Federal Reserve Survey: Consumers Demanding Faster Payment Options to Fit Their Digital, Always-On Lives

U.S. consumers are seeking faster payments in more areas of their increasingly on-demand lives, with four out of five saying they are interested in faster options to pay businesses, according to a survey released today by the Federal Reserve Banks. About 70% say having access to enhanced faster payment capabilities from their financial institution(s) is an important satisfaction driver.

"From recurring payments to last-minute bill pay, consumers are looking for faster payment options that give them more control over the timing of their transactions with businesses," said Connie Theien, senior vice president and head of industry relations for the Federal Reserve System. "These findings suggest that providing consumers with safe, efficient instant payment methods for business transactions needs to be a key industry priority."

With instant payments, which are a type of faster payments, a payee's account is credited within seconds of payment initiation, enabling them to have immediate access to funds, and allowing payers to know exactly when their money has reached its destination. This can ease the concern of late fees and gives them the ability to pay bills exactly when they are due.

The demand for faster payments spans age groups and has intensified in the wake of the COVID-19 pandemic, according to the survey. Person-to-business payments (P2B) top the list of likely use cases for faster payments (77%), followed by person-to-person (P2P) and account-to-account, both at 62%. The findings align with a survey of businesses published by the Federal Reserve Banks in the fall of 2021, which showed that nine out of 10 businesses expect to be able to make and receive faster payments in the next three years.

"The Federal Reserve's FedNow^SM Service will allow financial institutions of all sizes to offer safe and instant payment services for their customers when it launches in 2023," said Nick Stanescu, FedNow Service business executive. "In addition to the growing demand for faster payments to businesses, the survey shows P2P continues to be one of the strongest use cases for instant payments, which validates our direction for the FedNow Service."

Other key findings from the survey included:

• Nearly seven out of 10 consumers use mobile payment devices to send or receive payments.
• Nearly 80% are interested in leveraging faster payments to pay businesses.
• More than 60% of consumers want a real-time view of their account balance and immediate posting of payments they initiate.
• 83% of consumers are using a fintech payment app or digital wallet at least occasionally to complete transactions, including 71% of those 55 and older.

The survey also found that the COVID-19 pandemic was a notable driver for changes in consumer behavior, prompting many to place greater importance on online commerce, contactless payments, fraud monitoring, paying down debt and increasing savings.

A full report on the survey can be found here.

About the Study

The survey was conducted to assess consumers' current payment practices, pain points, awareness of potential benefits of faster payments and interest in adding faster payments to their available options. Through an online questionnaire conducted in the second half of 2021, household financial decision makers provided information on their personal payment activities, their familiarity with and usage of different types of faster payments, and their views on the benefits they expect from using faster payments. They also identified factors affecting their willingness to adopt faster payments. The nationally representative sample of 2,015 adults was stratified by age and income and allows for a sampling margin of error of +/- 3% at a 95% confidence level.

About the Federal Reserve and Payments

As the U.S. central bank, the Federal Reserve System provides payment services and seeks to foster the stability, integrity and efficiency of the nation's monetary, financial and payment systems. In 2013, the Federal Reserve initiated a broadly collaborative effort to enhance the end-to-end speed, security and efficiency of payments in the United States. The 2015 Strategies for Improving the U.S. Payment System paper defined five desired outcomes and strategies for pursuing advancements in speed, security, efficiency and international payments through stakeholder collaboration. For more information, visit www.FedPaymentsImprovement.org.