Plaid Anticipates Sea Change in Instant Payments, Emphasizes Safety & Biometrics

As the financial landscape continues to evolve at a shocking pace, Mollie Curran, payments lead at Plaid, anticipates a transformative shift in the realm of instant payments. In a recent interview as part of the series "What’s Next in Payments: Instant Payments: What Will Turbocharge Instant Payments Growth in 2024?" with PYMNTS, Curran shared insights into the imminent changes and key factors driving the adoption of instant payments.

In the interview, Curran highlights a fundamental transition from the concept of instant payments being a futuristic idea to a reality where biometric authentication and real-time transactions become standard. Plaid's own customers are currently exploring the advantages of cost optimization and contemplating the speed at which end customers will demand faster payments.

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Looking ahead to 2024, Curran predicts that the adoption of FedNow will lag behind Real-Time Payments (RTP) in terms of total payment volumes. RTP is expected to be available across various use cases, with a focus on sectors such as insurance, government aid, and eCommerce, where clear consumer value propositions can be established.

Further, she observes a growing trend in the use of instant options for account-to-account money movement, particularly as individuals engage in fund transfers between brokerage and savings accounts while planning and saving for the future.

To spur widespread consumer demand, Curran emphasizes the importance of not only offering convenient but also safe instant payment options. The shift towards digital native experiences and the integration of biometric authentication are seen as crucial elements for success, aligning with the characteristics that have defined successful payment types.

Plaid acknowledges the role of rewards and loyalty programs, including cash-back options, as catalysts for adoption. Companies are leveraging these programs to not only drive volume with existing customers but also expand their reach, scale, and attract new customers.

As the payments landscape evolves towards instant transactions, risk management becomes a top priority. The company's customer base is actively accelerating their anti-fraud roadmaps, aiming to transition from reactive to predictive measures. The shift to irrevocable instant payments will eliminate the days-long settlement times associated with ACH.

Curran outlines threefold risks in the adoption of instant payments: identity risk, account risk, and transaction risk. Plaid addresses these concerns through robust know your customer (KYC) systems and identity matching to ensure the legitimacy of users and transactions.

In conclusion, Curran emphasizes that the success of instant payments lies in building consumer trust. As consumers witness the seamless functionality of instant payments and the mitigation of risks related to account takeover and fraud, these payment solutions are expected to become preferred choices, securing a prominent place in the financial landscape.