Many Payment Systems, Many Strengths
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Contrary to what you might think, there are no Yankees-Red Sox type rivalries among the nation’s payment systems. Quite the opposite, actually.
People and businesses have more payment options today than a decade ago, much less a generation ago, and there’s no “fight to the finish” among them. Each option has its own unique strengths, and it’s worth taking a moment to look at those.
As you might expect, I’m partial to ACH. And why not? As the ACH Network continues to experience record volume, it’s clear that ACH is being embraced for more than just Direct Deposit. That’s in no small part because ACH can reach every bank and credit union account in the nation.
ACH remains the gold standard “set it and forget it” payment method. Mortgages, rent, utilities, tuition, subscriptions and other regular bills are paid like clockwork. There’s no sitting in the dark because you forgot to pay the electric bill; it’s done automatically. ACH is also great for recurring donations, so your favorite cause is taken care of every month.
While standard ACH is quick, sometimes you need to move money faster. Maybe there’s a payday error, or a bill or a vendor that needs to be paid today. That’s a perfect time to use Same Day ACH. Utilizing optimal speed, Same Day ACH payments can be received in as little as a few hours on the same business day.
There are times when using the instant payment systems—RTP and FedNow—makes good sense. It can be cashing out the funds in a digital wallet to your bank account, or closing on a real estate transaction for which irrevocability of the payment is a key consideration.
If there’s an exception to harmony among payment systems it’s checks. My sincere hope is that you long ago ditched paper checks, whether you’re making personal or business payments. With the plethora of check frauds occurring today, and the risks beginning the moment you drop a check in the mail, that should be reason enough to leave checks behind.
Checks aside, today’s major payment systems will coexist for many years and many reasons, not the least of which is that Americans by nature like having choices. For every payment, in every circumstance, there are options today. And having options is a good thing.