Category Archives: Alacriti Blog

Full Coverage EBPP for Auto Insurance

January 19, 2023 Aliya Sumar

Auto insurance premiums are among the most predictable bill payments in consumers’ lives. All but one state (New Hampshire) requires car owners to have auto insurance policies that help protect drivers, citizens, cars, and property from the damaging effects of auto accidents. Missed auto insurance payments can have serious consequences that go beyond losing the ability to drive the uninsured vehicle. Law enforcement can write tickets, issue fines, and even suspend car owners’ driver’s licenses. Undoing the damage caused by lapsed car insurance can be a headache, costing both time and money.

Given the disruptive repercussions of lapsed auto insurance, it’s important to make the bill payment process as user-friendly as possible for policyholders. A forward-thinking electronic bill presentment and payment (EBPP) solution empowers auto insurers to deliver a seamless experience that can help avoid the negative consequences of missed payments. Here are three ways EBPP can facilitate a more user-friendly bill payment experience for auto insurance policyholders.

Automate auto insurance payments

Allowing policyholders to automate their bill payments can help ensure that they keep their accounts in good standing. Thirty-nine percent, with continuous growth, of individuals prefer using automatic payments as opposed to manually paying on the day of. With EBPP solutions, Policyholders can sign up for e-bills, enroll in AutoPay, manage funding sources, and take comfort in knowing that their auto insurance premiums will be paid in full and on time.

Offer discounts for full premium payments

Today, 5 out of 10 of the largest insurance companies offer a pay-in-full discount. Making a full payment on an annual car insurance premium can help eliminate worry for both policyholders and auto insurers for a full 12 months. Auto insurers might consider offering incentives to encourage full premium payments through flat rate or percentage-based discounts. At this time, many opt for a 6-14% discount. Auto insurers can further facilitate one-time payments by offering policyholders a quick and easy experience where they simply visit a website, key in identifying account information, and make their full premium payment without logging with a User ID and Password.

Mobilize car insurance payments

Paying auto insurance premiums no longer means sending in checks or logging in via desktop computers. EBPP solutions can accept auto insurance payments through optimized mobile websites and innovative channels like text messaging (Pay by Text) and messaging apps (Facebook Messenger). Also, some EBPP solutions even support bill payments through intelligent personal assistants like Amazon Alexa and Google Assistant. This allows policyholders to make voice payments via smart speakers using simple spoken commands resulting in a convenient and personalized payment experience.

The Bottom Line: Auto insurance payments are simply too important to miss. An EBPP solution can streamline auto insurance payments by automating monthly transactions, supporting discount pricing for full premium payments, and delivering a convenient bill payment experience via innovative channels that policyholders use most.

Should you offer Pay by Text? Read 3 Reasons Why You Need to Offer Pay by Text—Now.

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

Alacriti’s Orbipay EBPP is a customizable electronic billing and payments solution for businesses and financial institutions of all sizes. Pay by Text is just one of several Orbipay EBPP features available to help you accelerate receivables. For more information, please contact us at info@alacriti.com.

Alacriti Blog

What Are Digital Disbursements?

January 16, 2023 Aliya Sumar

The relationships that consumers have with retailers and service providers are increasingly digital, from how they communicate to how customers pay these businesses. But funds don’t strictly flow in one direction from consumers to businesses. There are times when businesses must issue payouts to their customers for reasons including rebates, refunds, account overpayments, and claims payouts.

The B2C payout process is largely built around issuing paper checks to recipients. But, forward-thinking companies are reevaluating this workflow in light of digital solutions that streamline so many other aspects of their operations—and the global pandemic is only increasing the need for accelerated digitalization. If customers can make payments on their mobile devices, for example, why can’t they receive digital payouts directly to their bank or credit union accounts or debit cards? Do businesses need to continue investing time and money in issuing paper checks when so many transactions are now digital? Isn’t there a better way?

The overall value of digital disbursements as a user-friendly alternative to paper checks for delivering B2C payouts and consumer demand for contactless and speedier payments is driving increased adoption. And research indicates that faster payments are something consumers are willing to pay a premium for. Thirty-three percent (roughly 52 million individuals) of consumers have expressed that they’re willing to pay an additional fee for instant access to payouts.

Here are four things to know about digital disbursements:

Digital disbursements use existing payment “rails” to deliver faster payouts.

Digital disbursements can replace paper checks by delivering funds through payment rails that consumers already use. For example, one of the most popular alternatives to paper checks is delivering funds via the ACH network. Customers simply provide their account information and their financial institution’s routing number to sign up for ACH disbursements. Other options such as PayPal, Zelle®, and push-to-card (Mastercard SendTM and Visa Direct) are becoming more widely offered and adopted as well.

Faster payouts can reduce your business’s dependence on paper checks.

How many checks does your business issue to customers on a monthly basis? If it’s a high number, you’re probably spending significant time and money managing the process. Bank of America estimates that the costs of writing a paper check can vary anywhere from $4 to $20, depending on the nature of the business and the transaction. When thinking about the these costs, not only include the physical components of paper checks—the printing, fulfillment, and postage—but also the employee hours spent managing the check issuing process.Digital disbursements can help your business move away from the onerous process of issuing paper checks and replace it with a more efficient digital workflow.

Customers get their money faster.

When a customer is owed money, they want it in their accounts as soon as possible. This is especially true in circumstances like insurance claims payouts where the need might be urgent. A 2022 Disbursements Satisfaction Report shared that 67% of consumers would be encouraged to keep doing business with senders who offered instant disbursements. As mentioned earlier, customer satisfaction is crucial when thinking about your business’s long term success. With that being said, 58% of claimants with missed expectations noted it was because a payment took longer than they thought it should. Regardless of the situation, faster money means a better customer experience. Digital disbursements can reduce the lag time associated with paper checks and deliver B2C payouts faster than ever before.

There are experts that can help.

The thought of switching from paper checks to digital disbursements might seem overwhelming in the face of other priorities on your list. This transition can have deep impacts on existing technology, workflows, and security/compliance considerations. But time is of the essence in keeping up with the changing needs, demands, and expectations of your customers. Leveraging solutions developed by established providers that know the ins and outs of disbursement services can get your business up and running quickly, delivering the best possible experience to your customers in the fastest time possible.

The Bottom Line: Digital disbursements are poised to displace paper checks as the go-to for customer payouts. Invest in technology that streamlines the transition for your business while delivering the best possible experience to your customers.

Digital disbursements are but one of many payment conveniences that businesses can offer. Read 3 Reasons Why You Need to Offer Pay by Text—Now.

*This is an update on an original post published April 2021

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

Alacriti Blog

Payment Trends During the 2022 Holiday Season

December 15, 2022 Aliya Sumar

The holiday season is already here, and there is much speculation about how this year’s events will affect the traditional economic impact of this time of year. Here are the payment trends we expect for:

Retail:

You’ve probably noticed that retail stores have been advertising their Black Friday sales way before Black Friday. The growing trend of early shopping has continued year over year, however this year specifically consumers are especially feeling the pressure of inflation and product availability. In fact, retail sales alone are expected to rise between 6% and 8% over 2021 to between $942.6 billion and $960.4 billion.

During the last few years, we saw an extraordinary growth in digital sales as it became the new norm for consumers during the pandemic. However, this holiday season, it’s expected that many consumers will shift back to in person shopping and traditional shopping experiences. Interestingly enough, 46% of consumers are starting their holiday shopping sooner than normal this year.

E-commerce:

Predictably, you can expect consumers to be making more payments online vs. in person for what they need. Last year, online sales grew by 8.6%. Whereas this holiday season will beat that number with an increase between 10% and 12% to between $262.8 billion and $267.6 billion.

Some of the optimism around e-commerce for the holiday season can be attributed to rising prices pushing e-commerce retailers to offer more discount codes in order to attract budget conscious shoppers. In fact, 70% of shoppers are considering online payment plans and financing options as a result of inflation.

Personalized Omnichannel Experience

Customers are expecting more personalized, omnichannel experiences. Businesses are also more prepared, improving or investing more in services like curbside pickup and expedited delivery. Companies can offer more personalized service by offering tailored offers and messaging. The opportunity to do more is clear, only 33% of consumers believe that companies do a good job of creating relevant experiences for them. (e.g., failing to recognize recent purchasers as existing customers or sending irrelevant offers).

With the talk of recession and inflation being so prevalent during this holiday season, shopping for value will be a major trend. Meaning that consumers will be looking for retailers that are offering discounts, as well as seamless payment options including digital wallets, financing, and payment plans.

Fraud

Every year, criminals take advantage of the increase in payment activity during the holiday season, and this year will be no different. This year, online shoppers are a bigger mark. Only 32% of U.S. shoppers plan to shop in-person for Black Friday, which will result in a 17% increase in 2022 online Black Friday shopping from 2021. Consumers can protect themselves by not clicking links in emails, opening attachments from retailers (which may be fraudulent and contain malware), avoiding pop-ups that contain spyware, and steering clear of e-skimmers. E-skimmers can install code on retail websites to gather data when consumers check out, and that can be avoided by using third-party payments providers such as PayPal, Venmo, or Amazon. Financial institutions can help their customers avoid fraud by using robust data analytics to better profile their customers or members’ payment habits, so fraud is easier to discern.

Popularity of Installment Payments

As mentioned previously, Buy Now Pay Later programs will become more popular this holiday season—the projected number of users is expected to hit 59.3 billion in 2022. It’s a polarizing offering as critics believe these programs encourage people who are already in financial difficulties to take on more debt. However, the data shows that the income demographic most likely to use BNPL is $50,000-$74,999. Whatever the stance, it’s clear that this feature is becoming more important to consumers. In fact, a survey from Affirm confirmed that 56% of consumers were looking to use BNPL to fund their holiday shopping.

Vehicle Purchases

Between the months of November and December, dealership site traffic increases by 25%. Event’s like Black Friday and Year-End Sales, which are meant to get rid of older inventory, encourage shoppers to take advantage of this time of year. However, expectations have lowered for 2022 due to the impact of COVID on supply chains and the Ukraine War. Cox Automotive forecasters lowered their expectations for 2022 U.S. auto sales to 13.7 million new cars and trucks, down 9% from 15 million in 2021. For context, that’s down almost 20% from 17.1 million pre-COVID in 2019. Whether the volume is high or not as projected, with holiday spending on cars, financial institutions have the opportunity to provide a great experience beyond a competitive interest rate. Loan payers should have the option to pay their loans how they want to pay, whether that’s Apple Pay, ACH, or Debit and know immediately when their payment is posted. Financial institutions should have a modern EBPP solution that offers real-time integration with any core and online banking systems, making payments easy and fast.

The holidays are a great time to show appreciation to accountholders. Skip-a-payment is a helpful option that financial institutions and billers can offer during the holidays. Read more in Skip-a-Pay for the Holidays.

Alacriti’s Orbipay EBPP is a customizable electronic billing and payments solution for businesses and financial institutions of all sizes. Skip-a-pay is just one of several Orbipay EBPP features available to help you provide a great payment experience. For more information, please contact us at info@alacriti.com.

Alacriti Blog

Real-Time Payments Are Ubiquitous: Is Your Business Ready to Accept Real-Time Payments?

December 14, 2022 Kristen Jason

*Originally submitted by Mercator Advisory Group

As instant payments grow worldwide, so do the opportunities for fraudsters to strike. In a recent webinar with Alacriti, Mark Majeske, Senior Vice President of Faster Payments at Alacriti, and Brian Riley, Co-Head of Payments Research at Mercator Advisory Group, discussed what financial institutions and other organizations can do to mitigate fraud amid the widespread adoption of real-time payments.

Faster Payments = Faster Clearance

Faster payments have been a mainstay in Europe for roughly a decade, and their adoption is rising in the U.S.

“Faster payments is an emerging trend in the U.S.,” said Riley. “The clearance will speed up in a short period of time — from a difficult three-day period to minutes in most cases. One of the challenges is that you still have the same requirements to manage fraud, but now it’s in a shorter period of time. And that’s significant.”

“When we look at payment growth through the next decade, we see real-time payments hitting close to $5 trillion by 2023,” he added.

Regardless of the narrow margin of time given to catch fraud, businesses must still grapple with the four common types of fraud, including synthetic fraud, account takeover, unauthorized use, and authorized use. Sifting through the various distinctions of each category of fraud and knowing their risk is critical, as is getting familiar with all aspects of these risks and compiling them together to form an effective strategy.

Nimbleness Is Key in Detecting Fraud

The modus operandi of fraudsters involves finding an entryway into a system until the user makes a change, at which point, the fraudster course-corrects and figures out what the change was. Artificial intelligence (AI) and machine learning (ML) can easily pick up on these changes.

“What AI and machine learning does is identify deltas or changes in patterns far better than humans can,” said Majeske. “It’s noticing that the fraudsters are doing something different. It enables you to identify that sooner and adjust the tolerance levels of your fraud system to accommodate.”

“Nimbleness is essential when you are dealing with fraud,” added Riley. “In contrast to operational risk, or credit risk, where there is predictable behavior with the customer. Fraud works through the weakest channel. Having a high-impact way that can cross all channels and filter way beyond what a human operator can do is key to getting through the fraud management process.”

Customer Involvement Is Key

One of the most critical and strategic players in fighting fraud is the customer. And, financial institutions have an obligation to communicate that to their customers.

“It’s extremely important that FIs constantly send information and education out to their customers because they are the front line,” said Majeske. “Encourage your customers to look at their transactions. What fraudsters will often do is place a small-dollar-amount transaction just to test to see if you’re watching. They look at when you are paid and when you have the most money in your account.”

This emphasizes a key point that although financial institutions can throw money at countless fraud prevention tools, it’s not a fool-proof solution. Customers must be introduced as key players in the fraud prevention process.

“Customer involvement is important,” said Riley. “Although they are protected, they are subjected to inconvenience. Calibrating the fraud management system is essential to protect against false positives and false negatives that can cloud the situation. Having the customer involved whether it’s sending messages, notifying them of the transaction, or doing routine reviews of their accounts is important.”

Critical Data Points for Fraud Prevention

For many financial institutions, there’s a temptation to gather as much data as possible and then figure out what’s needed. And that’s not necessarily the best approach. Rather, FIs should take the data they currently have and align them with their current model to determine the best strategy.

“Don’t collect data that you don’t need,” said Majeske. “We are looking at transaction-based data — AML [anti-money laundering] controls, channel limits, transaction limits, and individual practices. We also add an analysis on the individual. We’re looking at how many times they change their email address. Do they have a history in another financial institution that might be negative? We combine all that into one rating.”

Current Tactics Banks Have to Prevent Fraud

When it comes to faster payments, it’s critical to first look at your current fraud system. Ensure that it’s competent and has the capability to handle transactions 24/7. Adding additional layers of protection to the current fraud protection tools is also a good practice.

With real-time payments becoming more ubiquitous, financial institutions must look at their current infrastructure and ensure that they are ready to accept real-time payments. Some organizations are only built to handle wire and automated clearing house (ACH) payments. If that’s the case, an upgrade will be required.

“Preventing the problem before it starts is really the way to go,” said Riley, “I agree on having different layers because you are dealing with so many different angles for crime to be committed.”

Addressing Fraud in Real-Time

The fact that real-time payments are happening around the clock, including holidays, changes everything. Whereas wire and ACH payments provide a margin of time to address fraud before they post, this option is gone with real-time payments. With real-time payments, you have seconds to milliseconds to address fraud.

“It’s about capturing the right data, creating a good model, and doing so proactively before the transaction is sent to the network,” said Majeske. “We take this information while the customer is still in session.”

This is why key information is requested from customers up front, as it informs the bank before they make a decision.

“Having an orchestrated fraud strategy that addresses much of the process with artificial intelligence is the most effective way to go,” said Riley.

Alacriti offers a payments as a service model (PaaS). It’s cloud-based and can easily integrate with many banking cores. It also has an open application programming interface (API), is ISO 20022 native, and includes smart routing.

The benefits to adopting this solution are that it grants both banks and credit unions access to all currently available payment rails. They include ACH, the FedNow^SM Service, and The Clearing House real-time payments (TCH RTP®) network. Alacriti offers protection on all the available rails.

Banks and other financial institutions really need to look carefully at their current enterprise fraud system to determine whether they need to make significant updates to truly accommodate real-time payments.

To learn more about real-time payments fraud prevention, watch the full webinar, Fraud Prevention in a World of Instant Payments, featuring Mercator and Alacriti.

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

Alacriti Blog

Skip-a-Pay for the Holidays

December 12, 2022 Aliya Sumar

The holidays are upon us and seasonal retail sales are expected to jump between 6 to 8 percent during the 2022 holiday season, fueled by consumers’ eagerness to celebrate the holidays despite inflationary challenges.

This is also the time of year when consumers might need more flexibility when it comes to directing their dollars—especially in light of inflation and higher prices. For example, funds that are earmarked for loan payments might be useful to help make holiday-related purchases. In these situations, some customers might want to take advantage of a skip-a-payment option for their bill payments.

What is skip-a-payment?

Skip-a-payment allows customers to do just that: take a month off from a regularly scheduled bill payment and reserve that money for other purposes. The customer typically needs to have their account in good standing to take advantage of this option, if it’s offered by their biller.

How does it work?

Billers typically offer skip-a-payment for a limited time period (for example, the holiday season might include November, December, and January) and assess a fee for using the service. Customers pay the fee instead of making the bill payment and can direct that cash toward other expenditures. The skipped payment is typically tacked on to the end of the loan, thereby extending its life.

Who offers skip-a-payment?

Billers may or may not choose to offer skip-a-payment depending on a variety of factors including the nature of their business, its payments operation, and the types of loans they service. Billers can begin the conversation with their electronic bill presentment and payment (EBPP) solution provider to discuss their options for offering skip-a-payment to their customers.

The Bottom Line: Skip-a-payment can be a helpful option for cash-conscious consumers during the holiday season. Its relevance to a specific business will depend on a variety of factors including customer demand, operational considerations, and the ease of implementing via an EBPP solution.

Read Why Should Businesses Offer Flexible Payment Options to better understand why providing flexible options like skipa-pay can help with receivables.

*This is an update on an original post published November 2021.

Alacriti’s Orbipay EBPP is a customizable electronic billing and payments solution for businesses and financial institutions of all sizes. Skip a pay is just one of several Orbipay EBPP features available to help you provide a great payment experience. For more information, please contact us at info@alacriti.com.

Alacriti Blog

Help for the Holidays—from Chatbots

November 25, 2022 Kristen Jason

The holidays bring on a flurry of activity for most businesses every year. Even with the potential of a recession looming over us, there seems to be little to no signs of it slowing down at the year’s end. Both online and retail sales are expected to grow substantially during the 2022 holiday season. During the months of November through December, holiday sales are expected to reach $1.45 to $1.47 trillion. Compared to 2021, e-commerce sales alone are expected to rise from 12.8% to 14.3% year over year.

For call centers at financial institutions, this season can get hectic. Accountholders call in for their balances, some to enquire about an overdraft and perhaps to dispute NSF fees. Also, unconventional spending may trigger fraud alerts, which increases call volume even further. Friendly fraud, in which a consumer demands a reversal of a charge they actually made (because they didn’t recognize it) triggers even more phone calls—39% of consumers have admitted taking part due to forgetting about the purchase or it being made by a family member. Of course, this increase in inquiries is all during a time of the year when many employees ask for personal time off to celebrate.

Today, many organizations use chatbots to free up customer service agents, allowing them to have more time to deliver personalized and focused support for customers with more complex issues. A recent report found that 58% of customers now opt to use chatbots for customer service. This can also apply to banking. Call centers can be relieved and provide better service when there’s a chatbot to answer standard inquiries.

We spoke with Jenn Markus, Glia’s Director of Technology Partnerships, for her take on how chatbots can help financial institutions run smoothly during the holidays.

It’s hard to get customer service right when you’re extremely busy. Do you have an example of a financial institution that you think really got it right?

There are so many examples of financial institutions doing things right, it’s hard to choose! Without calling out a specific financial institution, I would say that the most successful service organizations have common traits: they are proactively meeting customers where they are in their journey and they are balancing automation with personalized experiences.

At its core, Digital Customer Service (DCS) is all about providing a positive customer experience, based on each customer’s unique needs. Successful FIs are meeting customers in the digital channel of their choice—chat, voice, or video—but they are also offering a seamless transition between channels for live support as appropriate. Specialized AI-enabled chatbots can handle more straightforward inquiries, like reporting account balances or routing numbers, but can also transfer the complete interaction to Customer Service Representatives (CSR) for more complex questions. The result is a win-win situation: customers are able to navigate rapidly through your digital properties while CSRs are freed-up to handle more complex issues.

Considering 32% of all customers will stop doing business with a brand they loved after just one negative experience, what’s a good way for a financial institution to keep the inconvenience and frustration of card denials down, without compromising the integrity of fraud prevention?

While suspected fraudulent activity accounts for a fair share of transaction denials, there are a number of other reasons a card can be declined at the point-of-sale or during an online transaction. Throughout the transaction authorization process, there are various checks and validations occuring behind the scenes by the payment processor. Each one of these validation points present an opportunity for a transaction to be denied. In most cases, the only piece of information the cardholder will receive is a notification that their transaction has been denied and perhaps a denial code, which means nothing to them. Receiving a denial in public can be an embarrassing experience, just imagine a first date or perhaps hosting a business dinner. Additionally, the cardholder is in the dark about why their card was declined and needs to follow a multi-step process to resolve the issue.

As you mentioned in your question, according to a PWC survey, 32% of all customers will stop doing business with a brand they loved after just one negative experience, and 59% will walk away after several bad experiences. This presents high stakes for a financial institution trying to not only retain the existing cardholder accounts, but also acquire new ones and grow transaction volume.

It’s not all doom and gloom, though! While card denials are somewhat inevitable, there are solutions available to financial institutions to improve the cardholder experience. Financial institutions that offer Digital Customer Service (DCS) options for cardholders to seamlessly connect are seeing improved customer satisfaction results. Enabling cardholders to connect in the channel of their choice and where they are—OnScreen —can help resolve any issues quickly.

For those who aren’t tech savvy, what’s the best way to make digital customer service something they can actually appreciate?

Glia’s Digital Customer Service platform is well-suited for users of all technical levels. Customer Service Reps (CSRs) have a single view into the customer’s journey, providing context to the customers’ experience to and through the point of contact. CoBrowsing, or Collaborative Browsing, enables CSRs to guide customers through friction points. Reps can use DCS to demonstrate rather than tell customers how to navigate digital properties and resolve issues. Customers don’t have to download any apps and can choose the communication mode—voice, video, chat— that they are most comfortable with.

Where do you think a chatbot would be of greatest service in banking during the holidays?

During the holidays, there seems to be an increased sense of stress and pressure for customers and members. As they rush to finish holiday shopping or year-end tasks, more time-sensitive questions come up. With virtual assistants, your customers will receive a faster, more consistent support experience and your representatives will be able to easily handle multiple engagements without a decrease in quality. As I mentioned previously, chatbots can be deployed to handle routine inquiries, freeing up your CSRs to tackle more detailed interactions. As a result, there are less wait times, faster and more consistent service.

We’ve all talked to a chatbot who couldn’t answer our questions and then had to explain the issue again to a live rep or call in. What’s the best way to prevent that friction in the chatbot experience?

Digital Customer Service (DCS) offers a seamless experience for both customers and operators. Glia’s operator interface displays the customers’ interaction as well as where they are on your digital properties so that the CSR can jump straight into the interaction with full context and doesn’t need to ask “How may I help you?” Further, Glia’s platform allows operators to utilize the channel that is most appropriate for the engagement, so they can seamlessly move between chat, video or voice as well as assist with screen sharing and CoBrowsing to efficiently service customers.

From an end-user perspective, what do you think are the greatest benefits to banking with an institution that offers a chatbot?

The first benefit is meeting the customer where they are—OnScreen. Chatbots are a great entrypoint to understand what a customer needs and provide answers for simple tasks, such as a balance inquiry.

Being able to quickly speak with a live rep from within the chatbot by simply pushing a button is a tremendous convenience and also keeps the digital connection. Plus, reps benefit from seeing the full context when they get connected to the customer. Chatbots that just offer a phone number to speak to a live agent disrupt that digital connection, causing a friction point where many will simply abandon the call.

The immediacy without having to navigate the dreaded phone tree is yet another benefit, leading to a positive experience. Chatbots free up agents, to the benefit of even those who call in and DON’T use the chatbot. The call center isn’t as overwhelmed and callers are able to speak with someone fairly quickly.

This year, holiday forecasts predict a 6-8% increase in year-over-year spending in November and December. Banks and credit unions can drive spending around two months before the holidays by marketing relevant products and promoting cards so they’re top of mind/wallet. For example, increasing credit lines. And then after the holidays, offer balance transfers or convenience checks to prevent competitors from stealing away cardholders with similar offers. How could a chatbot assist?

First, simply helping to keep CSRs available, and wait times down helps a great deal during busy seasons. Financial institutions might consider deploying microbots that are able to handle specific requests common during the holidays, such as credit card spending limits. In fact, financial institutions should regularly evaluate their chatbot strategy based on seasonal usage data. Lastly, give the chatbots some character. Everyone appreciates a season’s greetings and a friendly ho ho ho in December!

Read more about chatbots in 4 Ways Chatbots Are Revolutionizing Electronic Bill Payments.

Updated from a blog originally published November 11, 2021.

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

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“Payment Services Hub”: What it Means Today

November 8, 2022 Kristen Jason

*Originally published on CUInsight.com

“Payment services hub” or “payment hubs” used to mean a consolidation of systems supporting Fedwire and ACH processing, which helped large financial institutions bring together their Commercial and Retail payment operations. Payment systems were historically introduced one at a time as new payment methods became available, giving rise to silos by workstream for operations such as product management, customer service, compliance, etc. for each payment type. An example of this is check processing, which began in the 1950’s.

Today, “payment hub” has expanded to include new real-time payment rails such as TCH RTP^® network, the FedNow^SM Service, and reverse debit networks such as Visa Direct and MasterCard Send. Celent refers to payment hubs as ‘where a single solution can process all payments on a single platform’.

Here is how the payments services hubs of today are different:

They are no longer just for large financial institutions with large budgets – payments hubs used to have a million dollar price tag. The new generation of payments hubs are cloud-based, allowing financial institutions to scale and pay for what they need at a price they can afford.
They are off-prem – a modern payments hub is not located on-prem. Instead, it’s located on a cloud service. However, this doesn’t mean that financial institutions can’t keep their existing services on-prem. In fact, they can actually combine what they have with the modern payment services hub.
Not reliant on the core – previously, payments hubs were typically reliant on a particular core, making it necessary to replace the bank or credit union’s core payment processing capabilities. This made them totally reliant on their Core Provider for all transaction types. Financial institutions can now connect to modern payment hubs, regardless of core, making it possible to access faster timelines and better roadmaps. This also opens up a multitude of vendor opportunities and innovative solutions they would not have had previously.
Smart routing capabilities – smarter, faster payments means automating the process of choosing which rails various payments transact on. This means the least expensive rail for the speed needed is chosen for the delivery of the payment.
More benefits – financial institutions benefit from better reporting and analytics, improved user experience, streamlined functions such as regulatory compliance, and a faster time to market for new payment options.

Today, payment hubs are being used around the world at hundreds of banks, and most of the top 30 U.S. banks have at least one payment hub. They are a key component of payment modernization, and widen the gap between bank and credit union capabilities.

Learn more about payments hubs in Payment Services Hub Explained.

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5 Cloud Migration Challenges Consulting Services Can Help With

November 2, 2022 Tiffany Taylor

If you’ve made the decision to migrate your IT architecture to the cloud, you’re in good company. In a recent report on cloud adoption, cloud usage among respondents grew to 90% while 48% said they planned to migrate half or more of their apps to the cloud in 2022. From a security, cost, and efficiency standpoint, migration to the cloud makes a lot of sense. However, it can be a complicated undertaking. Alacriti Consulting can assist with the following:

1. New Level of Complexity

Moving away from your current infrastructure and taking on new products and services can be nerve-racking. Implementing a strategy, understanding your current business model, and having a partner will help ease the transition to Alacriti’s cloud partner, AWS. Alacriti Consulting can provide you with a clear path to success.

2. Roadmap and Migration Plan

Before beginning the transformation journey, the firm should develop a roadmap and migration plan that establishes priorities and the steps needed to accomplish them in sequence. The cloud architecture should incorporate backup and redundancy features while addressing security and performance concerns. It should also integrate toolsets and processes to manage the cloud (once implemented) and to make sure anticipated business benefits are realized. With Alacriti Consulting spearheading these efforts with your firm, it will be a smoother transition.

3. Transforming Delivery

A holistic cloud implementation should result in a centralized, fact-based delivery program that incorporates DevOps and automation. A common misconception is that migrating to the AWS Cloud will result in a lot of downtime. Through a robust, tightly controlled approach to governance, companies are positioned to conduct business-as-usual activities in parallel with cloud migration initiatives. A key milestone might include the elimination of data centers, for example. Alacriti Consulting will help you create a phased approach.

4. Designing a Talent Strategy

A clear benefit of migrating to the cloud is the ability to leverage more modern, innovative solutions to benefit the firm and end-users. Cloud-based financial service companies can access a variety of solutions using Software as a Service (SaaS) models. In most cases, however, they will develop their own software for core functions. This means not only attracting and retaining new types of talent, but giving development teams what they need to innovate and deliver. The challenge of finding talent with the scarce and specialized skills required in a tight market to maintain the cloud post-migration should not be underestimated. Alacriti Consulting can provide a team of AWS Certified Professionals at a more cost-effective price to get your firm migrated and deployed more quickly.

5. Transforming Your Data

Your data can be an important competitive differentiator. To position the company for growth and disrupt the market, data should be harnessed and analyzed in real-time and with a high degree of accuracy. Cloud solutions are secure, highly scalable, and offer the fastest path to transforming enterprise data. With the help of Alacriti Consulting powered by AWS, your firm can get there faster in a cost-effective manner.

For more on moving to the cloud, read Why is AWS a Good Choice for a Cloud Provider?

Updated from a blog originally published January 5, 2021.

Alacriti Consulting, an Advanced Consulting Partner of AWS, provides consulting, migration, management services, and security assessments for AWS environments. Whether you need assistance with data migration or to prepare for compliance audits, Alacriti is here to help. For more information please call (908) 791-2916 or email awsconsulting@alacriti.com.

Alacriti Blog

ISO 20022: Why After Almost 2 Decades it’s More Important than Ever

October 26, 2022 Tiffany Taylor

ISO 20022 is a globally accepted messaging standardization approach (methodology, process, repository) to be used by all financial standards initiatives as a common platform for the development of messages. It was introduced in 2005 by the International Organization for Standardization to help financial institutions streamline their communication infrastructure by using the same language for all financial communications.

Today, ISO 20022 is used by payment systems in over 70 countries. It is estimated to be the de facto standard for high-value payment systems of all reserve currencies, supporting 80% of global volumes and 87% of value of all global transitions in the coming years. This common language is now an emerging global and open standard for payments data and is the expected future standard of fintech innovation and competition. ISO 20022 utilizes richer, higher quality data than other standards, driving improved payment outcomes that can easily adapt and are not controlled by a single interest. According to SWIFT, the benefits of ISO 20022 specifically include:

Better data – ISO 20022 enables richer, better structured, and more granular data for payments messages
Higher quality payments – higher quality data means more transparency and more remittance information for customers, which means better customer service
Improved analytics – less manual intervention is required, compliance processes are more accurate, and fraud prevention measures are improved
A foundation for end-to-end automation – with a single standard for all business domains and processes, new services are more easily created, and straight-through processing is enhanced
Uses modern technology – ISO 20022 uses XML (Extensible Markup Language) technology, which defines rules for encoding documents in a format that’s readable by both humans and machines. This allows for fast and single integration of systems, even if a financial institution is running a legacy platform.
Worldwide adoption – ISO 20022 is already becoming more pervasive, almost 200 market infrastructure initiatives are implementing the standard or are considering adopting it.

What does this mean for the U.S. market?

In 2017, The Clearing House RTP network was the first new central clearing and settlement system introduced that adopted ISO 20022. In addition, The US Federal Reserve Bank has announced that it will also adopt ISO 20022 for its new FedNOW payment rails. Additionally, it will migrate its existing messaging formats to ISO 20022 in the first quarter of 2025. SWIFT has started migrating all cross-border and many-to-many payments onto ISO 20022. So while the U.S. market is somewhat late to the ISO 20022 game, we are rapidly adopting the standard, and financial institutions need to adapt to take advantage of all of the rich data and operational efficiency this standard brings to the market.

Financial institutions that have recently undergone digital transformation projects will have the advantages of systems that were built around the ISO 20022 standard. Other institutions will have a lot of work to do when it comes to bringing their systems up to speed or overhauling their infrastructure altogether. However, they can mitigate their risks by partnering with the right fintech. Alacriti’s Orbipay Payments Hub employs data and message models based on the ISO 20022 standards. This allows financial institutions to offer real-time payments to their account holders without needing an entire infrastructure overhaul, and helps lay the foundation for a full digital transformation into the next era of payments.

Microservices and open APIs go hand in hand with ISO 20022 to assist in payment modernization. Read more in Microservices and API Architecture: Lesson 1.

Updated from a blog originally published November 2, 2020.

Alacriti cloud-based platform with open APIs based on ISO 20022 standards, Orbipay, provides solutions for real-time payments, EBPP, and digital disbursements. This provides a flexible integration framework to enable easy integration with internal systems (core banking, fraud, risk management, etc.), and your organization can easily add support for new payment schemes as they become available. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

3 Reasons Why You Need to Offer Pay by Text—Now

October 19, 2022 Tiffany Taylor

A key element in accelerating receivables is to make it as easy and convenient as possible for customers, members, or policyholders to pay their bills. Electronic bill presentment and payment (EBPP) solutions like e-bills and online bill pay is a great start. However, with the prevalence of smartphones, it makes a lot of sense to engage with customers on handheld devices. SMS payments, or pay by text, is one of the easiest and safest ways to pay bills. The user doesn’t have to remember passwords or bank details, they need only text. Here are three reasons why you need to offer pay by text—now.

Text Messaging is Too Big to Ignore

Just how prevalent is text messaging? Five billion people globally have the capability to send and receive text messages. Consumers spend more time texting than any other activity on their phone (e.g., social media, games, shopping, viewing videos). Eighty-eight percent said texting was the number-one thing they use their phone for. Globally, smartphone usage is increasing. It’s expected that by 2025, it will increase to 77 percent of the global population. Add to that a very high rate of engagement for text messages—98 percent of text messages are opened and 45 percent of people reply to branded text blasts they receive—and it’s clear that text messaging is a channel with too much engagement to ignore.

Text messaging is a method of contact that is growing between businesses and consumers. Seventy-one percent of consumers say using text messaging to communicate with a business was effective. From appointment reminders and marketing promotions to bill-ready alerts and notifications, more and more companies are leveraging text messaging as a direct communication channel with their customers.

Simplifying Bill Payments with Pay by Text

Pay by Text helps businesses leverage the power of SMS text messaging to encourage on-time bill payments from their customers. Here are three key benefits.

Benefit 1: Convenience

Payment convenience means meeting your customer or member where they want to pay with how they want to pay. Research suggests that 91 percent of all U.S. mobile users keep their phones within arm’s reach at all times. With that level of engagement and the huge percentage of Americans owning phones that accept SMS text messages, text messaging might be one of the most convenient channels for customer communication. In fact, SMS has a much higher response rate than email or social media—36 percent compared to 3.4 percent for email and 2 percent for social media. Delivering this level of convenience to the bill payment process can encourage on-time, hassle-free transactions in the messaging apps that customers use most.

Benefit 2: Speed

When a customer enrolls in Pay by Text, they can select the alerts and notifications they want to receive. Once enrolled, the system will check for a payment on the alert date, and if there is no payment, it will send a text to the customer. From there, the customer can simply reply with a text that says PAY to initiate a bill payment from the funding source they established in their account. A confirmation is texted back to the device, and the transaction is complete. Eliminating the need to open a browser or login to a user account means a faster bill payment experience for both businesses and consumers.

Benefit 3: Personalization

Customers sign up for Pay by Text and provide information including their mobile numbers, communication preferences, and payment funding methods to complete the enrollment process. In doing so, a highly personalized experience can be delivered. For example, customers can select how many days in advance they want to receive bill-ready alerts (within the biller’s parameters). Giving customers the ability to select when, where, and how these interactions take place can deliver an experience that’s custom-tailored to their needs and preferences.

Simplifying bill payments is all about delivering a user-friendly experience to the channels that customers use most. The ubiquity of mobile devices and extensive use of text messaging makes Pay by Text a natural way to accept bill payments from customers quickly and conveniently.

What about the “unbanked” or “underbanked”? Read: How Do the Underbanked Pay Their Bills?

Updated from a blog originally published January 12, 2021.

Alacriti’s Orbipay EBPP is a customizable electronic billing and payments solution for businesses and financial institutions of all sizes. Pay by Text is just one of several Orbipay EBPP features available to help you accelerate receivables. For more information, please contact us at info@alacriti.com.

Alacriti Blog

3 Things to Know About FedNow, Now

October 11, 2022 Kristen Jason

Previously the Federal Reserve’s real-time payment rail, the FedNow^SM Service, was said to launch in 2023, with no further details. However, the launch window is now more defined. The Fed has recently announced that the FedNow Service will launch in May-July 2023. Currently, over 120 organizations are participating in the FedNow Pilot program, which entered technical testing in September.

In a CUInsight hosted webinar, credit unions had the opportunity to ask questions directly to Joni Hopkins, Vice President, Product and Relationship Management Group at Federal Reserve Financial Services, and Mark Majeske, SVP Faster Payments at Alacriti.

Here were 3 interesting things shared in the webinar:

How to Connect:

An important part of the plan is how to connect.

A credit union can connect through one of the following:

Their own FedLine Solutions connection (existing or new)
A service provider’s connection such as Alacriti
A combination of both (e.g., based on use cases or account types).

FedLine Direct^®, FedLine Command^®, and FedLine Advantage^® are all direct means of connection. However, FedLine Web^® users will need to switch to one of the three aforementioned solutions for FedNow Service connection.

Types of service providers included hosted gateways, bankers’ banks, corporate credit unions, and core processors. Whether using Alacriti, a core processor, or a corporate credit union (if preferred), credit unions can have more control by managing their profile directly through the Federal Reserve (through a FedLine Advantage or above connection). Because of the FedNow Service’s flexibility, credit unions can even connect with multiple partners, e.g., a core processor and online banking service.

The Impact of Real-Time Payments on Operations:

When considering the impact that real-time processing will have on operations, there are further questions to think about. How will real-time processing be managed? Which upstream and downstream applications need to operate on a 24x7x365 basis? What contingency arrangements are needed to mitigate service disruptions?

Hopkins shared that the impact on operations is a significant concern for many credit unions. “When I’m talking to credit unions, a lot of times people get a little nervous when they think about real-time processing. Does 24x7x365 mean that I have to have someone sitting at the credit union 24 hours a day, 7 days a week, 365 days a year? The answer is no. When we’re your service providers, you will understand more about how you can offer 24x7x365 and have real-time processing without someone physically having to be in the bank. Understand that this is different, but your partners are going to walk you through it.”

Limits and Anticipated Pricing:

Hopkins shared a sneak preview of anticipated pricing. However, she encouraged attendees to review their next pricing announcement for official pricing, which will likely be at the end of 2022. Overall, it won’t be a lot more than what financial institutions are paying today for legacy services, such as checks and ACH. It is likely to be a $25 monthly fee per routing number that’s enrolled in the Fed. The prices anticipated are a fee of $0.045 per credit transfer to be paid by its sender, including returns, and a $.01 Request for Payment fee.

The transfer value limit for the FedNow Service is $500,000, and the default value limit is $100,000, which can be intimidating for some. However, the Fed allows financial institutions to set their own risk tolerance. For instance, a credit union can choose to set it lower for certain payment types. The reason it goes up to $500,000 is due to use case scenarios such as possibly having real-estate closures over the weekend.

To get an update from the Federal Reserve and learn the answers to commonly asked questions, watch the full webinar, FedNow Service 2023: Your Questions Answered, featuring the Federal Reserve and Alacriti.

Alacriti Blog

What Are Real-Time Payments?

September 27, 2022 Tiffany Taylor

Real-Time Payments (RTP – not to be confused with The Clearing House’s brand name RTP^®) refers to payment rails (platforms or networks via which payments pass through) that share a few characteristics.

The first is in the name: they are real-time—or very near real-time—initiating, clearing, and settling in a matter of seconds. Real-time payment networks are ideally 24x7x365, meaning they are always online and available for a transfer. As a result, in order to connect to a RTP rail, the bank or credit union’s backend systems will need to be available 24×7.

“Open-loop” is another important characteristic of RTP—this means the payments are withdrawn directly from an account, rather than relying on a prepaid balance.

Finally, a data-rich messaging format like ISO 20022 is also necessary. Without this clear and nuanced form of information, it is more difficult to resolve errors, which leads to processing delays. Strong formatting standards also provide greater security to all participants in the network.

Current examples of RTP networks include The RTP^® Network from The Clearing House (TCH) in the U.S., UPI in India, Faster Payments in the UK, and PIX in Brazil. The terms “instant payments,” “immediate payments,” and “faster payments” are also sometimes used interchangeably to refer specifically to real-time, or near-real-time, payments rails.

Real-Time Payments in the U.S.

The RTP^® Network from the Clearing House

Launched in 2017, The RTP^®Network was the first of its kind in the United States. It is developed and operated by The Clearing House Payments Company L.L.C. (PayCo), which is privately owned by a group of the world’s largest banks. It currently reaches 75 percent of all U.S. demand deposit accounts held by U.S financial institutions accessible by 61 percent of DDA account holders. Access is available to all federally registered depository institutions, either via a direct connection or a third-party service provider (TPSP). Financial institutions with the resources to make their backend processes compatible with the network can connect directly, but others may need to use a TPSP. Such providers specialize in complex and resource-intensive infrastructural issues like ensuring 24x7x365 processing. As with all specializations, this makes TPSPs more efficient. The current cap for an RTP transaction is $100,000, with lower limits sometimes set by connected institutions.

FedNow^SM from the Federal Reserve

The Federal Reserve is on track to launch its own RTP network in 2023. Much of what goes for The Clearing House’s network also applies to FedNow, though FedNow will be operated entirely by Federal Reserve banks.

The Fed expects the launch of a second domestic RTP rail to drive cost reductions, efficiency improvements, and increased adoption through competition. Given that the service is still in heavy development, specifics are still being worked out. What we do know is that FedNow’s rollout will be phased with the first stages involving support for core capabilities. The Fed is aware that the main obstacle for many financial institutions is 24x7x365 processing, so they are hoping to ease that transition. Concerns have been raised involving interoperability and public-private sector competition, but the Federal Reserve seems to be taking these concerns, as well as other lessons from extant systems into consideration. The current expected value cap for a FedWire payment is $25,000, but the Fed is also considering increasing this limit before release.

Common Questions

Even if you’re fully versed in payments lingo, there are some overlapping terms that it helps to clarify. Although the industry communicates the benefits of RTP to end-users and interest is increasing among consumers, consumer education still has a way to go. The meanings of terms can depend on who’s using them as well as the country they are being used in.

Faster Payments is a blanket term that, in the U.S., refers to an accelerated payment rail. Examples include same-day ACH, real-time payments, Zelle, push-to-card, and others. They are advocated for by the US Faster Payments Council. In the U.K., Faster Payments refers to one of their actual payments networks.

Is ____ a real-time payment?

Mobile P2P Payments: Not really. Not yet, at least. Apps like Venmo and CashApp offer instant transfers between users—but only as long as money is moved within that app’s system (closed-loop). As soon as a consumer or business wants to access their cash outside of the app, another payment rail will be deployed, typically ACH. Some vendors, however, are eyeing real-time payments as a method of facilitating transfers between eWallets and consumer bank accounts. This won’t make mobile wallets themselves open-loop but would allow for a more seamless connection to an open-loop system, like RTP.

Zelle: Kind of! Operated by Early Warning Services LLC, a company owned by several prominent U.S. banks, Zelle is an independent transfer service linked to many banks and credit unions. It has recently been integrated with The Clearing House’s RTP network, which allows payments sent using Zelle to be delivered by the RTP network. If the payee or payer financial institution is not connected to the RTP network, then it still settles in minutes via Zelle’s own network but is not technically real-time.

Wire Transfer: Kind of. Typically reserved for low-volume, high-value transactions, wire transfers do settle instantly. For this reason, they are referred to as real-time gross settlement, or RTGS, transactions. Despite the similarities, the difference is a practical one: real-time payments are ideal for high-volume transactions, whereas wires are used for high-value transactions. You might use RTP to send money to a family member or pay rent, while wire transfers make more sense for real estate transactions or settling estates.

Same Day ACH: No. While same-day ACH transactions are an improvement over regular ACH transactions, they only shorten the three-day window to one. More importantly, they are batched, so rather than being individually processed like RTP or wire transfers, they are all compiled and settled together at the end of the working day, meaning payments initiated after an institution’s cutoff window won’t be processed until the next business day.

Push-to-Card: Almost. Push-to-card leverages existing card networks but reverses the flow of information so that funds can be sent TO a debit or credit card, rather than from one. Transactions can settle in minutes—which is fast—just not as fast as via RTP.

Check: What? No!

Why Use Real-Time Payments?

There are myriad benefits to using real-time payments across every level of the financial system. The example most familiar to Americans are disbursements from the U.S. government, such as stimulus payments and benefit payments. The ability to send money directly to consumers electronically saves a huge amount of money on printing and mailing and helps eliminate printing errors like misspelled names. Electronic disbursement also speeds time to payment for many who rely on such payments for critical living expenses.

The good news is that soon we won’t have to think about the “what-ifs”. More institutions are connecting to TCH’s RTP network, and with the arrival of FedNow, real-time payments should very soon be the standard that ushers the U.S. into the next generation of commerce.

Learn more about real-time payments in the webinar, RTP 2.0: Adding Value With Payment Origination & Innovation.

Updated from a blog originally published January 22, 2021.

Alacriti Blog

A Crash Course in Faster Payments

September 13, 2022 Tiffany Taylor

The popularity of faster payments in the U.S. is growing at an accelerated pace. Not only are customers expecting their goods and services on-demand, but they’re also relying on digital, social distancing-friendly solutions to do so. With the use of cash being discouraged, people are looking for alternatives that offer the same speed and finality of payment. Faster payment offerings fill that need. They are designed to significantly expedite the actual movement of funds, with settlement completed anywhere from the same day to a few seconds after the payment is initiated.

“Faster payments” is an umbrella term for different payment systems that various entities have launched in support of quicker on-demand payments. In this blog post, we’ll outline four of the major systems that have evolved in support of faster payments.

Real-Time Payments: RTP^® from The Clearing House & FedNow

First, we’ll tackle the newest payment rail: real-time payments. Real-time payments (RTP—not to be confused with The Clearing House’s brand name RTP^®) is a generic industry term for a payment network or “rail” that allows businesses and consumers to send, clear, and settle payments instantly. Globally there are more than 50 real-time payments networks. All differ slightly but have a few common characteristics.

With real-time payments, funds move from the initiating account to the receiving account in a matter of seconds, requiring 24x7x365 capabilities for both operators and participants. Real-time payments systems also use the data-rich ISO 20022 messaging standard for payments. This allows for much more detailed information on a payment’s source and purpose or why a payment was denied. Real-time payment networks tend to have irrevocable payments and most are based on a “credit push” model. Rather than withdrawing directly from your bank or credit union account, which is known as a “debit pull,” a creditor would send a request for payment or a request to pay, which can then be accepted or denied by the payer.

In 2017, The Clearing House (TCH) launched its real-time payments system, RTP, the first new central payments infrastructure launched in the U.S. in over 40 years. The infrastructure of RTP is designed with both speed and security in mind, conforming to consumer protection criteria that help prevent fraud and misuse.

FedNow^SM is a competing real-time payment service in development by the Federal Reserve, set to go live in 2023. The Federal Reserve expects the addition of a second network to increase efficiency and reduce costs overall for real-time payments. Two operating networks will also allow for redundancy—users will be able to switch networks if one goes offline. Without a clear outline for interoperability, however, efficiency gains and cost savings will remain to be seen once FedNow goes live.

The expansion of real-time payment allows the U.S. to catch up to other countries, including the U.K., South Africa, and Brazil, that already have 24/7 RTP systems in place. TCH’s system supports funds transfers, payment requests, and two-way communication between parties. The infrastructure is built to help facilitate financial transactions between businesses and consumers, including bill payments, insurance claim payouts, and invoicing. RTP is open to all U.S. financial institutions, and as of 2020 is on its way to becoming an industry mainstay.

Some financial institutions are taking a wait-and-see approach to RTP integration, citing a lack of client demand and difficulty upgrading to a 24×7 operating model. Alacriti recently partnered with The Clearing House in an American Banker webinar where TCH presented the data behind the rapid growth of RTP. It’s not hard to see why. A rideshare driver could be compensated by the end of every ride instead of having to wait for a specified payday during the week and business owners could receive payment the moment an order is made and immediately direct that money towards additional working capital needs, for example.

Other “Faster Payments” Networks

Zelle^®

Zelle^® is a faster payments network from Early Warning Services that allows users to send money to one another by simply using an email address or a phone number linked to an account. Zelle is accessible from participating banks’ websites, the Zelle app, and other mobile apps.

Zelle was built to facilitate person-to-person payments without the need to physically exchange cash or write a check. Today, over 1,000 financial institutions are connected through Zelle. The availability of funds through Zelle is near-immediate, though the system actually clears and settles the funds leveraging older central rails that are not technically real-time. Zelle has seen solid growth prioritizing low-value transfers—value limits are set by each participating financial institution, generally between $5,000 and $20,000 a month with smaller daily limits.

The Card Networks: Mastercard Send^® and Visa Direct

Two well-known payment card brands—Mastercard and Visa—are staking their claim in faster payments as well. These established brands operate tried and true payment rails that have moved money via credit and debit card transactions for over 60 years. They are now leveraging their existing networks to join in the faster payments revolution.

Traditionally, debit cards have facilitated “pull” transactions, meaning that the merchant accepting the card for payment was “pulling” funds from the underlying customer. Visa Direct and Mastercard Send^® are now flipping the sequence and using debit card accounts to push funds from businesses or merchants directly to consumers’ accounts. This can facilitate everything from government benefit payouts and insurance claim payments to wages earned by contract workers in the gig economy. Given the ubiquity of Mastercard and Visa cards around the world, it also opens the possibility for fast, frictionless cross-border payments.

Nacha: Same Day ACH

The Automated Clearing House (ACH) Network is one of the largest payment systems in the world and has a 40+ year history of moving money between financial institutions. ACH is the backbone of many financial transactions that people have come to depend upon, from electronic mortgage payments to direct deposit of payroll and payment of government benefits.

Historically, payments made via the ACH network took one to three business days to settle. In 2015, an amendment to the National Automated Clearing House Association’s (Nacha) Operating Rules was announced to speed up the settlement of payments made via the ACH Network. This amendment, known as Same Day ACH, was designed to enable the same-day movement of money for almost any ACH transaction.

The Bottom Line: The payments market is entering a tipping point as the desire for faster payments continues to drive significant innovation in payment networks. This has resulted in the evolution of established networks (ACH, Mastercard, Visa) as well as the development of new ones (RTP and FedNow). As faster payments continue to generate new consumer interest and demand, financial institutions and businesses can capitalize on this by partnering with the right fintech to help execute their digital transformation strategy.

To help prepare your financial institution for real-time payments, please download Guide: Preparing for Real-Time Payments.

Updated from a blog originally published January 4, 2021.

Alacriti Blog

6 Leading Use Cases for Push to Card (Infographic)

September 7, 2022 Kristen Jason

As the payments landscape evolves, it’s important to understand your customer/member needs when evaluating payment rail choices and settlement speed. However, one rail is not going to fulfill all the needs of all accountholders. Therefore, multiple payment rails are needed. One of these rails is Visa Direct, which offers both domestic
and cross-border payments, and global ubiquity. Here, we look at 6 of the leading use cases for card-based push payments.

Download PDF

Alacriti Blog

Perspectives on BNPL by Generation

August 15, 2022 Nikhita Gurukula

*Originally published on CUInsight.com

What is Buy Now, Pay Later (BNPL)?

BNPL is a form of short-term financing. It allows consumers to purchase and pay for a product or service in installments. Customers typically make one upfront purchase payment and then spend the rest in installments during a predetermined period. Unlike traditional consumer loans or credit cards, BNPL offers zero interest.

The Rise of BNPL

BNPL usage surged during the year of the pandemic. It jumped 81.2% in 2020 when the COVID-19 pandemic began. Unemployment was at its worst, and people were struggling to pay bills and buy household necessities. When faced with financial challenges, BNPL became increasingly popular, as people could keep their families afloat despite the failing economy and growing unemployment.

Along with a rise in unemployment, the culture of consumer spending was changing, as people spent more time shopping online rather than in brick-and-mortar retail locations. It became even more imperative for companies to offer omnichannel payment solutions, prioritizing BNPL.

Currently, BNPL companies are facing challenges—a crowded market, increased regulatory scrutiny, and declining valuation. For example, Klarna has lost ~85% of its valuation in a year. However, BNPL is still very much a huge deal when it comes to short-term financing and its effect on the industry. Here, we explore how BNPL is received across various generations.

Gen Z on BNPL

This easy-lending process is becoming increasingly popular among younger generations. Zoomers, in particular, prioritize flexibility and convenience. Gen Z loves lavish lifestyles, and BNPL allows them to make purchases while planning out their finances to pay later. Most Zoomers do not yet own a home or have a steady income, making BNPL appealing. The idea of breaking up costs makes prices feel cheaper to Gen Z, and BNPL helps them get high-ticket items such as designer clothes or computers.

Gen Z is also accustomed to the subscription model, which began to rise around 9 years ago, and is currently a $650 billion economy. This sets the stage for this generation to be more amenable to paying in installments.

Millennials on BNPL

Millennials are incredibly tech savvy. They know how to save and spend their money. In 2021, 40.6% of BNPL users were millennials. Millennials typically have higher incomes than Zoomers, and most people think lower-income people prefer BNPL. However, those with higher incomes are more drawn to BNPL solutions. Those who earn $50,000 to $74,999 are the most likely to use BNPL. BNPL offers lower interest and helps improve credit scores. 90% of millennials are moving away from traditional credit cards, and BNPL provides the perfect solution.

Gen X on BNPL

Currently, BNPL services are starting to target older generations. Gen X shares similar values with younger generations and baby boomers alike, creating diversity in their preferences about BNPL. In 2022, Consumer Affairs surveyed a thousand people, and 700 used BNPL. Out of those users, 27% were Gen X. This is the second smallest generation of BNPL users.

Baby Boomers on BNPL

Contrary to most assumptions, many baby boomers are using BNPL. One in four baby boomers had been using BNPL for over a year. However, only 20% of those who use BNPL were baby boomers, making them the smallest generation to use it. Digital comfort for these older generations greatly influences their incentive to use BNPL services. Baby boomers are often wary of concepts they do not understand and would rather stand by the methods they have used for most of their lives.

Conclusion

The BNPL user profile is changing fast. There are many reasons older individuals will increasingly consider using BNPL solutions, as the solutions improve credit scores and offer lower interest rates than traditional credit options.

Although BNPL has been around for years, it has surged over the last two years due to dramatic technological change, the economy, and the pandemic. Due to various opinions regarding credit, digital comfort, and the changing economy, some generations were more drawn to BNPL solutions than others. However, BNPL has and will continue to change and adapt to different generations. Financial institutions should think about how BNPL will fit into their payments strategy. Having an infrastructure ready to handle new payment types or use cases is key.

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

Alacriti Blog

Zoomers: How Much Do They Value Real-Time Payments?

July 26, 2022 Nikhita Gurukula

Generation Z doesn’t really remember a time when they couldn’t get what they want—instantly. With everyday experiences such as 3-day Amazon Prime deliveries and ubiquitous high-speed internet taken for granted, the patience of Zoomers is almost nonexistent. This mindset bleeds into this generation’s perception of money movement.

Tech-savvy Zoomers’ decisions are driven by convenience and abundant options. They prefer stores and restaurants that offer many payment options, including real-time payments. Even if real-time payments are not a Zoomer’s first preference, a Zoomer is likely to still want the option.

What Are Real-Time Payments?

According to Payments Journal, real-time payments are initiated and settled electronically almost instantaneously. RTP networks provide access all the time for this exact reason. Real-time payments can apply to insurance, payroll, utility bill payments, and more. They should not be confused with faster payments, as faster payments are not necessarily instantaneous.

Perks of Real-Time Payments

Instant Communication: When an individual transaction is made, real-time transmission of more data follows.
Instant Access to Funds: Recipients do not have to wait for funds.
Financial Control: Instant bill payment, more substantial cash flow, and better budgeting are results of real-time payments.
Cash Positioning: Consumers expect seamless integration with systems like invoicing and bill payment.

Real-time payments are valued highly by individuals and businesses that need funds quickly. Zoomers, on the other hand, have varying opinions. Generation Z heavily uses peer-to-peer payment applications like Venmo and Zelle. These apps transfer money from the app to the bank account and can instantly do so for a fee. Most P2P providers charge 2%-3% current fee charges drawn from credit or debit cards. These transfers rout through the TCH RTP® network. Although Zoomers use these P2P apps for convenience when out with friends, “buy now, pay later (BNPL)” is popular as well.

Zoomer Attitudes on BNPL

Mercator Research found that 52% of Zoomers used BNPL or short-term loans in the last year. The majority of Generation Z feels like BNPL offers financial flexibility. Younger folks have a limited cash flow, and with BNPL, they can afford to buy larger items. However beneficial “buy now, pay later” may be for Zoomers, many do recognize the downsides of it as well. Accumulating debt with BNPL can lead to users having little to no savings.

How Many Zoomers Prefer Real-Time Payments?

Javelin Strategy & Research conducted a study to look at today’s real-time payments landscape. This study concluded that 90% of Gen Z felt that it was important to have instant access to funds. Zoomers utilize real-time payments in social situations where they need to pay friends back. Gen Z is typically averse to debt accumulation or being late. Real-time payments also go hand-in-hand with deeper digital engagement with peer-to-peer apps.

Real-Time Payments and COVID-19

Because of the pandemic, credit unions began exploring real-time payments. By the end of May 2020, 50% of the world issued faster payments through RTPs. Due to sanitary reasons and convenience, people veered away from checks and cash and moved to digital payments. And, due to Gen Z’s aversion to debt accumulation, Zoomers prefer real-time payments.

However popular the “buy now, pay later” mindset may be, real-time payments also match the speed Generation Z expects. Their mindset and the world’s changes after the pandemic, all play a major role in the value that real-time payments hold for Zoomers.

Read more about Zoomers in Zoomers: Traditional Financial Institutions Vs. Neobanks.

Today’s legacy and siloed banking technology infrastructure limit credit unions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

Alacriti Blog

Zoomers: Traditional Financial Institutions Vs. Neobanks

July 20, 2022 Nikhita Gurukula

*Originally published on CUInsight.com

Generation Z, or Zoomers, is the only generation that has not experienced life without the convenience of internet connectivity. This fact, along with the ongoing COVID-19 pandemic, has disrupted the world of traditional financial institutions. As a result, Zoomers commonly explore neobanks.

What are neobanks?

According to Forbes, ‘neobanks’ are fintech firms that offer various software and apps to create digital banks. Much of what Zoomers value goes hand-in-hand with what neobanks have to offer.

Accessibility: Neobanks have less bureaucracy, which leads to faster loan approval.
Lower Costs: Gen Z is opposed to fees, especially overdraft fees. Neobanks save money on real estate and operational costs, which allow them to lower prices and eliminate extra fees for their account holders.
Adaptability: Zoomers are a fast-moving generation who value innovation above everything else. Since neobanks are mobile/digital-first, innovation is highly scalable. Neobanks entered the banking industry knowing that they could more easily expand their interfaces and creativity vs. the competition. They are constantly adding new features such as microlending and commission-free stock trading.

Many traditional financial institutions are faced with the challenge of the speed and accessibility that neobanking offers. There was no real need for fast-paced evolution before the boom in online services, as they functioned for years within a structured oligopoly. As mobile-first financial institutions, neobanks have succeeded in creating high-speed, user-friendly interfaces.

There are also some issues with financial institutions that lack alignment with Gen Z values.

Scandal & Controversy: Generation Z values clean, ethical behavior in the political environment and the entertainment industry. Similarly, leaked information regarding traditional financial institutions’ unethical behavior repels Zoomer consumers. For example, Manole Capital Management’s 2020 study shows that 27% of Zoomers would never partner with a certain large bank due to their scandal in 2016.
Zoomers’ Minimal Interest in Visiting Banks: The study mentioned above showcased that only 16.70% of Zoomer consumers are interested in visiting the bank more than 5 times a year. Additionally, in 2018, Capital One Bank attempted to attract Gen Z consumers to branches by adding “money coaches”, “ambassadors,” and even complimentary refreshments. However, this was a failed attempt, and post-COVID is even less likely to work.

Despite the evident modern edge that neobanking has, Zoomer consumers can admit that there are still services that only traditional financial institutions can offer. Neobanking, as of right now, is more focused on essential, simple services, like checking and savings accounts. Traditional institutions provide mortgages and other types of loans.

Traditional banking institutions still have a lot to offer, including in-person services. The majority of Zoomers are still in school, and many of them have yet to worry about buying a home and paying mortgages, which is why the appeal of neobanking remains strong. Also of consideration—many Zoomers grew up watching their parents bank with traditional financial institutions, making it possible that they will trust what they’re familiar with.

Read more about Zoomers in Zoomers on Campus: Where I Choose to Bank.

Alacriti Blog

How Do the Underbanked Pay Their Bills?

June 14, 2022 Tiffany Taylor

Not so long ago, banking relationships were a staple of American life. Local banks and credit unions were a critical component of local communities, where tellers and customers or members often knew one another by name. Banks and credit unions fueled the American Dream by helping fund everything from new homes and automobiles to college tuition and vacation funds. These high-touch relationships were an integral part of the American economy and something that citizens relied upon for their financial wellbeing.

With the deregulation of the banking system and the digitization of everything from cash withdrawals to check deposits, banking relationships are not what they once were. Customers and members can get away with rarely setting foot inside a brick-and-mortar location. They may seldom if ever, interact with the employees at physical locations. And there are many Americans who cannot afford the cost of traditional banking at all. These people are often referred to as the “unbanked” or “underbanked.”

The numbers

The FDIC publishes a biennial report that explores the reality of people who are unbanked. Here are some key findings from the most recent study from 2019.

5.4 percent of US households were unbanked in 2019, meaning that no household members had a savings or checking account—this represents approximately 7.1 million U.S. households.
The FDIC did not report on underbanked Americans in its latest survey; however, according to one estimate, approximately 24 percent of Americans remain underbanked, meaning while they own a checking or savings account, they seek alternative financial services (AFS) from non-traditional providers.
Examples of AFS include money orders, check cashing, international remittances, payday loans, refund anticipation loans, rent-to-own services, pawn shop loans, or auto title loans.
The “fully-banked” rate was 94.6 percent, meaning the household had a bank account and did not use AFS in the past 12 months—the highest rate since the FDIC began the study in 2009.

Why choose AFS over traditional checking and savings accounts?

Choosing AFS can be attributed to many factors, the most pressing being the minimum balances associated with traditional banking accounts. According to the FDIC survey, not having enough money to meet minimum balance requirements was the most often cited reason (48.9%) for not having a primary checking or savings account. Many financial institutions require high minimum balances to get the most basic services for free or at a low cost. If account holders are being charged for basic services, these deductions can add up quickly and leave them with less money in their accounts than they might expect.

Over 34 percent of respondents cited high account fees as a deterrent. The fees associated with bounced checks and overdraft protection can be of particular concern. If a banking customer does not have sufficient funds to cover a check, they may be slammed with an average overdraft fee of $34. The Consumer Financial Protection Bureau (CFPB) reported in 2019 that US customers paid fees totaling $15.5 billion for bounced checks or overdrafts. For many customers, these fees and the uncertainty that comes with them are simply too much for their budgets to handle. It’s no wonder then, that digital banks have started a no-overdraft trend, resulting in many of the largest banks lowering or abandoning these charges.

How do the unbanked and underbanked pay their bills?

Fully-banked customers can pay their bills simply by dropping a check in the mail or using their bank account information for ACH transactions. It’s not that easy for the unbanked and underbanked. There are more hoops to jump through to pay minimums or balances on time. Here are some popular ways that the unbanked and underbanked can pay their bills in the absence of traditional banking relationships.

Option 1: Prepaid debit cards

Prepaid debit cards give customers the option to make card payments without traditional bank accounts or credit cards. They simply buy the prepaid card, load money onto it, pay the associated fees, and use it like a traditional debit or credit card. It provides the user experience of a traditional credit or debit card—including the ability to make payments online—without maintaining an underlying account.

Option 2: Cash

Despite the growing buzz around the demise of cash, cash remains a go-to method for the unbanked and underbanked to pay their bills. This is where walk-in services and kiosks can be invaluable for businesses with customers that require a cash option to pay their bills.

Option 3: Check cashing

Check cashers do just that—they deposit endorsed checks into their business bank account in return for immediate cash to the customer, less a transaction fee. They can also provide other financial services including bill payments, money transfers, and money orders. Thanks to the highly transparent fee structure for these services, in addition to the immediate receipt of money, check cashing can be a viable alternative for people without traditional bank accounts.

Not every American has or wants, a traditional banking relationship. That’s why it’s important to offer a variety of payment methods (including cash and prepaid debit cards) and payment channels (including walk-in and kiosk options for cash transactions) that serve the diverse needs of all consumers.

Convenience and flexibility around the payment channels you offer are an important part of your customer experience. Learn more in Offering More Payment Channels Improves the Customer Experience.

Updated from a blog originally published March 19, 2018.

Alacriti Blog

Real-Time Payments Without Borders

June 8, 2022 Kristen Jason

*Originally published on CUInsight.com

In April 2022, EBA Clearing, SWIFT, and The Clearing House announced their plan to launch a pilot service for immediate cross-border payments with the support of banks from both sides of the Atlantic. Twenty-four financial institutions are contributing, and the pilot service will launch at the end of this year. Initially, the service will begin with the U.S. dollar and Euro, and the intention is to expand to other currency channels and payment systems. Here’s why this is an important development:

Connects the U.S. and Europe in the immediate future

Although the global card networks have been offering fast cross-border payments for years, this announcement is important because it provides a means for the U.S. real-time payment rails to connect with Europe (real-time cross-border products have already appeared in Asia and in the Nordics). Russ Waterhouse, the executive vice president of product development and strategy for The Clearing House, stated to American Banker, “As much as we see use cases developing from real-time pay in the U.S. and Europe in their own countries, you’ll see the same kind of innovation in cross-border payments.”

Avoiding the lag and friction

Sometimes international transactions can take longer—sometimes multiple days— due to local liquidity and risk management requirements. Currently, there are intermediary banks that act as hubs, meaning one payment could go through several banks. This also adds to the time it takes for a payment to clear. Manual processes still prevail, and there is a lack of interoperability between platforms. With cross-border real-time payments, parties will know immediately if a transaction has settled, removing the risk of being unsure of settlement.

The potential of a global network

There are already four dozen countries with a real-time payment system. With economies becoming increasingly interdependent globally, there is more need for cross-border real-time payments. This could democratize entries into markets by reducing barriers to entry and promote financial inclusion.

There isn’t just one rail or channel that’s ideal to deliver faster payments. Card networks such as Visa can push instant payments to debit cards where existing rails can’t reach. Conversely, having an A2A option in real-time can reduce friction for consumers and businesses that make payments between countries where card penetration differs. It’s important to partner with a fintech that can provide connectivity to all the major rails, so the financial institution is completely covered no matter where or how fast the payment needs to arrive.

In other news, the Metaverse is becoming very important in the financial services industry. Read more in The Metaverse and Payments: 5 New Developments.

Alacriti’s centralized payment platform, Cosmos, 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 RTP^® network, Visa Direct, and the FedNow^SM Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

Accepting Online Donations: 4 Things to Know

June 6, 2022 Tiffany Taylor

Americans donated a record $471.4 billion to charities in 2020—and $3.2 billion of that came from online donations, representing 13 percent of total giving—up 20.7 percent from the previous year and the largest percentage of online giving ever. And, it’s estimated that 28 percent of all digital donations were made using a mobile device in 2021. It makes sense that as smartphone use continues to climb, the popularity and convenience of online giving platforms like GoFundMe® will continue to drive an increase in mobile donations.

While the bulk of these donations is still made in non-digital environments, these numbers show that online capabilities are imperative to support the changing expectations of donors. And accepting online donations doesn’t need to be difficult. In fact, it can be a natural extension of solutions that organizations already have in place. Here are four things to know about accepting online donations.

Donors want the option to make donations using credit cards and debit cards, including via Apple Pay and Google Pay

As demand for online and mobile gift-giving increases, it’s only natural that demand for charitable donations using credit cards will also increase. Supporting a wide array of online payment methods gives donors more choice and flexibility when making donations, increasing the likelihood that they’ll contribute. In addition, an online donation solution can also record in-person gifts made by cash and personal checks, giving an organization a top-down view of contributions across all payment methods.

One-time givers can be transformed into ongoing sustainers, increasing donor lifetime value

One-time contributions are valuable in their own right but turning one-time gifts into sustained income can create a long-lasting positive impact for years to come. An online donation solution should support both scenarios, allowing donors to make quick and easy one-time payments or establish an ongoing series of recurring payments.

Online donation experiences should translate seamlessly to mobile devices

As mentioned above, mobile devices are a rising force in online donations. It’s important that online donation experiences translate seamlessly to mobile devices by using a solution that’s built with responsive web design (RWD). In addition, a progressive web app format provides the convenience of an app UI experience on mobile devices using browser technology. This is significant as it’s possible to provide a better experience without having to download an app.

Accepting online donations can be integrated into an existing solution

Payment aggregators might seem like the quickest and easiest way to begin accepting online donations. However, leveraging these solutions often requires a separate login from donors that removes them from an organization’s branded experience. As a result, donors may find the user experience disjointed and frustrating, creating extra obstacles to completing their online donations.

Accepting online donations may be easily accessible through a solution that’s already in place. For example, an electronic bill presentment and payment (EBPP) solution may also support online donation acceptance. This means that online donations can be supported without hassle, allowing an organization to begin accepting charitable contributions quickly and easily, without having to implement, manage and support a new solution.

For organizations that rely on donations for operating, increased demand for online donations cannot be ignored. Delivering an online payment experience to donors that’s quick and seamless can help lower barriers to giving, benefitting all parties involved.

Find out more about EBPP in The Hitchhiker’s Guide to EBPP.

Updated from a blog originally published October 31, 2018.