8 Ways to Meet the Demand for Faster Payments

The COVID-19 pandemic has led more consumers to demand faster payments, and credit unions must begin strategizing to meet this demand, according to a new white paper, “Fast Access, Fast Payments,” which was produced independently by Javelin Strategy & Research and sponsored by the St. Petersburg, Fla.-based payments CUSO PSCU.

With fewer in-person banking transactions taking place, and financially-struggling consumers having to pay bills on their due dates as well as access government fund disbursements immediately, speed is more necessary than ever when it comes to making money available for use. In this new environment, credit unions will need to deploy faster payments in a phased approach, focusing on what will provide the highest impact, the white paper stated. “Without expedited implementation of payment strategies that are now considered table stakes, credit unions will be forced to make difficult decisions as the economic fallout continues.”

Here are eight recommendations from Javelin for credit unions ready to begin the initial phases of enabling faster payments for members.

1. Recognize there is no “one-size-fits-all” payments solution, but know the key considerations that apply to all credit unions. The white paper acknowledged that differing member needs and expectations will impact each credit union’s choice of a payments solution, but noted there are four key experiences and procedures that all credit unions should keep in mind. They are: Member experience and design, which encompasses features such as account controls, contact strategy and instant issuance; operational rigor, which includes authorization strategies, general ledger practices and liquidity management – all of which have an immediate impact on a credit union upon introducing a payment method; enterprise fraud management, specifically changes to authentication, dark web monitoring and real-time analytics; and compliance, including the consideration of changes to exception processing, payment scheme rules and regulations.

2. Focus on improving the member experience and leave the mechanics of faster payments to a technology partner. “By dividing responsibilities into areas of core competencies, credit unions can start today in building faster payment delivery capabilities while infrastructure work is done by others,” the white paper said.

3. Involve the entire organization in measuring the success of the payments solution. Credit unions must determine how a new solution’s success will be measured, and in doing so, should include every department of the organization and consider the solution’s impact on member relationships. “Although many organizations focus on financial indicators or net promoter score for member satisfaction, metrics should be incorporated into the credit union organization,” according to the white paper.

4. Enroll in Visa Direct or Mastercard Send. “If a credit union is not enrolled in Visa Direct or Mastercard Send, members cannot receive real-time payouts,” the white paper stated. “Instead, they would need to wait for an ACH to the credit union account or to PayPal.” It warned that not having access to real-time payments is a good reason for a member to do business with a bank or fintech instead.

5. Teach members why mobile banking apps and digital wallets with P2P capabilities are valuable. Members may not be aware that these tools can improve security, and reduce the need for branch visits as well as the number of checks they’ll need to cash and deposit. Educational messaging should be specific and practical, Javelin noted.

6. Enable P2P functionality directly from your credit union’s mobile app. While most P2P users are likely to leverage more than one service, the white paper said, ensuring your credit union offers the service on mobile can help maintain relevancy in an increasingly digital world.

7. Get on the instant card issuance train. Members still need access to their funds even when cards expire or they experience fraud, and providing immediate card issuance and provisioning is one way to help prevent access from being interrupted, the white paper stated.

8. Make faster payments a team mission. To prevent future silos and ensure the focus of a faster payments strategy moves in the right direction, credit unions should create a cross-functional team to manage the initiative, the white paper stated. “Every aspect of a credit union’s operation – including authorizations and funds settlement, risk management, consumer experience, organizational liquidity and asset management – needs to be represented in the move to faster payments.”