Independent Banker - January 2024 - 33

As community banks strategize how to evolve
their products and solutions to keep up with
customer needs, access to a new payment
system with instant clearing and settlement and
requests for payment cannot be underestimated.
ICBA remains very active in
industry conversations on real-time
payments, including as a member of
the U.S. Faster Payments Council.
Our staff is represented on its Board
Advisory Group, its Operational
Considerations for Instant &
Immediate Payments Work Group,
and its Fraud Work Group.
that can quickly and safely pay
workers for a day of work are more
attractive employers. This can be
especially valuable for those in
rural or agricultural areas.
 Instant loan funding. If a
community bank can provide
funding to a small business in the
community right on approval, it
has a competitive advantage on
pricing and when competing with
online lenders.
 Bill payment for low-income
customers. It's a fact of life that
sometimes customers are in a time
crunch to pay bills before utilities
are shut off . Giving customers
the ability to instantly pay their
bills online instead of having to
waste time traveling to pay a bill in
person is life changing.
Instant payments adoption
Community banks have the option
to enroll in FedNow as " receiveonly "
participants, meaning they can
receive instant payments without
being required to originate payments
through the service, or they can act as
both senders and receivers.
Adopting FedNow is a strategic
play right now-one that community
bankers should rally behind. While
adoption involves working with core
providers and other third parties,
it's an investment that will pay off in
time. As more community bankers
become both senders and receivers,
transaction volume will increase.
One of the biggest concerns with
the FedNow Service is the worry
that faster payments means faster
fraud-but we have not seen that bear
out. FedNow transactions are credit
push only, meaning that crooks can't
proactively break in and steal funds.
There appears to be very limited
amounts of authorized-party fraud
when customers initiate legitimate
transactions after being duped into
sending a payment to a third-party.
It's a type of fraud common to other
payment systems.
FedNow adoption can actually
play a role in reducing check fraud.
The mass mailing of relief and
unemployment checks during the
pandemic spurred a resurgence
in check fraud that continues.
The rate of check fraud nearly
doubled between 2021 and 2022,
according to the Financial Crimes
Enforcement Network (FinCEN).
The more community banks
can move customers away from
checks, the better it is for the
payments ecosystem.
ICBA is committed to making it
easier to adopt the FedNow Service
and eliminating barriers to entry.
Continued ICBA advocacy
Among ICBA's goals is promoting
interoperability, especially between
FedNow and The Clearing House.
When a customer sends an automated
clearing house (ACH) payment today,
it doesn't matter if the banks behind
the transaction are using FedACH
or The Clearing House Electronic
Payments Network. That's not yet the
case with instant payments, and ICBA
is using every opportunity to advocate
for removal of that barrier.
ICBA is a resource for community
banks considering FedNow adoption.
Our involvement throughout the
process-everything from initial
conversations with the Fed and
community bankers all the way up
to membership on the Fed's Faster
Payment Task Force and working
with ICBA members throughout
the pilot process-gives us a unique
vantage point to answer questions
and helping members think through
the possibilities.
As the volume of FedNow adopters
grow, so will the opportunities. Now is
the time to start strategizing how your
community bank will adopt faster
payments and seriously consider how
the FedNow Service can help you
achieve your goals.
Scott Anchin (scott.anchin@
icba.org) is vice president,
senior operational risk and
payments policy for ICBA.
independentbanker.org // 33
http://www.independentbanker.org
Independent Banker - January 2024

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