EYEON Fintech: The State of Faster Payments in the U.S.

Sarah:
Welcome everyone and thank you for joining us for another in our series of FinWise Eye On podcasts. I’m Sarah Grotta, your host and chief fintech officer here at FinWise Bank. In this edition, we’re keeping an eye on the evolution and recent growth I should add in faster payments. And I quite frankly can’t think of a better person to provide insight on this topic than today’s guest. And that’s

Reed Lutanan, executive director and CEO of the U.S. Faster Payments Council. So thank you so much for joining us this morning,

Reed:
Great, Sarah, thanks for having me. Excited to be here.

Sarah:
Yeah, so I gotta ask you, how strange is it to be on the other side of the podcast, Mic? Because typically, you’re the host of the Faster Payments Council’s Off the Rails podcast.

Reed:
Yeah.

Yeah, you it’ll be fun. I spend a lot of time asking the questions, although I find my way into those conversations as well, and I’m sure you probably do as well. You it’s always good to spend time, I think, on both sides. think talking to people and hearing what they’ve got to say, and also letting people know what you’ve kind of analyzed and synthesized through all those conversations is also pretty fun. So looking forward to it.

Sarah:
Yeah.

Yeah,

well, awesome. We’re looking forward to hearing some of those thoughts that you have. And first off, could you just kind of provide us a little bit of background about what the Faster Payments Council does, what you’re all about, who your typical members are, and really how you’re shaping the industry?

Reed:
Sure, yeah, the FPC is a bit unique in that unlike most associations you probably run across that are built on different industry verticals, So you’ve got financial institutions have a bunch of different associations that are their members are financial institutions and retailers and the tech providers. And the FPC is a bit unique in that all of those different constituent parts, all those different segments of the payments ecosystem are members of ours. So.

The FPC’s membership spans from financial institutions and payment networks and fintechs to retailers and consumer groups and others. So our mission is to bring all those folks together to have those critical conversations to drive the United States ecosystem forward to safe, easy to use, ubiquitous, faster payments.

Sarah:
You know that is unique because you often see other associations they veer one direction or the other. You don’t usually have, my goodness, banks and merchants in the same room.

Reed:
Mm-hmm.

Sarah:
Amazing, amazing. So I’m sure you have some pretty robust conversations. So, you know, one thing I wanted to talk about is, I know that you’ve been in this space for quite a while. I think you were in payments when you were at Walmart and you’ve had the opportunity to see the growth of faster in real time payments really since the beginning. I think you’re a part of the

Federal Reserve Bank’s Faster Payments Task Force. So really the initial thoughts around how this country was going to think about faster payments. So in all that time, how have you seen the growth lately?

Reed:
Yeah, yeah, it’s been fun. So yeah, I kind of was a pinch hitter on the Faster Payments Task Force. I was on the steering committee for the Secure Task Force. If everybody recalls, there were two different task forces that the Fed had kind of going in parallel. So definitely was involved in both. And then I was part of the Governance Framework Formation Team that the Fed pulled together sort of after those task forces wrapped up their work. And that ultimately resulted in the launch of the Faster Payments Council. So yeah, I’ve been in this space for a bit now.

Sarah:
That’s right. ⁓ that’s right. Yeah.

Reed:
⁓ I think what I’m seeing is just incredible uptake now. We’ve kind of transitioned from, I’d say, five or guess some six years ago when I sort of came into this role, the conversations with financial institutions were really around why and if they were going to adopt instant payments. And now those conversations have dramatically shifted and it’s really, it’s all about how and when. And ⁓ that’s been a fun transition to see, right? So now we’re gone from an environment where we had one

instant payment network ⁓ to now we have two, we’re seeing more than a million transactions a day going through instant payment rails. In the second half of last year, $1.5 trillion, that’s like real money, right? That’s a meaningful amount of money moving through these networks now. And over 2000 financial institutions are able to receive. So tremendous ⁓ growth in this space. And I think what’s driving that are

Sarah:
Mm-hmm. Yeah.

Reed:
lots of different use cases that I think we’re gonna probably get into talking about, but that’s definitely, it’s been fun to really see that evolution go from, ⁓ we don’t really know what this is, why we would even care about it to, we definitely are gonna do it. And I talk about, I spend a lot of time speaking at different industry events and I go to lots of different conferences that have financial institutions of varying sizes, but many of them, most of the financial institutions in United States are under 10 billion, right? So community banks, credit unions, folks like that.

Sarah:
Mm-hmm.

Reed:
When I first started going to those, the conversations in those sessions would be very rudimentary. There’d be questions like, what is RTP? Things like that. And now it’s definitely like you ask who here is either implemented or planning to implement and every single hand in the room goes up. the transition, you know, we’ve sort of gotten past the tipping point, I think, in that regard.

Sarah:
Yeah, maybe it’s a little bit of FOMO going on because the receive percentage of accounts that can receive a real-time payment is up to like the 70s I forget the number.

Reed:
Yeah, I think the clearinghouse says 73 % can receive an RTP transaction. So think we can assume it’s, you know, well north of 75%. But when you add in the FedNow percentages, you know, something 75 to 80%, I would guess.

Sarah:
Okay.

Yeah.

so in addition to perhaps the fear of missing out on good opportunities, do you think it’s also, you know, some of the cores that have made it a little bit easier for some of the financial institutions to jump on board?

Reed:
Absolutely. It’s been, ⁓ there’ve been, think two real things that have pushed the envelope in terms of the speed of financial institutions getting on board. One is, if you think about a network, the value of being part of a network as a participant increases when there are more other participants in the network, right? So as every financial institution has joined, the value in joining for the next one has grown, right? So you have that, like the payoff is increasing each time. And also to your point at the same time,

Sarah:
Mm-hmm.

Reed:
the effort and the project size required to implement because of the work done by the processing community, by those core providers, by the different hubs has made the investment in getting on the network lower, right? So while the payoff has gotten higher, the investment has gotten lower. And that’s a great combination for anybody looking at this.

Sarah:
That’s awesome. That’s awesome. So how are the fintechs getting connected to these faster payment rails? Are they finding good partnerships with financial institutions? Is that how that’s coming about?

Reed:
⁓ for sure. Yeah, there definitely are ⁓ financial institutions. Many of our members, larger banks, ⁓ the one that comes to my mind, I don’t mean to anybody with other banks that’s listening to this, don’t feel like I’m plugging this one member, but Cross River, course, does a lot of work in that space, providing those services to fintechs. I know BNY is active in that space as well. ⁓ And that’s not to say, like I said, a lot of banks are providing that. I think

Sarah:
Mm-hmm.

you

Sure.

Reed:
the necessary connectivity part of that is ensuring that these networks only, not ensuring, but the fact is these networks only serve financial institutions, right? So in order to put transactions into the FedNow service or into the RTP network, you have to be yourself a financial institution. so ⁓ there are, ⁓ those relationships are out there and it’s definitely providing then another layer of access to maybe financial institutions that are customers of those fintechs or consumers who are

Sarah:
Mm-hmm.

Reed:
using the different services that are powered by those fintechs. And there’s been an explosion of different user interfaces that have come to market because of that.

Sarah:

Mm-hmm. That makes sense. ⁓ I think, what’s happening in addition to the technology that is making this easier to onboard, I think we’re finding more and more use cases. I remember back when I was an analyst and looking at ⁓ transactions, it’s almost everything was all of us funding our favorite P2P app.

And I think that is, I’m seeing a lot more diversification that’s starting to go on. I think was, banks would like find a particular niche market and then maybe do a little bit of testing and kind of find out where there was a real market. And then it just kind of snowballed from there. Is that what’s happening in reality?

Reed:
Yeah, I think there’s a lot of that. And I think there’s also a lot of sharing of that information among financial institutions. I made the point earlier that joining the network is more valuable because there’s lots of folks who are already in it. But at the same time, if you’re already in the network, the value of being in the network grows if you can recruit more banks to join. So I think the banks that are in there are very eager to share their experiences and the use cases that they’re having success with. We had a fantastic

session at our spring member meeting about almost a month ago now. We had the Fed and the clearinghouse and they talked about the use cases that they’re seeing on their networks. it’s ⁓ payroll, earned wage access is one we hear a lot about and that’s for sure a big use case. Auto loan disbursements, ⁓ real estate escrow payments, small businesses making payments, micro-deposits, online marketplace sellers. So you think about ⁓ an Amazon.

Sarah:
Mm-hmm.

Reed:
where they’ve got their online marketplace, right? A lot of times when you buy something from Amazon, you’re actually buying it from some third party seller and then Amazon is receiving your payment and then they’re paying out to that person. Their marketplaces like that are increasingly using RTP and FedNow to pay out to their sellers. ⁓ And then of course, you mentioned it, but digital wallet definitely is still in there too, right? ⁓ And then the other one that we hear about…

Sarah:
Mm-hmm.

Reed:
and that they talked about in the session is online gaming. So a of fun, a lot of transactions moving back and forth and out of wallets, I guess, probably in particular over the next month or so as we head into March Madness.

Sarah:
there you go. That makes perfect sense. Yeah, I mean, we certainly here at FinWise see a lot on the loan disbursement side, you know, given the fact that we support a lot of marketplace lenders. So that’s definitely a use case that we’re seeing a lot of. Is there a use case that you think is just sort of beginning to launch or something maybe that you would love to see that would make a ton of sense?

Reed:
⁓ Yeah, I mean, if you ask me, which I tell you, all the use cases make sense to me. ⁓ I think ⁓ the ones that I’m really hopeful about kind of in the medium term are healthcare. I think there’s a lot of disruption that’s possible there. I think we’ve all sort of experienced the mess that can be the healthcare payment and insurance reimbursement. I don’t even know how to characterize it. It’s just a mess, right? ⁓

Sarah:
Yeah.

Mm-hmm.

Reed:
That’s a big one. guess looping in insurance more generally, I think about insurance payouts when you’ve had a claim that’s being paid out, they’re actually increasingly using push to card for that. I don’t know if anybody’s experienced that. I had a car accident about a year ago and they just asked me for my debit card number and they pushed in a secure web form.

Sarah:
Mm-hmm.

Reed:
I don’t want to make it sound like was just like writing it down on the phone or whatever. ⁓ And they just pushed the money. It was there within a half hour or so. ⁓ So I think that’s a big one. then ⁓ we’re hearing from some of these networks that there’s increasing interest in merchant payments. So I think that might be an interesting one. There’s obviously huge volumes on the consumer to business side, if that can be ⁓ cracked. What are you guys working on?

Sarah:
Sure, sure.

so we love those as well. I think the disbursement side is really ripe for the picking, if you will. I think it solves so many problems and it has

such an impactful opportunity with the end user. And those are the use cases, I think, that usually tend to take off sooner rather than later. I mean, if we go back to the dawn of P2P, I mean, that’s why P2P really

made some ground very quickly is because it actually solved the problem. And I think to your point, is a problem with healthcare payments. There is a problem with insurance payouts and insurance payouts is certainly an area that we’re kind of circling around a bit. And if you think about it, I think about, I mean, that’s a check heavy.

industry. Think about all of the checks we could wring out of that system and therefore all of the check fraud ⁓ that happens, which is amazingly to me becoming much more of an issue these days. It’s getting worse, not better. you know, I think there are so many benefits on each side of that equation.

Reed:
Mm-hmm.

Sarah:
⁓ for the senders and the receivers that that one is just ready for takeoff.

Reed:
Yeah. And I think those two things, they play hand in hand a little bit. think one of the things that is a theory of mine, I think we’re seeing this play out is you can seed lots of use cases by sending transactions to people, right? Then they start to experience, well, why did that happen so quickly? And why doesn’t it happen so quickly when I send money or when I’m doing business with you, it happens all immediately when I’m having…

In other cases, it doesn’t. And they start to demand that faster experience. And I think that plays into some of the use of checks that’s out there, Is that ⁓ checks are for all their faults, they’re the lowest common denominator payment system, right? Essentially, you can write a check, especially businesses. Most businesses are able to write and they’re happy to receive checks. They might prefer something else, but…

Sarah:
Mm-hmm.

Reed:
everybody involved knows that within a minute this experience will be over. Whereas if you’re talking about different electronic forms of payment, we haven’t necessarily made them all seamless in that way. don’t, you you think about those dances you’ve done with maybe your babysitter or something where it’s like, ⁓ do you take, do you have Venmo? no, I have CashApp. I don’t have CashApp. Do you have PayPal? Like that whole dance you have to do to make an electronic payment happen. Whereas during that conversation, you could have written them a check. That’s the problem we have to solve is how do we make

every use case for electronic payments simpler and easier and faster than that experience for checks. Because for a consumer, the back end, the fact that the check then has to be deposited and settled and all that stuff, especially if they’re person doing the payment, you don’t care. You’re done. You wrote the check, you handed it to the other person. You don’t care. ⁓ So I think there’s a lot of ⁓ learnings we should take from that thought process about how do we

Sarah:
Hmm.

Reed:
How do we attack it from a make this easier to use so people will want to use it for every use case perspective?

Sarah:
So do you think it’s open banking that helps to solve that issue where we have the opportunity to go and grab information that’s going to tell us the necessary checking account information to make that transaction possible? that ⁓ where most of the friction is or what are your thoughts on that?

Reed:
You know, I think there’s a lot of different ⁓ opportunities here. And I don’t know that I would go straight to, well, we have to have, you know, I think open banking, the ability to have APIs that can reach in and grab information, I think is critical. think developing this stuff in a way that the financial institutions involved are wanting to be part of that process. And if you don’t have them on board, whatever you do isn’t going to be a great experience for everybody involved, right? I think if you solve for, ⁓

Sarah:
Yeah.

Reed:
the bank on the consumer side, the bank on the other side, whether that’s a merchant or another, I should say send and receive, not consumer, right? So the send side, the receive side, both those financial institutions, if they’re both incentivized to make it a great experience, I don’t have any concerns about the technology being figured out.

Sarah:
Hmm.

Okay.

Got it. I see. You know, ⁓ I’m so glad that we’re starting to see a lot of momentum here. ⁓ But to me, I think there are a ton more use cases out there that are just, as we say, no brainers. And I just wish we could snap our fingers and make them happen. I wonder, you know, if it’s the fact that we have just so much optionality in the US market. We’ve got not one, but two real time payments

solutions,

we’ve got, you know, same day ACH, which in some instances is just fine. We’ve got, you know, the push networks, we’ve got Visa Direct, we’ve got MasterCard Move. Is it all that optionality that’s creating a little bit of hesitancy or is it really a matter of…

the senders and the receivers are just trying to figure out the best option. Or, is all this optionality really the best thing for the marketplace? And we have, you know, the most, most rich experience possible.

Reed:
I think if you ask, has all these different choices that are available to financial institutions and thus to their users, has that sort slowed down the progress that the US is making? I mean, I think you have to sort of back up a bit and say, well, when we talk about progress, what is it we’re trying to make progress toward? And if your end goal is simply

Sarah:
Mm-hmm.

Reed:
Well, I have a couple like use cases that I love and I think if there was only one network, we probably would have turned those on by now. You maybe could make that argument, but I think if your, if your end state is I want to have a robust ecosystem with not just optionality, but redundancy for all the different sort of paths that I might choose for my transactions. ⁓ then maybe while it maybe causes a few more, you know, machinations to be required along.

you might get there more quickly if you’ve brought all those different networks along with you for that journey rather than sort of trying to just go with one and then, oh, well, once we get to where we like it, we’ll copy it or something like that to make a redundant network versus having two or three or four true competitors in this space who are simultaneously learning from each other and challenging each other. And I think the theory could be they’re making each other better. I guess I don’t-

I guess it doesn’t really matter first of all, because we have what we have. But I’m not sold on the idea that the end state is going to be worse off. I think it’s just a question of are we getting more quickly to where we want to be. It’s having a clear definition of where do we want to be.

Sarah:
Yeah.

Got it, got it. Okay, I like that answer because I’m getting a little bit tired of hearing, ⁓ the US market, you’re so far behind what they’re doing in parts of Europe and India and places like that. I just, I don’t like that comparison. I think it’s just a different market.

Reed:
I do too. I think it, you know, not to say that what those markets have done doesn’t make sense for them. You know, I just think, you know, I grew up in a payments practice at, like you mentioned at Walmart, and we were pretty fanatical about always having diversified redundancy in our payments processing environment. And I think that makes a lot of sense. I think having, being single threaded, especially if you’re talking about a foundational network that supports the entirety

of our economy, that would make me a little bit nervous, right? We have always had two options for wire. We have always had two options for ACH. Why would we then suddenly assume that it’s better to have one, whether it’s the clearinghouse or the Fed ⁓ offering that for instant payments? It doesn’t really make sense to me.

Sarah:
Mm-hmm.

Got it. Yeah. You know, I know that one of the things that you’re working on right now is to develop some industry standards and will those standards do you think kind of help to, to kind of knit all of these various platforms and rails together to a certain extent?

Reed:
Why? sure hope it helps somehow. Why are we doing it? Yeah. Right. Yeah. Yeah. So the FPC, we’ve, we’ve, we’ve been around for, think about eight years now. And one of the things that we’ve heard from a growing number of our members and from folks who are maybe not in our membership, but in our sort of orbit, if you think about all the associations that are members of ours, they’ve got thousands and thousands of companies that are members of theirs, ⁓ is.

Sarah:
So tell me a little bit more about that. What are some of the objectives and what’s your approach there?

Reed:
that there is a need for some standardization in this space. Now, I think what form that takes and how we get there, that’ll be an interesting question that we’re gonna navigate as a group. We’re very consensus driven. But to further that, we did work with ASCX9, who is one of the leaders in payments standards creation. They’ve done all kinds of everything you can think of when it comes to standards and payments in the United States. X9’s had their hand in there.

And they’re part of the ISO framework as well. So you think about ISO 8583, ISO 20022, they actually developed ISO 8583 and then gave it to ISO. So they’re very serious about this. And so having that partnership is going to allow us to engage in a way that gets us to your point about moving quickly, gets us to a point where we’re going to be producing meaningful standards more quickly than if FPC on our own tried to stand up standards.

practice within the FPC. ⁓ So the things that we see jumping out to us, I don’t think will probably surprise this audience. And I’d be interested to hear if your take would be different, if you’re like, well, I wish they’d work on something else. ⁓ definitely fraud. So thinking about what are the things that are in the fraud and risk space that can help. ⁓ Maybe that’s ⁓ some things around.

confirmation of payee comes up a lot in other markets as something. And maybe there’s a standard that can be developed for confirmation of payee. ⁓ Also, the idea of reason codes or transaction tags or things along those lines that can allow for financial institutions who are party to that transaction to have a little bit more information about what the purpose of that transaction is and why it’s being done that can go a long way towards transaction monitoring. So fraud is going to be a big

I’m sure a big area of partnership between us. ⁓ Another is that user interface stuff. So I think when you think about enabling send, ⁓ the user interfaces are gonna be the key there. And they’re gonna be very, it’s gonna be different depending on what the use cases are, right? You’re not gonna be able to have just one standard thing. Like this is how we send a faster payments transaction, right? It’s gonna be different depending on if that’s, ⁓ if you’re sitting in an office and you’re trying to pay invoices or if you’re at a,

on a website trying to make a purchase or if you’re paying a bill, right? Those are all different use cases and I think the user interfaces are going to be different. So thinking through some of the standards there, one that comes up frequently is specifically the request for payment and how that’s displayed to the person who’s receiving that request and who ultimately will be the payor of that transaction. ⁓ What information is in that request? How does it look to them and can that be? ⁓

the same regardless of who is sending that request and what financial institution is sending the request and what financial institution is receiving the request ⁓ to create habituation. Habituation is incredibly important when you’re talking about payments. Having that same or similar experience over and over again is what causes people to trust something. And so that’s going to be really important. And then the other one is exceptions, right? FedNow, RTP, one of the things that makes them different than

other networks that we’re familiar with here in the United States is the finality, the irrevocability of those transactions. so thinking through when there are unhappy path transactions, when there is some maybe a fraudulent transaction or a misdirected payment or a mistake of some sort, how do we handle those? And it doesn’t have to be that we just copy and paste some other rule book from some other payment system, but ⁓ having an understanding for how those transactions will be handled will create

trust among users and allow them to feel comfortable using it because they know, well, ⁓ if I don’t like the rules, I won’t do it. I’ll do something else. But maybe overall, I think it’s fine.

Sarah:
Yeah, I have no comment to that because that’s exactly where this industry needs to go. I think that that’s just perfect. I can’t wait for that to become a reality. That’s going to be pretty amazing. Again, the consistency is going to create that trust and ensuring that

the end users and also the senders themselves have trust in it I think that would also help out the remaining financial institutions to jump on board ⁓ with some of these new payment types as well. Because I think,

You know, part of the problem is, there’s there’s been a hesitancy on the Sun side. And I think part of that has to do with, the fact that there are some things that are not quite solved yet that I think standards will really help with. And so I’d to get your your comments about that, too. Do you think some of these standards will help other financial institutions to jump in to?

actually sending and then even contemplating the request for pay. And maybe even start just from ground zero to kind of explain the difference between moving from receive to send.

Reed:
Sure, yeah, let’s start there. think that’s important because I think one of the differences in this space, and we’re talking specifically about instant payments, so RTP and FedNow right now, one of the big differences between those two networks and really every other, I guess, wire is this way, but wires, ⁓ I think we can set that to the side, but ACH, card, ⁓ check, is that these are only credit push transactions. So there’s no…

Sarah:
Mm-hmm.

Reed:
ability to reach out and pull money out of somebody’s account. It’s always a transaction that is initiated by the payor to the payee. ⁓ And the reason that’s important is because in order for, as a financial institution, in order for your account holders to receive the full benefit of the instant payment network for money to flow in and out of their account, you have to be set up to send and receive. And that’s different than ACH, right? So with

If you’re financial institution, you’re doing ACH, money can go into your account by another institution crediting, money can come out by another institution debiting. So money can flow in and out of your account holders accounts all day through the ACH network without you ever initiating or originating an ACH transaction as a financial institution. That is not the case with RTP or FedNow. For those networks, you have to implement that. And I think what we’ve seen is

Sarah:
Mm-hmm.

Reed:
You’re right. I think we’re definitely seeing a hesitancy when it comes to fraud and risk and concerns around, well, when you couple that additional effort read that you just told me I have to make in order to enable this in the first place with the irrevocability of these, am I opening my account holders up to potentially catastrophic losses if they make a mistake or if they’re scammed or whatever might happen? And I think that

is something that we have to have an answer for as an industry. If we’re telling all these folks, hey, you should do this, ⁓ having answers for those things is definitely important. I think, ⁓ so obviously there’s lots of research being done out there. The Fast Repayments Council has a fraud work group focused on this stuff. But I do think to your point, I think having a standard approach that lets these financial institutions know that what they’re doing is the accepted ⁓ best practice in the industry.

Sarah:
Mm-hmm.

Reed:
And it’s in when say that, and I mean, it’s very defined as a standard, but ultimately that standard becomes the accepted best practice that can provide them with that layer of confidence to take that to their auditors, to take that to their compliance folks and say, Hey, this is how 7,000 other financial institutions are doing this. ⁓ and, frankly, it’s not that much different than every other payment type we have in market, right? It’s the same types of protections. It’s transaction monitoring, it’s authentication.

Sarah:
Mm-hmm.

Reed:
⁓ It’s information sharing when you can. And then I think layering in there that confirmation of payee potentially as another layer that maybe is specifically relevant here.

Sarah:
when you say that, that makes me think that, you know, there, I think a lot of financial institutions are very concerned about fraud. I think that’s a, that’s a big part of why a lot of them haven’t moved from just, just receive in. But when you talk about what needs to happen, it’s like, my goodness, we have solutions for that. We do that today. Right. So it, in theory shouldn’t be that big of a step. Yes, it’s, it’s real time. So it’s a little bit different, but we have solutions in the marketplace. Right.

Reed:
Absolutely. Yeah, there’s tons of vendors out there who provide these. mean, like I said, this is not that much different than what these financial institutions are hopefully are already doing for their other payment types for their online banking. And, and I think the things that kind of get lost in translation are, well, this is instant. it’s gonna, I have like in the, it’s gonna happen immediately. And I’m not gonna have the time that I have with ACH, but the fact is you have all the time you want.

Sarah:
Yeah, yeah.

Reed:
between when your customer says, hey, I want to send this transaction. And when you as a financial institution put that transaction into the network, you don’t have to act on that request instantaneously. can do some checks. You can look for, you you can run it through your different fraud screening and different tools that you have available to you. ⁓ And you can make sure that you feel good about it. ⁓ And I think the other thing that you can have in place are different limits and different.

days of times and days of all that good stuff that you can put in place. They can say, we don’t have to allow every single account holder to send $10 million 24 seven, 365, right? You can limit how much money you allow people to send. You can limit the days, the times of the day. If you feel like that’s important, there’s all kinds of different things you can do when it comes to making sure that you’re protecting your account holders from being defrauded.

Sarah:
Mm-hmm.

Yeah, I think that’s really key for financial institutions to understand. I hope they’re all listening to you because as an organization that can do both receivance and I want some more financial institutions to swap some payments with.

Reed:

Absolutely.

one of the things I’m hearing from, ⁓ smaller financial institutions is that really when they started to assess the implementation of instant payments, what they found was they couldn’t really make it work from an ROI perspective without implementing send they needed the send is

Sarah:

that’s interesting.

Yeah.

Reed:
Yeah,

it was interesting to me too, because I think like, well, obviously you get the liquidity associated with receiving transactions. ⁓ for any financial institution listening, has been the case that every FI that comes on board receives many, transactions the day they turn it on ⁓ for receive. They’re always surprised by the volume that comes in almost immediately when they turn it on. But the ability to sort of market this and put in fine fee income.

Sarah:
Mm-hmm.

Reed:
is really what allowed many of these smaller financial institutions to sort of make it pencil out. Now that doesn’t mean that they implemented everything all at once, right? It’s almost always a phased, know, implement receive and then phase two implement send. And I think ⁓ having that in mind is like, well, there’s actually some revenue opportunities here on the send side that I don’t really have on the receive side is also an important thing to keep in

Sarah:
Perfect, perfect. ⁓ You know, as we kind of wrap up here, a couple more questions before I let you go. I know that as you mentioned, you just wrapped up your spring conference. Anything super notable coming out of that? Anything that you weren’t expecting at that conference that came up as a topic?

Reed:
I can’t say that these were things I wasn’t expecting, but I think just the volume or the percentage of sessions that ended up having ⁓ AI as part of the conversation was, it’s still, it’s not surprising, but startling, right? It’s like literally every single session, I think, that came up. And I think if you’re trying to grapple with,

Sarah:
⁓ yeah.

Reed:
not only the advent of these new payment technologies, but also the advent of this new meta technology that is sort of taking over, ⁓ maybe not taking over, but affecting all kinds of aspects of our daily lives and our work lives. ⁓ Those conversations were pretty interesting to hear and think about the intersections between AI and payments, sort of on the cutting edge of payments. And then the other one, again, not surprising, but ⁓ was stablecoin. That was a very, very ⁓

Sarah:
Mm-hmm.

Reed:
often discussed. think it’s something that as an FPC, ⁓ we’re going to be definitely expanding the amount of time we spend helping to produce education materials that are helpful for financial institutions and for corporates around stablecoin to help them understand, and not just stablecoin, but tokenized deposits, say those in the same breath, guess, help them understand how that might play into their strategy or how they at least need to understand what it is and how it works and what people might be doing with it.

as they think through their sort five-year plan. ⁓ Having eyes on some of these ⁓ emerging technologies is always ⁓ important.

Sarah:
Mm-hmm.

So is there a point where stable coin and some of our faster payment options kind of come together or do you see stable coin more as, yeah, now we have another payment option?

Reed:
I think if I knew the answer to that, I might be really rich. ⁓ I think that’s going to be the kind of thing that we’re going to see how it plays out. think it certainly today is another option that exists. So it’s something that ⁓ if you’ve got willing senders and receivers, can adopt a different… There are many stable coins in the market today that they can get into those ecosystems and use.

Sarah:
loaded question, right? I’m sorry.

Reed:
be interesting to see how maybe there’s some sort of like walled garden type situations with different stable coins being potentially like useful within the orbit of very large corporates, for example. don’t, but I guess I don’t see.

Sarah:
Mm-hmm.

Reed:
You never want to make bold, like, such sweeping predictions. But I think it’s hard for me to think that, like, within our lifetimes, within our careers, that we’re going to see a time where it has sort of subsumed all of the transacting that’s going on and that that’s, know, that fiat is kind of a thing of the past. don’t, I that’s not where I’m feeling the vibe.

Sarah:
Mm-hmm.

Gotcha. I the one thing I think about

is an issue between the on ramps and off ramps when it comes to stable coins. the on ramp is slow because you’re dealing with potentially antiquated platforms and the off ramp is the same scenario. And so this lovely transaction that happened

and within a millisecond just comes to a screeching halt. And I’m wondering if there isn’t an opportunity there for some faster payment goodness to come in.

Reed:
for sure. It’s honestly, in a lot of ways, it’s a lot like some of the use cases we talked about earlier, right? It’s like the Venmo and Cash App experience, right? If you and I are both within either of those wallets, it’s a wonderful experience. Like it’s super easy to send money back and forth and you can say what it was for and all that stuff. But it’s when you want to then move that money from your Venmo wallet into your bank account that…

Sarah:
Mm-hmm.

Yeah.

Reed:
experience can get a little bit frustrating if you don’t have, that definitely is a use case for instant payments as we already know. Certainly ⁓ stablecoin in and out could be a very big use case for instant payments as well to the extent there are people who want to transfer that back into ⁓ regular fiat digital bank dollars ⁓ for sure. ⁓

Sarah:
Yeah.

Reed:
but it sort of also is like, well, why don’t I just keep it as bank dollars?

Sarah:
Yeah. Well, we’ll save that for the next podcast. How’s that? So one last question. Where are you going next? Where can people find you in the industry?

Reed:
Right, yeah.

gosh, I’m going to be actually a lot of time at different events in April. ⁓ if you don’t, if you’ll bear with me, I’ve got, I’ve got a list that I’m going to rattle it off. So I’ll be at the bankers bank of Kansas innovate conference, April 8th. Then I’ll be at EPCOR in Indianapolis the next week, April 13th and 14th. I think something like that. And then the American bankers association, MDI conference ⁓ in DC speaking there on a panel on

Sarah:
⁓ go for it. Yeah.

Cool.

Reed:
on how ⁓ instant payments can affect minority financial institutions. And then ⁓ at Natcha, of course, everybody will be out in San Diego for Natcha. And FPC will be there with ⁓ our booth. I’ve got three sessions, the final session of the day, Monday, Tuesday, Wednesday. So if you’re a hardcore payments person, maybe you’ll find me ⁓ on stage. And then also FPC and ACI Worldwide are hosting an event on Monday in San Diego. So check out. ⁓

Check us out there and find that and join us for a drink and some talking about instant payments.

Sarah:
⁓ perfect. Perfect. That sounds like ⁓ a very nice event. Well, thank you so much. I appreciate all the background that you provided here today.

Reed:
Thank you so much for having me, it’s a great time.