OBSERVATIONS FROM THE FINTECH SNARK TANK
The 2023 launch of instant payments via FedNow was heralded as a milestone in the modernization of US payments infrastructure. Real-time settlement, once a distant goal, was now a reality.
Despite the fanfare, most financial institutions have taken only tentative steps toward adoption. According to Cornerstone Advisors, more than 80% of financial institutions remain in receive-only mode for faster payments.
Even more striking is the lack of commercial optimism: only 11% of banks believe they will be able to monetize business-to-business (B2B) instant payments within the next three years, and a mere 6% expect to generate revenue from retail-focused offerings.
Monetizing Instant Payments
Instead of treating FedNow as a new settlement mechanism, banks need to reimagine faster payments as the backbone for new product lines. If positioned properly, these tools can be powerful engines for revenue generation.
A new report from Cornerstone Advisors, commissioned by Matera, provides a playbook for this monetization.
Beyond the Rail: Instant Payments as a Business Solution
Most banks have framed faster payments as a simple enhancement to existing systems—e.g., faster ACH, instant wire, or real-time settlement. But businesses—especially small and mid-sized ones—aren’t clamoring for faster money movement.
What they want are solutions to long-standing operational inefficiencies like late payments, manual reconciliation, fragmented payroll processes, and outdated disbursement systems.
Instant payments can address these problems if banks reframe their offerings. Rather than leading with speed, banks should build and market faster payments as embedded solutions within specific workflows. Monetize the business pain point, not the rail.
QR Code-Enabled Instant Bill Payments: A Game Changer for Receivables
One of the most promising use cases is the modernization of bill payments using dynamic QR codes. Many billers still struggle with sluggish payments, high credit card fees, and the operational burden of handling checks and lockboxes. Even when payers use online banking portals, the transaction often results in a mailed check on the back end—a process rife with delays and error potential.
Banks can change this by offering QR-code-enabled invoicing tools that embed payment details and remittance data directly into the code. When a customer scans the QR code, they’re prompted to initiate an instant FedNow or RTP payment, with all reconciliation fields pre-populated. This drastically reduces errors and shortens the collection cycle.
Revenue opportunities exist on both ends. The biller’s bank can charge for each QR-enabled invoice or payment received, while the payer’s bank might monetize optional features such as priority processing or enhanced audit trails.
For instance, a credit union in California reportedly helped a local utility reduce its payment processing costs by 40% by moving away from credit cards and embracing real-time, QR-based payments.
Transforming Payroll and Workforce Disbursements With Instant Payments
Another fertile area for innovation is payroll. Traditional payroll cycles were designed for an era of batch processing and paper checks. Today’s dynamic, distributed, and on-demand workforce demands something better.
With faster payments, banks can offer clients tools to deliver same-day wages, off-cycle payments, and instant reimbursements. This is particularly beneficial in sectors like gig work, healthcare, hospitality, and emergency services, where cash flow timing can directly impact retention and satisfaction.
Some banks are already monetizing this opportunity. In one example, one bank partnered with a disaster response firm to enable instant wage disbursements for emergency workers deployed to crisis zones. The bank charged a flat fee per transaction—small enough to be attractive to the client, but scalable across high-volume use.
The potential goes beyond fees. Banks can partner with payroll fintechs to integrate directly into enterprise resource planning (ERP) or human capital management (HCM) platforms, creating embedded revenue streams that are far stickier than standalone payment fees.
B2B Instant Payments
While many banks have already digitized consumer payments, business-to-business transactions remain stubbornly analog. According to recent industry surveys, more than 40% of B2B payments in the U.S. are still made by check.
Faster payments offer a compelling alternative—especially when bundled with value-added services like invoice matching, automated approvals, and data-rich remittance. In one case study, a Midwestern bank created an “Instant Pay” service for manufacturing clients that allowed them to pay suppliers in real time at the cost of $5 per transaction. The bank not only generated new fee revenue but also deepened its relationships with commercial clients.
This is the key to monetization: don’t just sell speed—sell certainty, control, and integration. Create dashboards for CFOs. Offer tiered pricing for accounts payable teams. Build onboarding tools that guide vendors through setup. The more integrated the offering, the higher the willingness to pay.
Treasury and Liquidity Management: Real-Time, Real Value
Beyond payables and receivables, real-time payments can enhance liquidity management. Corporate treasurers need to shift funds across accounts at different institutions, react to unexpected demands, and optimize for interest and fee structures. FedNow allows these functions to happen 24/7—not just during banking hours.
Banks can capitalize on this by offering premium transfer services, just-in-time liquidity options, and automated sweeps that rebalance accounts in real time. For example, from a California bank enabled municipal clients to initiate instant transfers over the weekend to fund critical utility projects. Previously, such transfers would have required pre-funding on Friday or waiting until Monday.
This opens up new product categories, including microcredit, intraday loans, and hybrid treasury solutions that charge for availability rather than usage. Again, the opportunity is not in the transaction, but in the problem it solves.
The Instant Payments Shift: From Rail to Revenue
By themselves, real-time rails aren’t monetizable. The value lies in the products and services built on top of them. That requires a mindset shift from technical enablement to business enablement.
Banks need to name and brand their offerings. “FedNow-enabled” isn’t a value proposition. “SpeedPay for AP” or “OnDemand Payroll” tells a story. Institutions must also invest in integration—APIs, dashboards, ERP plugins—to make their offerings turnkey for clients.
Furthermore, success will depend on segmenting the market by vertical. A real estate firm has different needs than a logistics company or a hospital. Faster payments can meet all those needs—but not with a one-size-fits-all approach.
For a complimentary of the report Monetizing Faster Payments, click here.
Instant Payments Won’t Bring Instant Profits—But They Will Bring Strategic Value
Instant payments are not a plug-and-play revenue engine. They require thoughtful packaging, pricing, and positioning. But for banks willing to invest in product design, the rewards are real. Instant payments can unlock new revenue streams, deepen client relationships, and differentiate institutions in a crowded, commoditized market.
In the end, the banks that win in instant payments won’t be those who got to “send and receive” first. They’ll be the ones who used FedNow and RTP to rethink what banking can be—not just faster, but smarter.
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