Category Archives: Alacriti Blog

ACH Modernization: Insights from the Experts

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’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.

The FedNow Service: Community Bank Executive Questions Answered

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’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.

Decoding the FedNow Service for Community Banks

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’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.

The Future of Real-Time Payments in Banking

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.

Fednow Guide for Banks and Credit Unions

FedNow: A Guide for Banks and Credit Unions

In the rapidly evolving world of instant payments, the introduction of the FedNow
Service in July 2023 marked a significant milestone. This guide has been created
to provide banks and credit unions with a better understanding of the FedNow
Service, as well as the resources needed to find out more information. Alacriti
facilitates a connection between financial institutions and the FedNow Service
(as well as other rails) through its Orbipay Payments Hub solution. The below
frequently asked questions about the FedNow Service should address many of
the common misconceptions and questions that financial institutions may have.

What is FedNow?

The FedNow® Service represents the Federal Reserve’s entry into modernizing payments with a service that enables instant, 24/7 money transfers for financial institutions. It is the newest payment rail in the United States.

The FedNow Service aims to give businesses and people an effective way to pay and instantaneously access funds through their financial institutions. The financial institutions and their consumers benefit from a real-time payment option.

How does FedNow work?

How does FedNow work

Source: © 2023 Federal Reserve Banks, © 2023 Federal Reserve

Navigating the process is now more seamless than ever. Here is an overview of how it works.

The FedNow Service makes it possible to initiate payments seamlessly by transmitting payments messages through the end-user interface to financial institutions. The financial institution will then receive instructions to authorize the transaction, subsequently sending a payment message to the FedNow® Service. At this time, the FedNow Service will validate any payment messages and send them to the financial institution for either acceptance or rejection. Upon completion, the financial institution will send a response to the FedNow Service confirming the final decision.

In the event of rejection, the FedNow Service informs the payee. If accepted, the FedNow Service deducts funds from the payor’s account and credits them to the payee’s account.

Here’s a breakdown of this 10-step process that occurs within seconds:

  • Step 1: This transaction will occur between the payee and the payee’s financial institution.
  • Step 2: The payor initiates a payment by sending payment messages to the bank or credit union.
  • Step 3: The bank or credit union will then receive instructions and proceed to authorize the transaction if sufficient funds are available.
  • Step 4: The bank or credit union contacts and submits the payment message to the FedNow Service.
  • Step 5: The service will validate the payment message and subsequently send it back to the bank or credit union, indicating either acceptance or rejection.
  • Step 6: In the event of rejection by the bank or credit union, no further action will occur. However, upon acceptance, Fednow promptly deducts those funds and credits them to the payee’s account.
  • Step 7: The service will either debit or credit the sender and receiver financial institutions’s authorized account. Steps up to this point will take up to 20 seconds to complete.
  • Step 8: To notify both parties of the payment, the service will send an advisory to the receiver financial institution and an acknowledgment to the sender financial institution.
  • Step 9: The receiver financial institution can choose to confirm the posting by sending a message to the sender financial institution.
  • Step 10: Finally the Fednow Service notifies everyone of the successful transaction. In instances where the financial institution rejected the transaction in step 6, the FedNow Service notifies all parties of the rejection.

How can FedNow help banks and credit unions?

For Credit Unions: When choosing between credit unions and banks, the younger generation often leans towards banks due to perceived modernity. Zoomers form a relatively small portion of credit union (CU) members, which raises the question of why. This might be attributed to banks’ technological advancements and robust campus marketing. However, with connection to the FedNow Service available to all financial institutions, credit unions can now more closely align with the immediate gratification that Zoomers expect.

For Banks: The FedNow Service presents another opportunity for banks to improve their customer experience. As banks actively promote their instant payment services, the addition of the FedNow Service broadens their reach for financial institutions that participate in instant payments.

For All Financial Institutions: The FedNow Service will enhance liquidity management by introducing streamlined transfer capabilities, promoting efficiency for credit unions and banks. This directly benefits financial institutions and their accountholders, as the expedited process contributes to increased customer satisfaction. In addition, banks and credit unions that are struggling with processing and exceptions (associated with wires and ACH), may find relief in the fully automated FedNow Service. The result is better back-office efficiency.

How can the FedNow Service help bank customers and credit union members?

Improve Efficiency: The FedNow Service can improve efficiency for bank customers and credit union members. Customers and members demand speed and efficiency, especially in times of emergency. Customers can access funds immediately using the FedNow Service, resulting in faster access to funds. This is helpful for any accountholder, but is especially valuable for those who are not able to wait for conventional settlement timeframes.

Lowering Cost and Improving Management: Forward-thinking financial institutions equip their customers and members with personal finance tools to help manage their money. Offering instant payments helps accountholders better predict and manage their money, and avoid the frustration of unnecessary NSF fees. Not to mention for business owners, there can be faster settlements which can lead to minimizing administrative costs and enhancing the overall financial management.

Technological Advances: The addition of the FedNow Service will assist businesses in developing better and more pleasant ways to improve customer experience. Overall, the FedNow Service provides numerous opportunities for customers to have a better experience with their financial institutions. As technology is on the rise, providing customers with more convenientsolutions than ever, so are the demands on banks and credit unions to enhance their customer experience with products that address their needs. For instance, a car loan disbursement over the weekend so a customer can drive out of the dealership with a new car on a Saturday.

What are the use cases for FedNow?

How can the FedNow Service help bank customers and credit union members?

Source: https://fasterpaymentscouncil.org/use-cases

A2A: Investments →Apple Cash allows for instant credit, which can subsequently be used for other wallet transactions.

B2B, B2G, G2B, G2G: UPS/FedEx → Immediate payment in full upon delivery acceptance (cash on delivery).

B2C: Transportation/Delivery/Personal Service → Delivery service where payment gets sent in addition to tips in real time.

C2B, C2G: Food & Beverage → Restaurants need contactless payment and aim to avoid the cost of interchange and chargebacks. They have sensitive cash and can gain an advantage from immediate access.

G2C: Government Services → Some examples include social security, welfare, disability, and unemployment.

P2P: Non-Industry Specific Use Cases → Child support and situations where several people split the cost of rent or another purchase are a couple of instances (connected to the same reference information).

Which banks or credit unions are using the FedNow Service today?

According to the Federal Reserve, over 500 financial institutions are now either receiving or both sending and receiving on the FedNow Service network as of November 2023.

Adoption is already at a good start with most major banks using the FedNow Service. Its impact on efficiency and speed is especially significant when it comes to services related to payroll—receiving a paycheck immediately can be a game-changer for many. For instance, gig workers with variable hours e.g., DoorDash drivers can now receive their earnings the same day they worked.

The FedNow Services extends its services to over 10,000 banks and credit unions, either directly or as intermediaries. The sole criteria for eligibility to use the FedNow Service is to be either a bank or credit union. Check here to see a list of financial institutions that are a part of this network.

What services compete with FedNow?

The RTP® network stands out as the primary direct competitor of the FedNow Service. The RTP network belongs to The Clearing House, which provides real-time payments that are all federally insured and eligible for swift and secure transactions from senders to receivers. In addition to core banking providers, the RTP network has established partnerships with major technology companies and funding agents. This platform consistently introduces innovative features to mitigate risk and increase consumer confidence, such as DDA Tokenization and Document Exchange.

In addition to the RTP network, alternative services such as PayPal, Venmo, Zelle®, and MasterCard Send offer faster payment solutions. These platforms have established relationships with various companies, ensuring customers have an efficient payment process so they can receive or send their money easily.

What’s the difference between the FedNow Service and The Clearing House’s RTP Network?

What’s the difference between the FedNow Service and P2P Applications?

What’s the difference between the FedNow Service and The Clearing House’s RTP Network?

Initiated in November 2017, the RTP network is overseen by The Clearing House and operates as a privately held system, and is owned by the largest commercial banks such as Bank of America, TD Bank, BNY Mellon, and many more. More than 280 participants currently use the RTP network to send and receive real-time payments. Notably, users can both initiate and request payments through the platform. The RTP network has processed over 45 million transactions in the third quarter of 2022, demonstrating consistent growth since its initial launch. The RTP network has recently introduced several innovative features, garnering positive feedback from both individuals and financial institutions. Among these features is IXB (Immediate Cross-Border Payments), as well as a Zelle partnership (a P2P service), which has established partnerships with numerous banks and financial institutions. As for limits for transactions, there is a maximum volume limit of $1,000,000 per transaction. This rapidly increased from the initial $25,000 individual value limit as RTP wanted to have a more risk-managed approach when introducing this service.

Launched in July 2023, the FedNow Service is under the management of the Federal Reserve, a centrally-owned system established in 1913. Some of the notable financial institutions that take part in the FedNow Service are JPMorgan Chase, Veridian Credit Union, and many more. As of November 2023, more than 200 financial institutions use the FedNow Service. Similar to the RTP network, this instant payments service operates continuously, providing services every day of the year, without limitations on weekends or holidays. While the platform ensures availability for sending and receiving payments at all times, it currently imposes a maximum volume limit of $1,000,000 for transactions as stated above. The FedNow Service has a limit of $500,000. However, the Federal Reserve regularly assesses and adjusts credit transfer limits as deemed necessary. The FedNow Service offers a range of options, including Send and Receive, Receive Only, liquidity management transfers, and settlement services.

As for cycle day, the FedNow Service cycle day will be 7 p.m. to 7 p.m. ET. For the RTP network, it will be 12 a.m. to 11:59 p.m. ET. The FedNow Service will offer everything the RTP network does, in addition to Liquidity Management Transfer (LMT). The cost to send a singular customer payment is $0.045 for both, but the cost to send a request for payment (RfP) is $0.01 for the FedNow Service and $0.11 for the RTP network.

How much does the FedNow Service charge per transaction?

The enrollment fee for participation is $25 to receive credit transfers, with a fee of $0.045 per transaction, covered by the sender.

What is the FedNow Service’s transaction limit?

While the transaction limit is set at $100,000, it’s imperative to note that the Federal Reserve regularly reviews credit limits, making adjustments as deemed necessary.

What’s the difference between the FedNow Service and Fedwire?

Fedwire functions similarly to FedNow facilitating instant posting and settlement of payments. Nevertheless, distinctions exist between the two systems. The FedNow service operates seamlessly throughout the day, including holiday weekends and regular weekends, with more than 100 participants. In contrast, Fedwire does not operate on weekends and is subject to holiday restrictions, with more than 5,000 participants. In terms of transaction limits, the FedNow service currently imposes a cap of $100,000. In contrast, Fedwire transactions do not carry a predefined limit; rather, the transaction limit for Fedwire is contingent upon the policies of the specific financial institution involved in the transaction.

Another way these two differ is their hours of operation. Fedwire operates from 9:00 p.m. to the preceding day till 7:00 p.m. Monday through Friday. The FedNow Service is 7 p.m. to 7 a.m. 24 hours per day on weekends and Federal Reserve holidays. Fedwire does not operate 24 hours a day unlike the FedNow Service, but may offer extensions by the Federal Reserve Banks.

What’s the difference between the FedNow Service and PayPal/Zelle/Venmo?

PayPal operates as a private money transfer service, distinguishing itself from the FedNow Service. In contrast to platforms such as PayPal, Zelle, and Venmo, users of the FedNow Service are required to go through their financial institution for access. PayPal, Zelle, and Venmo users can manage their account, send, request-to-receive, and receive money directly from the app. The FedNow Service offers swift money transfers by allowing users to send and receive money within seconds. Services such as Venmo impose a fixed rate of 1.75% on instant transfers sent to a credit union or bank account. For example, if someone is transferring $200 to their bank account, they incur a $3.50 fee, while a $50 transfer results in a $0.87 fee. Users may opt for a free transfer option, however they are required to wait 1-3 business days. Depending on the financial institution, the FedNow Service requires a monthly fee of $25 and senders incur a $0.045 per credit transfer fee (including returns). Alternatively, a $0.01 fee is charged for the RfP (Request for Payment) which must be paid by the requesters.

How can I get started with the FedNow Service, and how long will it take?

To initiate the usage of the FedNow Service, it is possible to connect directly or through a third-party service provider. Unlike direct-use platforms like Venmo or Zelle, the FedNow Service primarily functions as a service accessed through financial institutions.

Before connecting, banks and credit unions, banks or credit unions, should assess their systems and processes to identify necessary changes or modifications.

There are two ways to participate in the FedNow Service. The minimum participation type is to be a receiving financial institution, which means the financial institution can receive payments and post them to accounts instantly. Financial institutions may have the perspective that their existing systems work well enough with ACH, checks, wires, credit, and debit cards. However, at a minimum, it’s essential to give accountholders the minimum capability to get their money into their account(s) as quickly as possible. This can be done through service providers like Alacriti (which would take around a few months), to have the Receive connectivity to bring the money into customer accounts, post, and make the funds available immediately.

The next level in real-time payments is the capability to send. A receiving institution that elects to send has a little more work to do that goes into having that capability. They’re opening up for customers to move money out of their accounts. At that point, it’s necessary to make sure all of the security protocols and fraud mitigation tools are in place and have a way to ensure that members are not sending out money erroneously or getting defrauded. Also, with Send, that doesn’t mean that it’s necessary to open the capability up to everybody—there can be different Send capabilities and different limits for individual customers or business clients.

When banks and credit unions are finally connected to FedNow, how fast do they typically receive transactions?

The speed of transactions is contingent upon several factors, including the technological infrastructure used by banks or credit unions and the efficiency of the technology itself. However, transactions can be received and or sent within a couple of seconds. The minimum time required for a transaction is a few seconds, while the maximum duration is up to a few minutes, depending on various considerations.

Is it mandatory to open a separate account with the Fed for FedNow?

A financial institution can settle in their master account at the Federal Reserve if or if they have one, they can settle with their correspondent bank. This can be done in the same way as other financial services products today. So a financial institution can settle the same way as it does its ACH, wires, and checks. There’s no need to get any new accounts pre-funded. It can all flow through a correspondent account or directly into a financial institution’s master account.

Are funding agents required for the FedNow Service?

It is not required to have any type of funding agent. Financial institutions will use their accounts the same way. However, the Fed is launching some new liquidity management capabilities because the Fed normally isn’t open 24/7/365. The FedNow Service will be able to enable fund transfers between a financial institution’s master account and a joint account in the private sector (if wanted). So while it’s not mandatory to have a pre-funded account or a funding agency, the FedNow Service will offer liquidity management services over the weekends and even at night as needed.

Using a funding agent in regards to real-time payments has many benefits. Let’s
discuss them.

24/7/365
While funding agents offer continuous real-time payment processing, including
weekends and holidays, traditional systems involve batch processing during
business days.
Efficiency of Resources and Streamlined Processing
Funding agents streamline the settlement process, removing the need for
ongoing supervision and control by employees of financial institutions. Because
of its efficiency, staff members can concentrate on other important duties
without worrying about depleting the institution’s resources.
Consolidated Access to Reports
Consolidated report access is usually offered by funding agents, which expedites
the reconciliation procedure. The ability for financial institutions to easily obtain
all settlement reports in one location improves usability and transparency.
Transition Support
The smooth transition from a joint account to employing their services can be
facilitated by funding agents. Financial institutions can ensure a seamless
transition by establishing a Receive-Only profile before utilizing funding agency

Efficiency of Resources and Streamlined Processing
Funding agents streamline the settlement process, removing the need for
ongoing supervision and control by employees of financial institutions. Because
of its efficiency, staff members can concentrate on other important duties
without worrying about depleting the institution’s resources.

Consolidated Access to Reports
Consolidated report access is usually offered by funding agents, which expedites
the reconciliation procedure. The ability for financial institutions to easily obtain
all settlement reports in one location improves usability and transparency.

Transition Support
The smooth transition from a joint account to employing their services can be
facilitated by funding agents. Financial institutions can ensure a seamless
transition by establishing a Receive-Only profile before utilizing funding agency
services.

Reconciliation Simplification
The reconciliation procedure is easier and cleaner with financing agents, even for
organizations used to batch processing. Consolidated report access makes the
reconciliation process more simplified and effective.

Different Profiles Support
Funding agents meet the unique requirements of financial institutions by
accommodating various profiles, including Send and Receive-Only profiles. For
instance, even in the absence of a pre-funding requirement, Receive-Only profiles
profit from financing agent services.

Reduced Pre-Funding Requirements
When financial institutions utilize a Send profile through funding agents, they
typically experience reduced pre-funding requirements, if pre-funding is
necessary. This lessens the institution’s financial strain and increases
accessibility to real-time payments.

Flexibility in Fund Replacement
Financial institutions are given flexibility in where their money is kept thanks to
funding agents. This flexibility allows for the added financial benefit of putting
money in interest-bearing accounts that are overseen by the funding agent.

Alert Handling and Support
In order to guarantee a prompt reaction to any problems or alarms pertaining to
the transactions, funding agents may offer alert handling services. The real-time
payments procedure is more dependable and secure thanks to this proactive
approach.

Support from Providers
As funding providers, some funding agents, such as Corporate One, manage
positions and alerts, pre-fund member accounts, and operate as financing
providers. Financial institutions can assign many of their operational obligations
to the financing agent thanks to this extensive support.

Is FedNow mandatory for my financial institution?

No–financial institutions in the U.S. are not required to use the FedNow Service
offered by the Federal Reserve. Financial institutions looking to give their
consumers real-time payment services have the option to choose the FedNow
Service. Institutions have the autonomy to decide whether to adopt FedNow,
providing them with flexibility based on their operational and strategic
requirements.The adoption of real-time payment services may be subject to
differing rules and restrictions in other countries. For example, in Europe, banks
are required to offer real-time payments. In addition, instant payments must be
offered at a cost equal to or less than the standard credit transfers.

Are credit unions using FedNow?

Following the recent introduction of the FedNow Service, the integration of
payment transfers that are accessible to the recipient within seconds is gaining
broader acceptance. Along with the initial adopters of the FedNow Service, many
credit unions have since adopted this advancement. Notably established credit
unions include Veridian Credit Union. They are currently at 46 and growing. To
look at a list of credit unions using the FedNow Service, visit this link.

The advent of the FedNow Service offers credit unions a new opportunity to join
the expanding roster of financial institutions taking part in instant payments.

Are FedNow and RTP interoperable?

The FedNow Service and the RTP network are not interoperable although they are
both ISO 20022-based. Each platform has a distinct arrangement for sending
and receiving payments. These services can only be used by financial institutions
to transmit to other financial institutions that utilize the FedNow service or the
RTP network; they cannot be used between financial institutions that do not
share a service provider. For instance, if a bank is only connected to the RTP network, it cannot originate an instant payment to a credit union that is only
connected to the FedNow Service.

How the Evolution of EBPP Affects Credit Unions

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.

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

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’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.

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

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’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

Payments Hub Solutions: A Guide for Financial Institutions

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.

What Are Payment Rails?

For consumers, payments can be as easy as the dip of a credit card, a tap on a smartphone, or the touch of a “Pay Now” button. The ease of these transactions belies the complex architecture that makes modern payments so fast and effortless.

When a payment is initiated online or at the point of sale, an intricate flow of information and instructions is passed between entities. This information includes customer account information, merchant identification numbers (MIDs), and instructions for financial institutions, just to name a few. The flow of this data is supported by established networks, commonly referred to as payment rails, that ensure the correct flow of funds between businesses and consumers.

Payment rails were established to transmit this information quickly and accurately, resulting in the speedy payment transactions that consumers have come to expect. What are these payment rails, and how do they work? This blog looks closer at four payment rails commonly used for payment transactions in America – the ACH network, card networks, The Clearing House’s RTP® network, and the FedNow® Service.

ACH

ACH is an acronym for Automated Clearing House, and it has a long history of facilitating transactions between merchants, consumers, and financial institutions. It’s one of the most used payment rails in the U.S., having handled 597.6 million Same Day ACH payments valued at $1.78 trillion in 2023. This is an increase of 42.4% compared to the first three quarters of last year.  

ACH can be used for both credits (direct deposit of payroll, for example) and debits (including mortgage, loan, and utility bill payments). It’s also being leveraged to power popular peer-to-peer (P2P) payment solutions like Zelle®, Venmo, and Square Cash. Users can either link their bank accounts directly or access them using an alias (email address and/or phone number). Using an existing payment rail like ACH has allowed these solutions to thrive because they can leverage an established, reliable payment rail without building it themselves.

Card Networks

Card networks are payment rails maintained by four major brands–American Express, Discover, Mastercard, and Visa. Much like ACH, they are established networks with infrastructure, rules, and regulations that allow payment transactions to run smoothly between parties (card issuers, consumers, merchants, acquiring banks, and the card networks themselves). Unlike ACH, these networks also supply branded plastic cards that consumers can use to make payments. The widespread issuance of these cards, plus global marketing campaigns, have made the card networks some of the most recognizable brands in the U.S.

The card networks are also evolving to support new payments technology. Push-to-card is one way that companies leverage card networks as payment rails to send money to consumers, flipping the traditional flow of consumer-to-merchant card payments. Both Lyft and Uber have introduced push-to-card solutions (Lyft Direct and Uber Instant Pay) that allow drivers to receive their earnings directly to a debit card for a small fee. More companies are expected to adopt push-to-card solutions as consumers shift away from paper checks and toward digital disbursements. Thanks to the ubiquity of their plastic payment cards, card networks are an attractive payment rail for businesses that want to offer fully digitized transactions to a broad range of consumers.

The Clearing House – RTP

One of the newest payment rails is The Clearing House’s RTP network. It launched in 2017 with the goal of bringing real-time payments to the U.S. Consumers can use the network to send, clear, and settle payments in a secure environment designed to make payments more efficient. RTP is unique from ACH and the card networks in many ways, the most obvious being its relative youth. Currently, no mandate requires U.S. banks to use RT, but according to this publication, real-time payment capabilities are accessible to financial institutions that hold 90% of U.S. demand deposit accounts (DDAs), and the network currently reaches 65% of U.S. DDAs.

Federal Reserve – FedNow® Service

FedNow is the Federal Reserve’s new instant payment rail which provides bank payments that settle in real time. The system’s pilot program began in January 2021 and officially launched in July 2023 with the participation of 41 banks and 15 service providers. This service has been introduced to support the growing demand for instant payment services in the U.S. Catering to U.S. depository institutions, this service offers near real-time, 24/7/365 interbank clearing and settlement. With FedNow, consumers and businesses can engage in end-to-end payment processing within a secure and efficient infrastructure. Distinct from traditional payment rails like ACH, FedNow offers continuous payment and settlement, reflecting the evolving expectations of the digital age. While there’s currently no mandated adoption for U.S. banks, the momentum gained from its launch and the Federal Reserve’s promotion of the system underline its potentially pivotal role in the future U.S. payments landscape.

The Bottom Line: Payment rails work behind the scenes to facilitate payments between businesses and consumers. Some are new, and others have existed for decades, but they’re all used in imaginative ways to support traditional payment flows while facilitating up-and-coming payment technology.

Click here to see how U.S. faster payment channels and their respective advantages compare.  

 *This is an update on an original post published July 2019


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

Unraveling the Future of FedNow for Credit Unions

*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.

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

*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: 

  1. Understand their use cases 
  2. Evaluate ROI
  3. 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.

Meeting Consumer Demand: Real-Time Payments Use Cases

Since TCH’s launch of its RTP® network in 2017, the first new payments network in 40 years, adoption has been steady, but slower than it should be for a variety of reasons, including uncertainties about profitability and a reactive stance to consumer demand, as well as a lack of imagination about all the ways real-time payments could act as a foundation for new products.

Real-time payments offer numerous benefits for consumers, including speed, convenience, and security. Consumer demand exists and the benefits are undeniable, so the field remains wide open for innovative opportunities to leverage—and monetize—real-time payments. How exactly then can financial institutions best leverage real-time payments to add speed, convenience, safety, and value for consumers—and increase revenue?

Drawing out consumer demand for real-time payments

Consumers have had a taste of faster/instant payments and they like it— 41% are even willing to pay for the added speed and convenience in some cases, for example, paying a fee to transfer money from their P2P app instantly as opposed to waiting 2-3 days for an ACH transfer to their bank account.

The problem is, while the benefits are tangible and easy for them to see, consumers aren’t going to proactively knock on their financial institution’s door and demand “real-time payments” because they don’t know or care how faster payments happen. It’s up to financial services providers to lead with innovation based on consumer demand and expectations. After all, if you don’t do it, a disruptor will step in for you.

A solid example of this can be found in cross-border payments. Many financial institutions still only offer wire transfers to send money internationally. And many financial institutions will say there is little demand for wire transfers these days, especially low dollar amount transfers. However, people in the U.S. send $74.6 billion to individuals in low- and middle-income countries a year. Fees average 6% a transaction. For example, sending $1,000 to a family member could cost $60.   However with some alternative services available, sending money internationally is quick, cheap, and easy. For example, to send money to send $50 to someone in Mexico with WorldRemit (most transfers are instant or near instant), it would just cost $1.99. The truth is, demand is there, but traditional financial institutions aren’t meeting it, so consumers have had to seek fulfillment from disruptors. This is business financial institutions could easily recapture using real-time payment rails. 

Benefits for consumers, opportunities for banks and credit unions

Speed

One of the biggest benefits of real-time payments is speed. When a real-time payment is sent, the funds are transferred instantly. This is in contrast to traditional payment methods, such as ACH transfers, which can take several days to clear.

Financial institutions can satisfy this need for speed using real-time payments rails as the bedrock for innovative products and services, like instant P2P payments, upselling instant transfers from app balances to consumers’ bank accounts, instant (or earlier) payroll, and expedited bill pay.

Convenience

Another benefit of real-time payments is convenience. The 24/7/365 nature of real-time payments means bankers’ hours are a thing of the past. Consumer access to the network via integration with existing banking channels means consumers can send and receive money—or pay for goods and services—anytime, anywhere.

Security

Real-time payments also offer enhanced security. Funds are transferred using a secure network with no float time, which helps to reduce the likelihood that fraudsters will have time to attempt to divert and intercept payments. This can be especially helpful for securing large transactions, such as mortgage escrow funds.

Orbipay Instant Payments brings the future to financial institutions

The use of real-time payments will eventually grow rapidly. As more and more businesses and consumers adopt real-time payments, we can expect to see even more innovative use cases emerge.

Alacriti’s Orbipay Instant Payments brings a modern payments infrastructure to financial institutions. The platform provides access to TCH’s RTP® network, FedNow® Service, and Visa Direct payment rails empowering you to deliver modern money movement experiences to your customers or members.

The real-time payments gateway is cloud-native and built for scale, and its open APIs and microservices-based architecture mean the sky is the limit for building innovative solutions that can be integrated with your existing systems (Alacriti has pre-built integrations with many core banking solutions and digital banking systems). The platform also offers a host of built-in features for safety, security, speed, convenience, and ease of use to ensure seamless integration of real-time payments into your existing infrastructure and workflows. 

Discover more about real-time payment use cases in our article: “The Sky’s the Limit: How Financial Institutions, Businesses, and Consumers Benefit.”


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.

Instant Payments: Market Survey (Infographic)

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


Real-Time Payments: Practical Use Cases Driving Growth in Financial Institutions

Real Cases for Real-Time Payments: How Financial Institutions Can Add Value to Attract and Retain Retail and Commercial Account Holders

In today’s rapidly evolving financial landscape, the adoption of real-time payments (RTP) has become increasingly crucial for banks and credit unions. The RTP market size was valued at 17.57 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 35.5% from 2023 to 2030. With the introduction of The Clearing House’s RTP real-time payments network in 2017 and the pending launch of the FedNow® Service by the Federal Reserve, the potential for leveraging real-time payment rails has grown significantly. However, many financial institutions have been hesitant to embrace this transformative technology due to concerns about profitability, customer/member demand, and the difficulty of envisioning its full range of possibilities. This blog post aims to address these challenges and shed light on the compelling use cases for real-time payments that can drive adoption and growth for financial institutions.

Challenges to Adoption

Monetization and profitability have been the primary concerns hindering the widespread adoption of real-time payments. Many financial institutions have been cautious, waiting to see how early adopters fare before fully committing to implementation. The lack of available profitability data and the uncertainty surrounding the choice between different payment networks have further complicated the decision-making process.

Additionally, although consumers have shown a preference for instant payments, they may not actively demand real-time payments since they are often unaware of the underlying technology. Financial institutions must draw out demand by meeting consumer expectations and innovating based on their needs, as failure to do so may leave room for disruptors to step in and capture market share.

There is also significant—perhaps more—demand from businesses for real-time payments which can bring increased efficiency and greater competitive advantage, as well as cost-savings to them. Businesses have been at the forefront of adoption since the early days of the network—but in order to leverage real-time payments, they must have access to a network. 

Real-time Payments Use Cases for Consumers

  • Instant, anytime, anywhere money movement: Real-time payments enable consumers to move money instantly between each other and between their accounts, providing a seamless experience beyond the closed networks of popular apps like Venmo and PayPal.

 

  • 24/7/365 loan funding: Integrating real-time payments with digital loan applications and decisioning workflows allows consumers to apply for loans, receive approval, and disburse funds to a car dealership, for example, even outside of traditional banking hours.

 

  • Getting paid earlier: Real-time payroll is especially valuable for hourly and gig workers, allowing them to access their earnings immediately and alleviate cash flow challenges which low-income wage earners may be more prone to experience.

 

  • Secure large transactions: Real-time payments facilitate secure transactions, such as transferring escrow funds for property purchases, by eliminating delays fraudsters can use to divert and intercept funds, and providing instant verification.

 

  • An easier way to send cross-border payments: Real-time payments can revolutionize the cross-border payment landscape by providing faster and more cost-effective options. Financial institutions can leverage real-time payment networks to streamline the process, reduce fees, and enhance transparency for international transfers, thereby improving the customer experience and attracting businesses engaged in global commerce.

 

Real-time Payments Use Cases for Businesses

  • Getting paid faster: Real-time payments help businesses improve cash flow by receiving funds instantly, while also integrating payment capabilities into workflows to streamline processes. 
  • Ensuring timeliness of deliveries: For cash-on-delivery (COD) vendors, real-time payments can eliminate potential delays caused by payments held up during the delivery process. 

 

  • Providing value-add services: Utility companies, for example, can leverage real-time payments to reduce non-payment disconnects by offering instant payment options during customer interactions, helping customers avoid service disruptions and saving the utility company the cost of sending an employee to shut off service.

 

  • Offering a more secure means of payment: Real-time payments reduce the risk of fraudulent intercepts by allowing businesses to send immediate Request-for-Payment (RfP) notifications to clients.

 

Orbipay Instant Payments Brings the Future to Financial Institutions

Alacriti’s Orbipay Instant Payments brings a modern payments infrastructure to financial institutions, empowering them to harness the power of real-time payments today. The platform provides access to TCH’s RTP® network, FedNow® Service, and Visa Direct payment rails empowering you to deliver modern money movement experiences to your customers or members.

The real-time payments gateway is cloud-native and built for scale, and its open APIs, and microservices-based architecture mean the sky’s the limit for building innovative solutions that can be integrated with your existing systems (Alacriti has pre-built integrations with many core banking solutions and digital banking systems). The platform also offers a host of built-in features for safety, security, speed, convenience, and ease of use to ensure seamless integration of real-time payments into your existing infrastructure and workflows. 

Innovation, Value, Competitive Advantage, and a Better Bottom Line

Real-time payments present significant value and growth opportunities for financial institutions. By embracing this transformative technology, banks and credit unions can meet evolving consumer demands, enhance customer/member experience, drive operational efficiency, and tap into new revenue streams. The compelling use cases for real-time payments span across consumer and business domains, providing benefits such as faster fund transfers, improved cash flow, enhanced security, and expanded international payment capabilities.

Financial institutions that proactively adopt real-time payment solutions and strategically align them with their customers’ needs will gain a competitive edge in the market. It is crucial for organizations to invest in the necessary infrastructure, collaborate with payment networks, and educate both their internal stakeholders and customers about the advantages of real-time payments. By doing so, they can unlock the full potential of real-time payments and position themselves as leaders in the digital payment ecosystem.

Discover the various use cases of real-time payments and how they can benefit financial institutions, businesses, and consumers by increasing value, convenience, and opening new revenue channels in the article: The Sky’s the Limit: Unfolding the Use Cases of Real-time Payments.


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.

Biller Solutions: The Difference Easy Bill Payments Make

As the financial sector continues to evolve, modern fintech solutions, such as Electronic Bill Presentment and Payment (EBPP) systems, have emerged as game-changers. They streamline billing and payment processes, offering significant convenience for customers and improved efficiency for financial institutions. Amidst a crowded fintech marketplace, the challenge is finding the right partner to navigate this digital transformation. This article will provide insights into all things EBPP and how to choose a solution that’s right for you.

Understanding EBPP and How It Works

Electronic Bill Presentment and Payment (EBPP) systems are designed to enable businesses to digitize their invoicing process and electronically collect payments from customers. At their core, these platforms are designed to simplify the billing process, reduce the potential for errors, and provide customers with a host of convenient options to settle their accounts.

Functionally, an EBPP system digitizes invoices, issues notifications to customers via their preferred method, and supports a range of payment methods such as ACH (Automated Clearing House), credit cards, or digital wallets. This means customers can view and settle their accounts with just a few clicks.

Integration:

A robust EBPP solution should be able to integrate seamlessly with the existing systems of a business, such as CRM, ERP, and accounting software. This integration allows for efficient data sharing and process synchronization, leading to a more cohesive and streamlined operation. Providers like Alacriti with its Orbipay EBPP solution provide API-based integration capabilities, allowing businesses to easily connect their existing systems with the EBPP platform.

The Benefits of Implementing EBPP

Electronic Bill Presentment and Payment (EBPP) solutions provide a multitude of benefits. They enhance the customer experience by offering a high degree of flexibility and convenience. They also accelerate the receipt of payments, leading to improved cash flow. Moreover, they streamline operational procedures, thereby reducing operational costs and minimizing errors.

Stuart Bain, Senior Vice President at Alacriti, expounds on these benefits in a recent podcast interview. He elucidates how EBPP systems, also known as “biller direct,” can give customers direct access to their current billing information through the biller’s website or phone service. This level of accessibility, combined with the ability to use different payment methods including debit or credit cards, amplifies the flexibility and convenience provided to customers. Today, EBPP solutions are far more advanced, accommodating the rising consumer demand for a range of features such as guest web payments, AutoPay, chatbots, and Interactive Voice Response (IVR). These features optimize the user experience by adapting to shifting customer preferences and technological advances.

An optimal EBPP solution should provide an integrated omnichannel experience, catering to the diverse mediums used by modern consumers, including web, mobile, and phone. Moreover, the ability to support real-time or same-day payment posting is vital to meet the consumers’ expectation for immediate payment processing.

The agility and adaptability of an EBPP solution are also significant aspects to consider. While maintaining a standard build, it’s essential to offer the capacity to tailor services to individual billers’ needs, underscoring the importance of a flexible approach over a ‘one size fits all’ methodology. The adaptability of EBPP solutions, therefore, stands as a testament to their potential to revolutionize payment systems, benefiting both billers and customers.

Considerations for Selecting a Biller Solution

When deciding on a biller solution, it’s imperative to consider several factors. These crucial elements are meant to guide you toward a solution that provides a strategic advantage in your market and caters to the evolving needs of your consumers.

  • Speed to Market: Quick implementation is essential in today’s fast-paced business environment. A prompt deployment process, such as Alacriti’s, enables you to be operational within a short period, typically between 30 to 90 days. This expeditious time-to-market can empower institutions to promptly serve their customers and gain a competitive edge.

 

  • Expertise: The EBPP provider you choose should possess in-depth knowledge of the banking industry’s unique challenges. A partner seasoned in this field can offer invaluable insights and strategic approaches to tackle these obstacles.

 

  • Innovation: Your provider’s commitment to innovation is indicated by their regular updates and enhancements. You should aim for a vendor that regularly introduces improvements and encourages client input in new functionalities. The latest technologies such as real-time payments and digital wallets, are reshaping the payment landscape. The ideal EBPP solution should integrate convenient payment channels like Pay by Text, intelligent personal assistants, and messaging apps, combining them seamlessly with traditional methods to give a comprehensive view of your entire payment program.

  • Personalization: A customizable interface that caters to specific customer needs is vital for customer satisfaction. A top-tier EBPP solution should not only be visually appealing but also adjustable in terms of features and functionality. This flexibility allows the solution to be tailored to specific business requirements, enabling a frictionless experience catering to diverse customer preferences.

 

 

  • Security and Compliance: Compliance with regulatory standards and robust data protection measures are indispensable for any EBPP solution. It should provide peace of mind to both businesses and customers by ensuring the highest levels of data security and privacy.

 

  • Customer-centric Approach: The provider should have a strong focus on the customer experience, offering various payment channels, methods, and options. With bill payments often serving as the most frequent touchpoint between businesses and customers, a smooth, hassle-free process irrespective of when or where the customer chooses to pay is critical. Timely support and an intuitive, efficient interface can transform the bill payment experience, resulting in increased customer satisfaction and loyalty.

 

  • Open Architecture: Open architecture ensures easy integration with existing banking systems and provides flexibility to accommodate future enhancements or business process changes.

 

  • Scalability: The EBPP platform should be scalable and proactive in adopting new technologies. Cloud-native platforms offer this scalability and flexibility, ensuring the business is ready for future growth and evolution.

 

  • Efficiency: An efficient EBPP solution should simplify operations, quicken receivables, and lower call volumes. Comprehensive reporting tools can offer insights into all activities, fostering improved decision-making and strategic planning.

 

Bill payments form an integral part of the overall customer experience. By partnering with an EBPP provider focused on innovation, customer experience, and flexibility, you can transform the bill payment process, benefiting both your business and your customers. With the shift towards digital transactions and increasing demand for contactless technology, an effective, multi-channel bill payment solution can provide the advantage your business needs to stay ahead of the competition.

To learn more about the importance of a modern EBPP solution read: Maximizing Bill Payments with EBPP


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.

Business Use Cases: The Promise of Real-Time Payments

Though TCH’s RTP network has been available since 2017, the U.S. is a relative neophyte in the global market. Despite having the largest economy in the world, the U.S. doesn’t even fall within the top 10 in terms of monthly transactions.

Real-time payment adoption could be sped up by overcoming some initial challenges that have hampered momentum, including questions about monetization and profitability, demand, and the need for creative use cases for productization.

Real-Time Payments: A Game-Changer for Businesses

One group of stakeholders that have embraced real-time payments above all others is businesses. The most important benefits of instant payments to businesses—especially small to mid-sized ones—include the elimination of crucial cash flow concerns, enhanced reconciliation, and the elimination of chargebacks, as well as enhanced security. In a recent survey of 1,000 business leaders in multiple verticals, 56% said they were planning to adopt real-time payments in 2024. 

Businesses are the segment currently driving the most demand for real-time payments and many are lightyears ahead of other users. Sixty-one percent of businesses believe that real-time payments provide a competitive advantage.

But, in order to leverage real-time payments, businesses need access to real-time payment networks. Financial institutions looking for supporting fodder for business cases related to the implementation of products built on a foundation of real-time payments could easily start with business banking clients.

Benefits for businesses; opportunities for banks and credit unions

Speed

As mentioned earlier, the most obvious advantage for businesses is to get paid faster—but in addition to receiving the funds themselves instantly, real-time payments are being integrated into business workflows to reduce friction and improve efficiency. For example, the network enables businesses to send Requests for Payments (RfPs) electronically, instantly, and securely. It also allows for real-time dialogue between the business and vendors or customers in which corrections can be made real-time—all while making payment capabilities seamless with the flexibility to pay now or later according to the terms set forth.

For COD deliveries, much coordination between the delivery driver and receiver can be simplified by sending an immediate RfP which the recipient can take care of right away, eliminating any potential delivery delays resulting from payments held up “in the ether.”

Efficiency

In addition to speed, enhanced reconciliation capabilities afforded through real-time payments provide the ability to automatically reconcile payments, improving back-office efficiency, reducing processing delays, and making it easier to identify and fix errors.

Also, the simple ability to send an immediate request-for-payment (RfP), can be the catalyst for significant time and cost-savings related to printing and mailing statements at scale, as well as reconciling delayed or analog forms of payment.

Security

The ability for a business’s clients to pay on the spot—or at least receive a RfP—on the spot, reduces the chance that a bad actor can redirect and intercept a payment. In one type of scam, fraudsters targeting property buyers during the closing process will intercept large escrow deposits by sending fraudulent communications directing buyers to deposit funds in a scam account. When the buyers, out of tens of thousands of dollars, show up to closing, they realize only then their funds never made it to the actual escrow account. Now imagine if closing companies were given the ability to send a Request for Payment (RfP) instantaneously while on the phone with a buyer, eliminating any doubt about who’s requesting payment and preventing any time delays that give fraudsters an opportunity to try to intercept funds.

Competitive Advantage

Businesses can also leverage real-time payments to create new streams of revenue. Any time there is an opportunity to meet consumer demand to be paid faster, there is an opportunity for businesses to productize it—and banks and credit unions have an opportunity to monetize the access to real-time payment rails that makes it possible. For example, some insurance companies are using real-time payments to disburse funds to claimants immediately upon approval.

Orbipay Instant Payments Brings the Future to Financial Institutions

The future is now. Alacriti’s Orbipay Instant Payments brings a modern payments infrastructure to financial institutions. The platform provides access to TCH’s RTP® network, FedNowSM Service, and Visa Direct payment rails empowering you to deliver modern money movement experiences to your accountholders.

The real-time payments gateway is cloud-native and built for scale. Its open APIs and microservices-based architecture mean the sky is the limit for building innovative solutions that can be integrated with your existing systems (Alacriti has pre-built integrations with many core banking solutions and digital banking systems). The platform also offers a host of built-in features for safety, security, speed, convenience, and ease of use to ensure seamless integration of real-time payments into your existing infrastructure and workflows.

The exponential growth of real-time payments is at its tipping point. The market is expected to grow at a rate of 33% annually over the next 10 years, with volumes forecast to reach $300 billion by 2032. It’s essential that financial institutions place their stake in the ground now to position themselves as innovators and market leaders.

Essentially, anytime there is a need, or desire, to pay or be paid faster, real-time payments help businesses with speed, convenience, and security—and help create a competitive advantage for attracting and retaining clients.

Read more about use cases in the article: 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’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 FedNowSM 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.

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

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.

Demystifying the Top 5 Misconceptions about the FedNow Service

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. 

11 Things You Wanted to Ask About the FedNow Service

What is FedNow?

The Federal Reserve is revolutionizing the payments landscape with its FedNow® service, providing seamless and real-time transactions for financial institutions and their customers. This instant payments service is designed for uninterrupted 24/7/365 processing. It integrates clearing functionality, enabling financial institutions to provide end-to-end instant payment services to their customers. However, even with the recent launch, misconceptions surrounding the system still remain. Here are the top questions being asked about the FedNow service. 

Will FedNow replace PayPal/Cash App?

While the introduction of FedNow has garnered attention as a potential disruptor in the realm of money transfers, it is unlikely to completely replace popular platforms like PayPal. The Federal Reserve has been clear in stating that FedNow is not intended to eliminate or supplant existing options such as Venmo, Cash App, PayPal, or Zelle. Instead, it complements existing payment methods, offering financial institutions an additional avenue for faster, more secure transactions.

Who will use FedNow?

The FedNow service is designed to be used by a wide range of participants. Eligible depository institutions, such as banks, credit unions, and other financial entities within the Federal Reserve system, will have direct access to FedNow. Individuals, merchants, and non-bank payment service providers can access the service through their respective financial institutions. This inclusive approach ensures that businesses of all sizes and everyday consumers can benefit from the convenience and efficiency of the FedNow service.

What is the difference between FedNow and Fedwire?

FedNow and Fedwire are distinct payment systems offered by the Federal Reserve, each with unique characteristics. Fedwire, a real-time gross settlement system, enables instantaneous transfers of large-value payments between banks, businesses, and government entities. However, it operates within designated business hours and is subject to limitations on weekends, holidays, and non-business days.

In contrast, FedNow sets itself apart by providing round-the-clock accessibility. It operates 24/7, including weekends and holidays, allowing users to initiate and receive real-time payments at any time. While FedNow imposes a maximum value limit on transactions, individual banks may establish their own limits for Fedwire transfers. This key difference in availability and transaction limits makes FedNow a more flexible and convenient option for immediate payments, catering to the evolving needs of individuals and businesses in today’s digital economy.

What are the benefits of FedNow?

FedNow offers several benefits that are expected to have a significant impact on the payments landscape:

  • Increased Access: By making instant payment technology accessible to a wider audience, including smaller community banks, FedNow promotes equitable access for businesses and individuals. 
  • Cost Savings: The implementation of FedNow is projected to reduce payment processing costs for banks and non-bank financial institutions. By streamlining payment settlement processes and eliminating intermediaries, these entities can optimize operational efficiency and realize cost savings, ultimately benefiting both the institutions and their customers.
  • Improved Cash Flow: Individuals will experience the benefits of FedNow through instant access to paychecks and other electronic fund transfers. This enables better cash flow management by eliminating the delays associated with traditional payment methods, allowing individuals to access funds immediately for their financial needs.
  • Enhanced Business Operations: FedNow facilitates efficient liquidity management and cash flow forecasting for businesses. With real-time payment capabilities, businesses can optimize their operational expenses, ensuring timely payments to vendors and suppliers. This enhances cash flow stability, strengthens business relationships, and contributes to overall operational efficiency.
  • Advanced Data Exchange: FedNow conforms to the ISO 20022 standard, enabling participants to exchange rich data during payment transactions. This includes non-value message types and Request for Payment (RfP) messages, providing comprehensive information that can enhance transactional transparency, reconciliation, and business processes.
  • Enhanced Security: FedNow contributes to the promotion of instant payment security by developing industry-wide standards for disputing fraudulent transfers. Its adherence to the ISO 20022 standard and the utilization of payment authentication mechanisms further strengthen the security framework, reducing the risks associated with fraudulent activities.

What are the business use cases for FedNow?

The FedNow Service by the Federal Reserve expands the capability of real-time payments beyond peer-to-peer transactions, catering to a broad spectrum of financial institutions. Use cases for this service range from account-to-account transactions to digital bill payment and prompt insurance claim disbursements. It’s also perceived as a tool that could streamline business operations by enabling instant payment of invoices, thus improving efficiency and cash flow. One notable feature, the “Request for Pay (RfP), is seen as fundamental to instant payments, addressing the growing demand from businesses and consumers for immediate transactions. As the FedNow Service evolves, it is expected to foster innovation in financial services, creating a platform for financial institutions, processors, and fintechs to develop new offerings, including potential novel types of payments as we move further away from cash.

What is the limit on FedNow?

The Federal Reserve has announced the pricing approach for the recently launched FedNow Service, which includes a $25 monthly participation fee per routing transit number (RTN), a $0.045 fee per transaction for senders, and a $0.01 fee for request for payment (RFP) messages. Additionally, the initial credit transfer transaction value limit is set at a maximum of $500,000, with the default limit at $100,000, allowing financial institutions to adjust it as needed. These details provide stakeholders with valuable information to prepare for the implementation of the FedNow Service and understand the associated costs and transaction limits.

How is FedNow different from RTP?

While FedNow and the Real-Time Payments (RTP) network share the goal of providing 24/7 real-time payment services, there are several differences between the two systems. Initially, FedNow will function primarily as an alternative to RTP, aiming to increase access and introduce healthy competition. One key distinction is the transaction limit, with FedNow capping transactions at $500,000 compared to RTP’s $1 million.

FedNow stands out with its liquidity management tool, enabling instant payment liquidity transfers between participants and financial institutions with real-time capabilities. Although RTP has a head start, the Federal Reserve’s broad reach and market access have the potential to level the playing field and drive substantial growth through healthy competition. It is essential for financial institutions to partner with trusted real-time payment technology providers to seamlessly connect to both FedNow and RTP, maximizing the value of their investments in these systems.

Will FedNow be mandatory?

Participation in FedNow is not mandatory. However, it offers financial institutions an opportunity to enhance their payment services and meet evolving customer expectations.

What is the timeline for FedNow?

The FedNow Service launched in July 2023.

How is FedNow being rolled out?

The Federal Reserve announced that more than 110 organizations, including Alacriti are participating in the FedNow Pilot Program. As a participant in the program, Alacriti actively contributes to shaping the features and functions of FedNow, providing valuable input into the user experience, and ensuring readiness for testing. This collaboration will play a vital role in defining the service and adoption roadmap, industry readiness approaches, and overall strategy for instant payments.

Bonus Question: What are the four categories of certifications that were part of the FedNow certification announcement?

The Federal Reserve announced that certified service providers must complete testing certification to provide payments processing to participants. This includes Receive only, Send and Receive, Receive RFP, and Liquidity Management Transfer. Alacriti is one of just 5 providers (out of a total of 17) that have all 4 participation types.

Learn more about the FedNow Service in the webinar, Top 10 Misconceptions about the FedNow Service, with Alacriti and the Federal Reserve co-presenting. 


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.