Explore Instant Payments Use Cases
Article contributor / Janet LaFrence / Faster Payments Program Manager
It’s no secret that consumers expect speed and convenience in every transaction. Whether it’s getting dinner delivered within the hour, having same-day or next-day guaranteed shipping, breezing through a self-checkout line, or receiving instant payments — it just has to work, and the faster the process, the better.
To meet the growing needs and demands of accountholders, many financial institutions are considering adding instant payments options to their overall service offering. Instant (push-to-account) payments represent a new electronic “payment rail” in the U.S. The U.S. instant payments networks include the RTP® System, operated by The Clearing House® since 2017, and the FedNow® Service, operated by the Federal Reserve Bank since 2023.
Card networks provide immediate funds availability to the receiver when a sender initiates or "pushes" funds to the payee's debit card, while interbank settlement is deferred until the next business day. Instant payment rails, like RTP and FedNow, allow larger transaction limits, provide immediate funds availability to the payee, and feature real-time interbank settlement between the sending and receiving financial institutions, 24/7, within seconds of payment initiation.
The Accountholder Experience
The types of payments accountholders might expect to receive via RTP and FedNow include instant payroll deposits, expedited merchant settlement, “cash out” from a digital wallet or money management application, account-to-account transfers, insurance claim payments, gambling payouts, U.S. government payments, such as tax refunds or emergency aid, and more.
Use cases are expected to expand as the market for instant payments evolves. Let’s review some hypothetical instant payments examples and how they benefit accountholders.
Expedited Merchant Settlement
Susan, a self-employed hairdresser who does most of her business on Saturdays, uses a popular payment processing service to take card payments from her clients paying for their salon visits. She used to have to wait until Monday to access the funds she earned on Saturday. Now her merchant payment processor offers the option to receive expedited settlement through instant payments, which are available on weekends and holidays. As she’s sweeping up her salon at the end of a busy Saturday, she opens her digital banking app on her phone to see all the funds she earned are already in her deposit account and available for withdrawal.
On her way home from work, Susan stops at a convenience store to get gas, picks up groceries for dinner, and withdraws cash from the ATM, all using her debit card, tied to her deposit account, to access the funds she earned earlier that day in the salon.
Instant Payroll Deposits
Juan and his wife recently bought their first house. Their budget is tight, and they sometimes don’t have enough money in their checking account to pay bills that are coming due. They can’t afford late fees and overdraft charges, so Juan picks up a side gig working for a popular food delivery service on the weekends. Thanks to instant payments, Juan gets paid immediately for each delivery he makes. He checks his digital banking app and sees the available balance in his checking account building up until he has enough money to pay the bill that has been weighing on his mind. Juan is relieved to have immediate access to the money he earns at the delivery service. Now, he can pay his bills just in time to avoid late fees and overdraft charges and even have enough money left to pay for date night with his wife over the weekend.
Insurance Claim Payments
Nicole and David came home from a weekend trip to find a pipe had burst in their finished basement while they were away. The water damage was extensive, and they were in a panic. First thing on Monday morning, they filed an insurance claim and started calling contractors to repair the pipes and help with the clean-up. They were grateful to find a contractor who was available to repair the pipes the same day, but half of the repair fee was due before the contractor would begin any work.
To their relief, the insurance company approved the claim without delay. Thanks to instant payments, the funds were available in Nicole and David’s checking account that same day, and they were able to pay the contractor to start the repairs immediately.
Help Your Accountholders Get Paid Instantly
SHAZAM® Core is certified to receive, validate and post instant payments received through our direct processing connections to the RTP System and the FedNow Service. We’ll be expanding our faster payments capabilities to include instant payment initiation through our digital banking and core applications and to serve financial institutions beyond the SHAZAM Core.
Contact your regional director to learn more about SHAZAM’s faster payments program.