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With a few clicks and a short wait, lunch is ready at my doorstep from my favorite restaurant. Instant gratification has become a common commodity in our lives. However, when it comes to the 33.2 million small- and medium-sized businesses (SMBs) in the US, they have been left behind when it comes to instant payments. This is disappointing, considering SMBs account for 44 percent of economic activity in the United States. For years, consumers have had popular P2P platforms like Zelle and Venmo to instantly send and receive money to their friends and family. Things are about to change with the recent launch of The Federal Reserve’s FedNow® Service.
FedNow is set to revolutionize the payment landscape by providing over 10,000 US financial institutions the ability to provide SMBs access to instant payments and help bridge the gap between SMBs to the instant payment experience. Popular private P2P platforms like Cash App and Venmo have taken the consumer payment market by storm. Although they provide a form of instant payment experience, some experts recommend you don’t use them.
What is FedNow?
The FedNow Service is a new instant payment infrastructure developed by the Federal Reserve that will allow over 10,000 financial institutions across the U.S. to provide safe and efficient instant payment services 24/7/365. Unlike traditional payment methods involving delays and processing times, FedNow empowers FedNow Service-ready financial institutions to send and receive funds instantly. This means businesses using these financial institutions will no longer need to wait for checks to clear or endure lengthy processing times from ACH transfers. With FedNow, funds are available within seconds, offering a level of financial agility that was previously unimaginable.
Far ahead of traditional payment systems, FedNow brings improved cash flow, enhanced customer experiences, and streamlined payment processes to accounts receivable. With instant payments, businesses gain immediate access to funds, empowering them to seize growth opportunities and overcome cash flow challenges. Every small business that knows the challenges of chasing late payments and dealing with cumbersome bank hours through ACH should not sleep on upgrading to an instant payment platform.
Are FedNow and Cash App similar?
While FedNow provides banks with instant interbank settlement in real-time, Cash App is a private, consumer-facing mobile payment service with instant peer-to-peer transactions through a digital wallet. Instead of transferring money from account to account, the money is in the Cash App system. FedNow works differently, transferring money from a bank account at one bank to another account at another bank without the funds sitting in a wallet to gather dust.
Where instant payments can make a difference
Imagine a scenario: You’re a small business owner who just received an urgent order from a new client. It’s a fantastic opportunity that could make growth a real possibility. The only catch? You need to fulfill the order quickly, which means you wish you’d purchased the additional supplies yesterday. When you reach out for an expedited order, your supplier insists on the money immediately, and the 3% extra they want to charge for payment by credit card will dig into your bottom line.
This is where instant business payments come to the rescue. With the power of instant payments, you can pay immediately, enabling them to process your order right away. Instead of waiting days for traditional payment methods to clear, instant payments ensure that your supplier receives the funds in real time. This not only builds trust but also strengthens business relationships and ensures that you can seize the day when it comes to urgent demands.
Instant business payments are also ideal in unexpected situations. Let’s say you encounter a critical equipment breakdown that requires parts to be ordered and paid in full ASAP. Without a quick payment method, you risk downtime and loss of revenue. With instant payments, you can settle your bill as it happens and remove any delays caused by payment processing. Overall, instant payments help minimize disruptions and maintain smooth operations by staying on top of sudden expenses.
Accessible, faster payments for businesses
Forwardly is the first and the best payment processor for small businesses in the market, already supporting The Clearing House’s RTP network and the FedNow Service upon launch. Forwardly empowers accountants, small business owners, bookkeepers, CFOs, and financial professionals to improve their businesses and clients’ cash flow, streamline account receivables, and automatically reconcile transactions with leading accounting software brands like QuickBooks Online and Xero. Like consumer payments platforms, Forwardly focuses on bringing the instant gratification experience to small businesses through its user-friendly online portal. Through Forwardly, users can pay invoices instantly, and money will be delivered and deposited in the bank account in less than 60 seconds.
Are you ready to unlock the power of instant payments? Join Forwardly and start transforming your cash flow by experiencing faster payments for your business. Sign up for free and get started today.
