FedNow Hit With Resistance From Smaller FIs

This week’s roundup of payment rail innovations shines a spotlight on how B2B FinTechs are expanding the functionality and value of existing payment rails. Visa’s Visa Direct, for instance, embraces the company’s card rails to add value to professionals seeking early access to wages, while Billtrust embraces more legacy payment rails with its B2B payment service to streamline the movement of both funds and information. Meanwhile, the Federal Reserve’s plans for a new payment rail have hit some resistance.

FedNow Pushes Through Objections

The U.S. Federal Reserve’s efforts to roll out the nation’s newest real-time payment service, FedNow, is pressing forward with its timeline despite some objections submitted as part of the Fed’s request for comment.

According to recent reports, the majority of objections to the service point to the argument that the Fed should not be competing with other players in the private sector — namely, The Clearing House, which is operating its own real-time payments solution, RTP.

In an interview with American Banker, Mercator Advisory Group Analyst Sarah Grotta said, “While having the Fed facilitate payments adds competition and provides choice, that choice will likely slow adoption.”

Other objections from smaller banks and credit unions (CUs) raise concerns that their needs will be ignored if they do not sign up for FedNow.

Nevertheless, the Federal Reserve said the upcoming service remains on track for launch in 2023 or 2024.

Billtrust Expands Payment Rail Choice

Announced this week, Billtrust’s augmented Business Payments Network (BPN) is adding support for ACH and wire transactions. The BPN, first announced in 2018, facilitates a direct integration between buyers and suppliers to support the seamless movement of both funds and data between companies. Its launch tackled one of the biggest challenges of commercial card adoption, making it easier for corporates to understand which suppliers actually accept cards, and making it easier for those vendors to streamline the ingestion and management of card transactions.

Now, Billtrust said it is introducing support for ACH and wire transactions with a similar focus on streamlining the transmission of information and money, while at the same time providing greater choice for corporates and vendors when it comes to picking the payment rail they want to use.

Paystand Mixes Rails For Company Spend

With its new prepaid card technology, B2B payments company Paystand is mixing payment rails to tackle friction in corporate expense management. The firm recently rolled out its Zero Card offering, a prepaid card that connects employees to virtual cards to make purchases on behalf of their organizations. The technology combines blockchain as well, with Paystand’s payments platform built upon distributed ledger technology (DLT) to facilitate bank-to-bank transfers.

By blending card rails and blockchain infrastructure, Paystand said it aims to enhance the visibility of employee spend while tackling the pain point of fees associated with traditional card products. In a statement, Paystand CEO Jeremy Almond said the company “reengineered the corporate card so businesses can move away from reactive spend management tactics to a place where they have visibility of spend before it happens.”

Wagestream Adopts Visa Direct

Early wage access solution provider Wagestream is enhancing its product offering through the adoption of Visa Direct, Visa’s push payment platform that wields Visa’s card rails to accelerate and streamline transactions. The partnership between the companies will first go live in Europe, where Wagestream will wield Visa Direct to connect professionals to their earned wages more quickly while providing them with a choice in how they receive their payments: either via their accounts or their Visa cards.