Finance chiefs weigh the benefits and costs of adopting real-time payment systems

  • CFOs are holding off on using real-time payments in the back office
  • Real-time payments offer the ability to closely manage working capital
  • Availability and costs are factors that hinder adoption
  • Some CFOs are planning to use real-time payments for payroll, vendor payments, or replacing checks
  • Interest rates and cash flow management are important for CFOs and treasurers
  • Demand for real-time payments in the back office is expected to increase slowly

Chief financial officers (CFOs) are cautious about using real-time payments in the back office, waiting to see if the benefits outweigh the costs. Real-time payments offer the ability to closely manage working capital and provide certainty in payment settlement. However, smaller financial institutions have limited access to these systems, and the costs of real-time payments are higher compared to other payment methods. CFOs are considering using real-time payments for payroll, vendor payments, or replacing checks, but changing established processes and making the necessary investments can be challenging. While interest in real-time payments is high, adoption in the back office is expected to be slow. CFOs and treasurers recognize the importance of cash flow management and are interested in the opportunities that instant payments offer, but demand from suppliers and limited applications are factors that hinder widespread adoption.

Public Companies: Federal Reserve (N/A), Clearing House (N/A), Computershare (N/A), Lithia Motors (N/A), U.S. Bancorp (N/A)
Private Companies:
Key People: Tom Hunt (Director of Treasury Services and Payments at the Association for Financial Professionals), Tom Spataro (Chief Treasury and Banking Officer at Kurtzman Carson Consultants), Jim Colassano (Senior Vice President of Real-Time Payments Product Development at the Clearing House), Nick Stanescu (Senior Vice President at the Federal Reserve and Business Executive for the FedNow service), Tina Miller (CFO at Lithia Motors), Mike Jorgensen (Head of Emerging Solutions at U.S. Bancorp)

Factuality Level: 7
Justification: The article provides information about the rollout of the FedNow real-time payments system by the Federal Reserve and the factors that are influencing the adoption of real-time payments in the back office. The information is based on statements from bankers, payments executives, and treasury executives, as well as survey data from the Association for Financial Professionals. The article does not contain any obvious bias or personal perspective masquerading as fact. However, it could benefit from more specific data and examples to support the claims made.

Noise Level: 7
Justification: The article provides information on the rollout of the FedNow real-time payments system and the factors that are influencing CFOs’ adoption of the system. It discusses the benefits and challenges of real-time payments, including availability, costs, and the need to change established processes. The article also includes survey data on treasurers’ usage and plans for using real-time payments. Overall, the article stays on topic and provides relevant information, but it lacks in-depth analysis and actionable insights.

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the rollout of real-time payments systems by the Federal Reserve and the Clearing House, which could impact financial institutions and their customers.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article primarily focuses on the adoption and challenges of real-time payments systems in the back office, without mentioning any extreme events or their impacts.

Reported publicly: www.wsj.com