Studies administered by the Federal Reserve Financial Services found strong growth in digital wallet use in 2023. Efficiency-focused businesses increased their use by 31% over the prior year, and convenience-minded consumers experienced a 32% increase.
These changes, particularly consumers’ use of digital wallets and online banking, are leading to increases in instant and faster payment use cases such as bill payment, mobile wallet funding and defunding, account-to-account transfers and immediate payroll for employees.
“The growing demand for faster and instant payment services suggests that tools like the FedNow Service will continue to play a crucial role in helping financial institutions meet their customers’ needs,” Mark Gould, chief payments executive for Federal Reserve Financial Services, said. “The strong growth we’re seeing in the FedNow Service, which has grown to over 700 participants since launching last summer, shows how financial institutions are stepping forward to meet this change in customer expectations.”
Overall, 86% of businesses and 74% of consumers said they used faster or instant payments in 2023, and most (74% of businesses and 79% of consumers) reported looking to their financial institution to provide these services.
“Workers can now get paid immediately, helping them avoid late fees and better meet a variety of obligations,” Shonda Clay, executive vice president for Federal Reserve Financial Services, said. “At the same time, employers are seeing the benefit of improved employee satisfaction and retention as a result of same-day pay. This is an example of how investments in enhanced payment infrastructure are helping institutions and their technology partners innovate new services for their consumer and business customers.”
Other key findings from the surveys include:
- Younger consumers are leading the move to digital, faster and instant payments. More than half of Generation Z (ages 18 – 25) and millennials (ages 26 – 41) now use digital wallets, and 80% of these younger consumers say it is important to be able to make payments by mobile device.
- 25% of consumers are challenged by the slow speed of payments and prefer to have better options for instant money movement to help manage personal finances.
- Businesses are using faster/instant payments because it helps them reduce cost (48%) and provides flexibility to pay and be paid as customers prefer (39%). Additionally, 35% appreciate the 24/7 nature of instant payment services.
- Businesses say key use cases that benefit from instant payments include business-to-business (92%), business-to-person (71%) and account-to-account (40%). Many businesses also believe instant payments will be useful for digital wallet funding/defunding (50%) and earned wage access (25%).
Full reports of the corporate and consumer surveys are available online:
