Are Small Businesses Ready for Instant Payments? It's Complicated

FedNow’s recent launch is a landmark development in the push toward a ubiquitous and affordable instant payments regime in the United States. For small businesses, instant payments promise to improve cash-flow management, enhance liquidity, reduce reliance on paper checks, and facilitate the digital transfer of remittance information. Yet most lack the internal expertise to understand the implications of faster payments. In fact, new Javelin Strategy & Research data shows that most small businesses harbor misperceptions about instant payments and are unaware of their potential benefit in improving operational efficiency. Although the rollout of instant payments to the small-business market won’t happen overnight, it’s inevitable. Banks, credit unions, payments technology companies, and government entities need strategies now to address the challenges of educating the small-business market, introducing payments products that solve daily cash-flow problems for customers, and integrating faster payments into the broader digital banking and payments experience.

In this report, Javelin details those challenges; analyzes awareness, expected use cases, willingness to pay, and other behaviors and perceptions toward instant payments; and makes strategic and tactical recommendations for marketing, product development, and digital user experience design.

Key questions discussed in this report:

• How are instant payments poised to transform operations for small businesses?
• What do small businesses know about instant payments today, and how do they expect to use them?
• What challenges do banks and technology providers face in rolling out instant payments to small-business customers?
   

Companies Mentioned:

Early Warning, Federal Reserve, Star One Credit Union, The Clearing House, Zelle