In the first edition of a three-part blog series, we discussed the topic of choosing a payments network between RTP and FedNow. For part two, we’ll explore the benefits of taking a slow-and-steady approach to instant payments integration, or more specifically, of starting out with a “receive only” strategy and the benefits.

Starting with Receive Only: The Benefits

While it may feel like a bare-minimum approach ahead of the imminent FedNow rollout, launching instant payments in receive only mode is actually an incredibly smart strategy for banks not ready to go all in and comes with a number of significant benefits. After all, it may be that your institution simply isn’t prepared to jump head-first into the 24/7/365 world of instant payments, but enabling receive only capabilities for a minimum period of 3-6 months can serve as a much-needed learning experience, and ultimately providing a solid foundation upon which to build future services. Of the 280 financial institutions connected to the RTP service today, nearly all began (or remain) in Receive Only mode. Only 30 financial institutions are active originators today.

Here are just a few of the myriad benefits of starting out with a receive only strategy:

1. Low Credit Risk. To be clear, there are always credit risks to financial institutions in the payments sector, however receiving instant payments is about as close to “risk-free” as it can possibly get. For example, there is currently no requirement to return an instant payment once received; no chargebacks, no recalls. And while there is a process in place for requesting the return of an instant payment, as it currently stands the receiving bank remains under no obligation to comply with such a request.
   
2. Less Complex Technological Implementation. Gaining the ability to receive instant payments requires far fewer and significantly less complex technological integrations than it does to enable sending. To receive, you’ll simply need to connect to the instant payments network(s) as well as to core deposit solutions. This is easier primarily because core deposit systems are typically already integrated into digital channels, where instant payments are incorporated into the transaction ledger display. It isn’t until you begin to send instant payments that the introduction of fraud protocols and other, more complex digital integrations will need to be considered.
   
3. Operational and Customer Support Education. By starting out slow and steady with a receive only approach, you provide your institution with a valuable opportunity to carefully document and build out new processes that are unique to 24/7/365 banking and return requests, an effort for which your customer base will be grateful. Moreover, the gradual approach of a receive only strategy will facilitate better long-term resource and functionality planning in anticipating instant payments volume growth over time.

In addition to the above, it’s also worth mentioning that your account holders likely already have situations in which an instant payment option would be beneficial. For example, ride-share drivers, food delivery services, Venmo and PayPal users, and other small business owners already have the option to receive instant payments—and it’s an option that, most importantly, they seem to value immensely. This can be evidenced by conversations between career professionals on various online forums—Uber drivers, for one, are particularly active here—some of which even feature discussions about which financial institutions are currently able to receive instant or on-demand payments.

Bottom line? When it comes to launching instant payments, not only is there no need to put your institution under any more pressure than is necessary, but starting slow can also actually be an incredibly effective strategy to maximize success in the long term. First, focus your energy on connecting to a network and receiving instant payments as quickly as possible. Follow up those efforts with additional planning toward more complex integrations that will ultimately deliver you to the sending phase. This will provide your institution with the best opportunity to properly support your account holders step-by-step as they begin to leverage more of your instant payments services.

In the third and final edition of this blog series, we’ll explore how best to frame and communicate your overarching business case around instant payments and align it to enterprise goals.