Prompt Payments


Improving the experience for customers while keeping a watch on bank risk dominated discussions at the annual NACHA payments conference. Attendees from banks and the vendors that serve them examined the operational changes and business opportunities available as less expensive and more available same-day payments come to the United States this fall.

NACHA is the electronic payments association that sets the rules for the automated clearinghouse (ACH), the major means of making and settling U.S. domestic electronic payments. All U.S. financial institutions are required to accept and settle ACH payments during the business day come Sept. 23, 2016. Funds are available to most consumers receiving ACH payments within two days.

It’s a precursor of what’s to come. Consumers ultimately want the balance they see when making or receiving payments to be the money they have available to spend and invest. That experience will wait until the U.S. builds a realtime payments system. Initiatives sponsored by the Federal Reserve are moving forward while a number of FinTech startups are working on completely new payments systems. Watch for details.

Meanwhile, the FinTech-Bank relationship gets some love, congressmen call for a closer look into online lending platforms, and the Federal Reserve warms up to blockchain in this week’s links:

NACHA examines mobile wallet solutions and direct-deposit results

NACHA and the Payments Innovation Alliance released “The Winning Mobile Wallet Solution” at the association’s Payments2016 conference last week. The reports provides more insight into the value and benefits of mobile wallets as well as their potential when banks and retailers collaborate. The association also found a growing adoption and satisfaction$ with direct deposit through ACH for payroll in a study with Javelin Strategy and Research. See the direct-deposit infographic for key results.

Visa is fixing those chip cards everybody hates

On Tuesday, Visa announced it had upgraded its software to shave off about 18 seconds from the typical chip-card payment time, aiming to address retailers concerns about how long EMV transactions take, TIME magazine reports. Quipped ecommerce and payments entrepreneur Mike Dudas in a tweet, “1970s: Visa introduces the 0.5 second swipe. 2015: Visa introduces the 12 second dip.”

Banks-FinTechs as partners v. competitors

Three articles take a look at the power of collaboration between FinTech firms and banks. “Too much has been written and discussed about the ‘disruption of banking’ when the real power of new market entrants is the ‘power of collaboration’ between fintech firms and the legacy banking organizations,” writes Mike Carter, CEO, BizEquity, for The Financial Brand. David Gerbino, director of marketing strategy for NYPAY, discusses the state of the FinTech sector in a Q&A for the Money Summit. “There’s nothing wrong with combining and working with incumbent institutions. They’re not enemies,” he says. As Eyal Lifshitz, CEO, BlueVine, weights in for TechCrunch, “Banks will either need to build their own competitive solutions, buy those solutions, or strike deals that make banks a critical part of the “plumbing” for those solutions.”

What will the bank of the future look like?

Not everyone agrees on a future of collaboration. “The monopolistic environment created by the banks made it difficult for challengers to enter the market. As a result, the early disruptors in financial services had to introduce greater transparency in order to compete. With greater transparency comes greater freedom and greater choice. This has set the wheels in motion for a revolution in the sector,” argues TransferWise CEO Taavet Hinrikus in a post for The Next Web. His vision? More cost-savings for consumers—not millions, but billions of dollars—as well as further unbundling of banking services.

Regulators pay more attention while FinTech lenders focus

According to Inc. magazine, several U.S. Senators are calling for more oversight of peer-to-peer lending platforms. They’re asking for a new report to examine the size and structure of lending portfolios, risks related to institutional investors funding small business loans, and the underwriting standards of alternative lenders compared to banks. Now that investing in alternative lending platforms has slowed and there’s a glut of companies in the sector, these online lending entrants have to zero in on niche markets, which range from mortgages and cars to getting hitched. The Wall Street Journal has the full breakdown.