

July 18, 2023 Kristen Jason

As customers become more tech-savvy and demanding, their higher expectations extend to when they go to work and represent their businesses. This has become especially true in recent years, as the pandemic created more pressure for banking transactions to be completed digitally. A seamless experience and convenience in banking is key to businesses of all sizes. And it starts right from the beginning. 42% of U.S. based businesses view onboarding experiences at fintech companies to be more efficient than those at their banks.

Businesses are an ever-growing opportunity. A decade ago, 2 million businesses were formed per year. Before the pandemic, it was 3 million. Now, by the end of 2022, 5.4 million new businesses are expected to be formed. Neobanks and challenger banks are of course capitalizing on this market, making it vital for traditional financial institutions to compete with their digital capabilities. And these capabilities are significant. Small firms are avid users of digital channels. For instance, almost half (46%) of surveyed small business stakeholders use their mobile banking app daily. For surveyed larger firms, online self-service was the most important factor that business clients cited when weighing a bank’s digital offering.

Alacriti’s partner, Glia, offers digital-first experiences, including Alacriti’s payment technology, for financial institutions to connect to their customers or members. We sat down with Jenn Markus, Director of Technology Partners at Glia to discuss how important digital customer service is in banking to businesses.

1. According to Aite-Novarica Group, 5-10% of new online treasury product applications never get completed due to poor onboarding capabilities and experiences. With online customer service like co-browsing, imagine not missing any business because you can help continue to deliver the online experience, even when assistance is required. What other ways would you say financial institutions should leverage online customer service to increase revenue?

There are a number of different ways that online services can grow revenue: a recent Harris Poll showed that 40% of banking customers are willing to leave their primary financial services provider for one that provides a better digital experience. By providing them with that better digital experience, FIs can avoid losing customers through attrition and improve customer retention. Just a 5% increase in customer retention can improve profits by anywhere from 25-95%, according to Bain & Company. Making sure existing users don’t have any reasons to leave goes a long way in securing profits.

Additionally, digital tools can allow Customer Service Reps (CSRs) a greater insight into the needs of website users. With Glia’s Live Observation tool, a CSR could watch a user’s journey through the website, including seeing them struggle with a form, and proactively reaching out to them and offering assistance. 45% of consumers say they’re likely to go elsewhere if a business doesn’t provide a personalized experience, so the ability for CSRs to reach out proactively at the first moment of struggle can make all the difference for customer loyalty.

2. What are the benefits of online customer service for business banking?

Online service really wins a lot of people over with its convenience: almost everyone (over 90% of the US according to Statista) can reach the internet with 24/7 access, and with features like AI-powered chatbots, you can truly use banking services digitally 24/7. They can do all their important banking whenever they want, wherever they need to, without all the hassle of visiting a physical branch. Being able to get in touch with you on their terms, when it’s most convenient for them, is a valuable selling point.

Digital Customer Service will also benefit businesses by providing the FI with more insights into their business customers’ finances. FIs can take advantage of a wealth of data and digital tools to better provide for their business customers, helping individual accounts with unique plans for long-term financial success.

3. In a survey of 358 small businesses, 45% said they banked with Paypal, 55% said they could consider doing so; and 30% said they currently work with Square, and 43% said they would consider doing so. In your experience, how important is the digital customer experience in banking important to businesses?

Digital Customer Service has become an increasingly crucial platform for maintaining loyalty. Users become frustrated with the digital experience when it doesn’t meet the needs of their business and can quickly erode their trust. They often expect the same kind of service experience they receive from tech giants or major retailers, and if you don’t deliver it then they may want to seek out someone else who can. It’s easier than ever in the digital age to switch FIs, so maintaining business’ loyalty with great digital experiences is paramount. If you can avoid giving someone any reason at all to leave, you should.

4. Of businesses surveyed, 52% of surveyed businesses state a seamless experience across the bank is required for or very important to keeping their business; an additional 36% state it is important.” Is it safe to assume the same about businesses? What do you think businesses expect when it comes to online customer service from their institution?

It’s usually safe to assume that the same kinds of things that can cause friction for consumers will also negatively impact businesses. Most people may, in fact, have a higher standard for the banks they trust with their business than the ones they use for their personal finances. Financial institutions should definitely make sure they’re meeting their business clients’ needs as well as their personal account holders.

Businesses will want to be able to easily monitor their accounts and finances from anywhere, ensuring they have ready access to them and can easily make changes in the event of an emergency. Businesses also want to be able to perform actions like paying bills and transferring money quickly, so they should be easy to find on your site and intuitive to carry out. They expect to be able to quickly get in touch with a specialized business CSR should they ever have any issues: over the phone, online, or however else they like to get in touch. They also will expect support staff to be knowledgeable and trustworthy, so they can feel comfortable trusting them with their business’ finances. At the end of the day, we are serving the people within the business, so providing a seamless, personalized experience makes a difference.

5. Considering nearly 3 out of 4 consumers are willing to go to a competitor, driven by the digital disconnect, what is the best strategy to personalize the digital customer service experience?

At Glia, we often talk about meeting account holders where they are and in their moment of need. By offering multiple avenues to connect online and via phone, you can provide a personalized experience, remove the digital disconnect, and streamline the experience. Whether utilizing online chat, SMS, video, voice, or phone, giving people a lot of different options for how they want to get in contact with you makes sure that you’re meeting them where they already are, which creates a personalized journey.

It’s also important to ensure that these channels are interconnected, and can communicate with one another: nothing makes someone feel more ignored in a customer service interaction than when they have to repeat what they’ve already said! Make sure that your channels can communicate between one another, passing along context when transitioning the users to ensure that nobody needs to explain themselves all over again. It not only makes service feel more personal, but reduces frustration and makes them much more likely to want to keep coming back.

Alacriti and Glia have partnered to assist financial institutions in providing their members with best in class digital-first service. Glia’s Digital Member Service Platform combines all communications into one unified digital experience. With the partnership, members have access to Ella, Alacriti’s AI chatbot that’s fine tuned to answer bill pay questions and is fully integrated within Glia’s Digital Member Service platform. For more information about Digital Member Service powered by Alacriti and Glia, please please call us at (908) 791-2916 or email info@alacriti.com.

Alacriti Blog

Maximizing Bill Payments with EBPP

June 6, 2023 Kristen Jason

There are quite a few benefits of offering EBPP for a biller versus just having customers mail checks or using online banking bill pay. Stuart Bain, Senior Vice President at Alacriti, was recently interviewed for Alacriti’s podcast where he discussed the benefits of EBPP, its creation, how it supports payments across channels, and the most used features. Here are some key takeaways from the interview.

Electronic Bill Presentment and Payment (EBPP) offers increased convenience and efficiency for customers and billers

EBPP, also referred to as biller direct, is a service that enables customers to make bill payments directly to the biller through their website or phone. Bain explained that the key benefits of EBPP include providing customers with access to their current billing data, offering more payment options, the ability to create recurring payments, and same-day or real-time payment posting.

Bain stated, “Customers have access to their current billing data because typically they can pull it straight from the biller site, and they can see exactly what they owe at a given point in time.” He also emphasized the importance of offering multiple channels for customers to make payments, saying, “Customers can also use their debit or credit card (if the biller chooses to support them) to make payments rather than having to debit a bank account either via a check or an ACH.”

EBPP solutions have evolved over time to meet changing customer demands and demographics

Initially, EBPP solutions were more rudimentary compared to today’s offerings. Bain noted that they started with a single web channel for enrolled web one-time and recurring payments, basic call center functionality, and basic reporting. However, as customer demands and expectations increased, more channels and features were added to EBPP solutions, such as guest web, AutoPay, chatbots, and IVR.

Bain explained, “We do see a lot of variation, but it also depends on how you actually define most used. As an example, our reporting from our Orbipay EBPP solution shows that the channel that gets used the most by the customers is our guest Web channel.” He emphasized that it’s essential for billers to offer a range of channels to meet their customers’ needs and preferences.

Financial institutions should look for an EBPP solution that offers an omni-channel experience, real-time payments, and flexibility

An ideal EBPP solution should provide a true omni-channel experience, offering a range of direct channels such as customer websites, mobile options, and phone payment options. Additionally, supporting real-time or same-day payment posting is crucial for meeting customer needs. “Around two-thirds of consumers think that it’s very important to them that they can do instant payments. It can’t be something that’s going to take two or three days to apply the payment because it just doesn’t meet the consumer’s need for immediacy,” Bain explained.

Bain highlighted the importance of a flexible EBPP solution, saying, “The important thing to understand is that it’s not one size fits all. And we play well in that area because rather than a one size fits solution, Alacriti has the ability to drive things through configuration and parameters. While we have a standard build, it can all be tweaked and configured to suit a specific biller. We can typically change things overnight. In addition, the entire system was designed around the concept of real-time (which is a key difference), with support planned for the RTP® network and the FedNow^SM Service, while simultaneously being able to support batch-based processes. An example of this is the generation of ACH files to go to clearing.”

Listen to the full podcast: Episode 11: EBPP.

To view data on consumer bill payments, download our Consumer Bill Payments in 2022: Trends Report.

Alacriti Blog

Instant Payments Fraud: Market Survey (Infographic)

May 3, 2023 Kristen Jason

In a recent webinar, we invited financial institutions to take a survey to reveal their concerns about fraud and real-time payments. Here are the results:

Download PDF

Alacriti Blog

A Quick Run-Down on Real-Time Payments and Liquidity Management

March 14, 2023 Kristen Jason

*Originally published on CUInsight.com

As credit unions move forward with real-time payment adoption, how to connect is the primary consideration. However, another major decision is whether or not to use a funding agent (or correspondent partner). Participating in real-time payments increases intra-day liquidity needs, as adequate cash must be immediately available to fund outbound payments. Credit unions need to balance the risk of underfunding payment accounts and the inefficiency produced by overfunding pre-funded accounts.

A funding agent funds and manages positions in the RTP^® network’s joint Federal Reserve bank account on behalf of its participating credit union. And while the Fed doesn’t require financial institutions to prefund any accounts, similar services for the FedNow^SM Service are available (called correspondent partners). A correspondent partner can manage a credit union’s profile, cash, and settlement, and make payments.

For instance, The Clearing House’s RTP network is 24/7/365 and uses a reconciliation window that goes from midnight to midnight. During that time, the prefunded requirements and balances are held separately in a joint account at The Federal Reserve Bank of New York, which needs to be managed and monitored at all times. The joint account is required regardless of a credit union’s home region for a federal reserve bank, meaning without a funding agent, there is a need for a separate joint account.

A funding agent can hold the account on behalf of the credit union and actually move the money back and forth between the credit union’s account and the Federal Reserve Bank of New York’s account. This service can provide value to the credit union because if available funds get low during off hours, the credit union could run out of funds. A funding agent will pre-fund the account for the credit union, manage the limits, and react to the alerts.

Benefits of using a funding agent or correspondent partner:

24/7/365 facilitation and management of real-time payments – figuring out how to manage the settlement and how it’s going to be monitored is very new for many credit unions
Simplifies processing – there is no need to have someone managing and monitoring the account every day
Simplifies the reconciliation process – typically, funding agents have consolidated access to all different settlement reports
Lower funding requirements – for the RTP network, there is typically a lower pre-funding requirement when a financial institution uses a funding agent

The decision to use a funding agent or correspondent partner is individual to each credit union and should be evaluated even before implementing Receive Only. To find out more about credit unions using funding agents to connect to real-time payments rails, watch the webinar, Real-Time Payments Funding Agents 101, featuring Corporate One and Alacriti.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow^SM Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.