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When FedNow launched last July there was a lot of excitement in the financial community about the first new payments rail from the Fed in fifty years. There was also some trepidation. What would the rollout look like? Would banks take a wait-and-see approach? And how would the presence of RTP affect adoption?

Now, almost eight months later we have answers to many of these questions. My next guest on the Fintech One-on-One podcast is Mark Gould, the Chief Payments Executive at the Federal Reserve Financial Services. He is the head of FedNow, and has steered the Fed through its successful launch and now into its growth stage.

In this podcast you will learn:

• The many different roles Mark has held at the Fed.
• What the Fed’s role is exactly in the payments system.
• The number of banks that are now on board with FedNow.
• How the FedNow system actually works.
• What Mark’s pitch is when talking to prospective banks.
• The difference between signing up for send and receive.
• How fintech companies should think about FedNow.
• The primary use cases that are flowing through FedNow right now.
• How Mark thinks about RTP from The Clearing House.
• The idea of interoperability between RTP and FedNow.
• How Mark expects the mix of payment types to evolve over the next decade.
• The tools that the Fed has in place to prevent fraud.
• The transaction limits that are in place today.
• The short term product roadmap for FedNow.
• When Mark thinks there will be ubiquitous availability of instant payments.
• What it will take for consumers to have an expectation that payments will be instant.

Read a transcription of our conversation below.

Peter Renton  00:01

Welcome to the Fintech One-on-One podcast. This is Peter Renton, Chairman and co-founder of Fintech Nexus. I’ve been doing this show since 2013, which makes this the longest running one-on-one interview show in all of fintech. Thank you so much for joining me on this journey.

Peter Renton  00:27

Before we get started, I want to remind you about our comprehensive news service. Fintech Nexus News not only covers the biggest fintech news stories, our daily newsletter delivers the most important fintech stories into your inbox every morning, with special commentary on the top story of the day. Stay on top of fintech news by subscribing at news dot fintech nexus.com/subscribe.

Peter Renton  00:57

We have a very special guest on today’s show. I’m delighted to welcome Mark Gould. He is officially known as the Chief Payments Executive at the Federal Reserve Financial Services. Most people think of him as the head of FedNow. And that is what we’re gonna be talking about today, we are doing a deep dive into FedNow, we cover a lot of territory in this podcast, we talk about the adoption, obviously, how the rollout has been going, and the speed with which that is happening. We talk about what’s involved in signing up for FedNow, we talk about sending and receiving instant payments, we talk about how Mark is pitching FedNow to banks today. We discuss how fintech companies should be thinking about FedNow, he has some interesting things to say there. We also talk about RTP, and their relationship with the other instant payments network, and much more. It was a fascinating discussion. Hope you enjoy the show.

Peter Renton  02:02

Welcome to the podcast, Mark.

Mark Gould  02:03

Thanks for having me.

Peter Renton  02:05

Okay, so you’ve been at the Federal Reserve a long time, but can you just take us through some of the highlights of your career to date before you took this position you’re in now?

Mark Gould  02:18

Yeah, I’m happy to do that. And thanks for having me on the show. It’s great to be here. One thing I want to emphasize right at the outset, everything that I say today are my own comments. They don’t necessarily represent the views of anyone else in the Fed, or the organization itself. So with that out of the way, as I look back, I’ve had the opportunity to do just about everything in my career at the Fed. I started here as an entry level analyst right out of college. And over the time, I grew into various leadership roles in operations, payments, technology, strategy, ultimately, I wound up having the opportunity to run our national cash business and to serve as the CIO, the COO, and even a short stint as interim CEO for the San Francisco Fed. And when I look at the picture, I think it was a Polaroid picture, the person in HR took of me on day one at the Fed, I absolutely would not have envisioned myself sitting at the FOMC table one day, even in an interim role, but I’ll admit that was both super fun, and incredibly nerve racking. But as I look back, I’ve just, I’ve had basically, as I think about it, several different occupations within the span of one career, and that really prepared me well for my current role, which, you know, being responsible for the Feds full portfolio of payments services. And, you know, it’s, why do I think that? Well, looking back, I’ve just had a front row seat to all kinds of change over the past 30 years in the payments business, I think about check processing, really kind of where I started, I mean, I witnessed the run up to what turned out to be peak check processing days, you know, watching the transition to digital image exchange, and ultimately, you know, clearing all checks electronically. That was a move accelerated by 9/11, which itself was a pretty traumatic event. ACH, I remember early in my career, watching couriers pull up to the back of the bank and drop off these big reels of magnetic tape, which was how ACH transactions were, were loaded and exchanged and ultimately watched that become electronic, completely electronic. And then we saw the rise of same day and more exchange windows and things like that. Cash, I mean, cash has undergone several developments with new banknote designs, new security features to thwart counterfeiters. And I think what, to what most people would be a surprising amount of technology built into cash and and now we see the evolution of real time payments, you know, going not just from Fedwire our large dollar systemically important system to now having FedNow in the market for instant payments that I think of as kind of on a more every day sized basis. So I’ve seen a lot of change, changes new to me and that’s actually one of the reasons I’m super excited about the decade ahead because I see tons of change on the horizon. I think the next decade actually, we might see more change than we’ve seen, you know, even in the past couple of decades.

Peter Renton  05:20

For sure. So before we dig into FedNow, can you kind of take a step back and explain exactly what the Fed’s role is, when it comes to processing payments and how it works within the banking system and with all of its member banks?

Mark Gould  05:36

You know, I think a lot of people don’t understand the Fed very well, period, I think, you know, if you do word association with the Fed, people might say, you know, Chair Powell, or they might come up with one of the former chairs, or they might say monetary policy or interest rates, maybe, you know, safety and soundness of the banking system, but I don’t think a lot of people would probably come up with payments as a role of the central bank, but it really is. And so what do we do? We basically clear, you know, of large number of payments every single day, we settle about $5 trillion a day in payments across our various platforms, we serve over 9000 financial institutions in doing that, and we have just shy of 2000 people across the country, in all 12 of the Federal Reserve Bank locations, that perform this service. So, you know, we offer a full range of services from check clearing, ACH Fedwire, and now Instant Payment Services. When I when I think about all of those payments, one thing that I try to keep in mind is there’s a, there’s a story behind every single one of those payments, you know, we tend to the focus on the big macro numbers, but you know, it’s, it’s a lot of it’s tuition payments, it’s paychecks, it’s, you know, somebody’s house payment, maybe paying the babysitter, it’s a lot of those things that that we facilitate. And so our goal is to offer the services that are really resilient, and very trustworthy and reliable, because people all around the country are counting on them.

Peter Renton  07:04

Okay, so let’s talk about FedNow. We’re recording this on February 15. And would love to kind of get a status update. I think I was reading an article earlier this week that said that number of banks now is somewhat equivalent to RTP. But can you just give us an update on where are we at with FedNow when it comes to the rollout?

Mark Gould  07:24

Yeah. So I’ll just start by saying, I’m totally jazzed with where we are with the rollout of FedNow. In fact, I’m thinking when we first met, and we first started talking about doing this podcast, I suggested to you that maybe we’ll wait until we hit a milestone. And I think I threw out the number of 500 connected customers. And I recall you saying why don’t I don’t think I want to wait that long. Why don’t we do it sometime sooner? Do I have that right? Do you do remember that?

Peter Renton  07:48

You do. You do remember that right.

Mark Gould  07:51

So I’m happy to say today it’s 503, is the number. 503 institutions as of this recording. And you know, I guess the way that I feel about that is I, so first of all I feel very good about where we are given that we’ve only been in the market since July of last year, but ultimately my read of that is what I hear from other people in the industry, and what I generally hear from folks is they’re surprised. They’re surprised at how quickly we grew the network and as we’ve signed up some new customers what I hear from them is their sense of urgency in signing up was motivated in part by the fact that the number of customers was larger than they expected at the outset. So overall, I think we are making terrific progress, we have a lot more customers in the pipeline. Volume is growing steadily. Of course it’s low because we don’t have a complete network yet, but overall I feel very good about it.

Peter Renton  08:49

So then, is it fair to say you’re you’re above expectations? When you started rolling this out in July, I’m sure you had goals in place about where you would want it to be as far as number of banks on board. Are you above? Or where are you at?

Mark Gould  09:04

Yeah, we ended the year above our internal expectations of where we thought we would be. But again, also not really knowing it’s very difficult. But none of us really have a lot of experience in bringing something completely new to market. The last time we did this was about 50 years ago with ACH. And so you tend to be really good at stuff that you do all the time. Things that you do once every 50 years, you tend to, you know, you don’t have a lot of experience on which to base it. So one of the things that we did to try to ensure that we did have a good experience was to invest pretty significantly in digitizing the onboarding experience, the customer onboarding experience, because you know, we recognized if you know, there’s 9200 financial institutions in the United States. If we want to get every single one of them connected, we really don’t want a line around, you know, out the door and around the corner. We really want to avoid that. And so, you know, we we were thinking ahead to say, okay, at a certain point in time demand is going to be very large, how do we ensure that we don’t have a line out the front door? Well, you know, digitizing the onboarding experience. So I think so far, our record from a bank signing a contract to being live on the platform is eight days, eight days from signing the contract to being live on the platform. That’s a result of investing in this digitized onboarding experience. Again, that’s not something we’ve ever done before. But it’s an experience that over time, you know, will spill over into our other payment services where, you know, in some cases, we’re still relying on people signing pieces of paper and forms and things like that, you know, ultimately, that’ll all go away.

Peter Renton  10:43

So did you have people with fintech experience like building this onboarding process? It sounds like a typical fintech problem.

Mark Gould  10:50

We imported a lot of talent for the FedNow program, both contractors and full time employees, we also utilize consulting resources to help augment our skills, because we recognize what we’re doing with FedNow is something we’ve never done before. That’s a cloud native solution, it’s 24/7. And it needs to be, you know, meet the same reliability standards of all of our other services. And when you’re trying to do something you’ve never done before, it usually means you need to do something differently than you’ve done before. And that’s the approach that we took in building it.

Peter Renton  11:24

Okay, so then can you explain the mechanics of how a payment flows through FedNow? Let’s assume you’ve got both a sender and receiver who have activated that the capabilities to send and receive, how does it actually work?

Mark Gould  11:41

Well at the very highest level FedNow it’s basically a mechanism to enable within seconds, and around the clock 24/7, the transfer of money between financial institutions in a manner that’s immediate, it’s final, and it’s irrevocable, that makes it distinct from all of our other services, where say in the case of ACH, you know, you have message flow that happens, and then you have settlement that happens, this is all you know, each payment is settling individually as it’s made by nature then, we refer to them as instant payments, because we’re talking about the payment settlement happening in a matter of seconds. I think that makes it ideal in a lot of cases for, you know, for use cases where you’ve got, you know, a situation where a good has been provided or a service has been provided, and the provider of that service wants to make sure that they have good funds available. You know, in a lot of, you know, app based, you know, payment platforms, you have information flowing, but you don’t have settlement flowing. Settlement usually happens, you know, it could be a day or two later. And so there’s, you know, an element of risk involved in that, I think that’s what really differentiates instant payments, because, like I said, the payment and settlement is happening all at once.

Peter Renton  12:55

Okay, so then I’m curious about when you’re talking with banks. And now you’ve said 500, that’s a fantastic milestone. I imagine it makes it easier now that you are being successful in your rollout. But what is your pitch? And I presume you have a different pitch, if you’re talking to a large bank than you do if you’re talking to a much smaller bank.

Mark Gould  13:19

Well I think the basic pitch is the same. But I’ll get to maybe a little the difference between a large bank and a small bank, I think the basic pitch is this is that we live in an instant world. I mean, we’re used to getting things instantly I can go on, I can go on my computer and access information about anything, instantly, I can get anything delivered to my door, you know, within a matter of hours in many cases, but but we often find ourselves waiting for payments. Even in this you know, instant world, you might be waiting a day, maybe longer than that. And you know, living in an instant world, if you’re a bank, even if your customers aren’t necessarily asking for it, the experience that your customers have in every other aspect of their lives is instant. And I think, you know, most people, if they’re choosing between something fast and something slow, they’ll choose the fast thing. I’m flying later today, and you know, I’ll go to the airport, I’m gonna get in the TSA PreCheck lane. Why? Because I prefer fast and predictable, to slow and uncertain. And I just, I think that same thing applies to the world of payments. And I think, you know, for for banks to remain relevant and maintain the customer relationships they’ve invested so hard in building, you know, providing that kind of instant payment and settlement service to their customers, I think is important. Now as it relates to small banks versus big banks. I think, as we think about the Fed offering the service one of the reasons that we are in this market is because the industry asked us and said yes, we really think that the Fed should provide an instant payment service. A lot of those comments come from small and medium sized regional banks that, you know, on a relative basis, just don’t have the same resources to invest in technology that the very largest banks in the country do. And so I see our ability to offer an instant payment service to the very smallest banks, no matter where they are, how remote they might be in the United States, you know, as a really important role for the for the central bank, to enable them to give them a competitive playing field, so that they can offer similar products to the very largest banks, the largest banks have lots of resources that they’re investing in, you know, the private sector solution, RTP has been in the market for several years, many of them are using that. But a lot of small banks, you know, are waiting, were waiting for the Fed to get in to this business so that they could, they could leverage the Fed the same way they use us for ACH wire transfer and cash services.

Peter Renton  15:56

Right. Right. So I presume most banks are signing up initially for the, to receive FedNow. I mean, there is a different technological lift, right, between the send and receive functions. And maybe you could tell us a little bit about the, the differences there, and how like, of the 503, I mean, how many are signing up for both send and receive?

Mark Gould  16:18

Yeah, I mean, it’s certainly true that receiving is easier than sending. While all of our connected customers are signed up to receive, you know, it’s only a subset of them that are signed up for sending, you know, part of that is, is due to the the technology lift, part of that is due to preference and wanting to just kind of, you know, crawl or walk before they run a little bit. Part of it is the, you know, just even the technology solutions, the core providers that banks are using, not every platform is equipped for send. So one thing to keep in mind, that I try to keep myself, keep in mind myself all the time, because I’m naturally an impatient person is that the, this market, the market for instant payments is really still in its infancy in the United States. And so, you know, the, the solutions are not all necessarily equipped with all of the capabilities they need yet. And, and I think, you know, the industry, gaining a little bit of experience will give people a greater sense of confidence, you know, to jump into the sending game as well. Now, having said that, we have some banks that have been sending since day one. In fact, you know, the first transaction was between two credit unions, you know, one credit union has been very assertive on the send side, and being really kind of entrepreneurial and experimental. So we are seeing a fair amount of sending activity, but I expect that to ramp up. I expect that to ramp up this year, as the technology solutions become more enabled. And the thinking around use cases, you know, is that more well defined, and a lot of these early adopting customers.

Peter Renton  17:48

So then how should fintech companies think about FedNow, because obviously, fintech companies don’t have access to the Fed’s, the Fed payment system, they’re always working with partner banks. How should fintech companies think about it?

Mark Gould  18:01

This is one of the reasons that I was eager to come on your podcast and speak with you because, you know, I think we’re talking to a lot of fintechs out there, I really view fintechs as playing an important role in two different ways. First, you know, just thinking about financial institutions, you know, every financial institution has some combination of their their technology solutions that they’ve built, that they buy through a service provider, or that they augment with capabilities provided by fintechs. And I think, you know, there are a lot of really innovative fintech solutions out there. You know, we have a lot of companies identified even on our FedNow Explorer website, that offer solutions that could plug into banks, back end solutions to more quickly enable functionality that would be useful in leveraging instant payments. But I think that, I mentioned two things. I think the second thing is this goes beyond banks. If you think about how all of our other payment services are embedded in the, I’d say the larger business community, you know, every corporation has, you know, a back end system that’s feeding payroll or accounts payable or things like that. I mean, for the US economy to get to a point where instant payments are ubiquitously available and broadly used, it’s going to require every financial institution to be connected, but it’s also going to require every other company, nonprofit, you know, sole proprietorship, whatever, anybody who makes or a receives a payment needs to be thinking about instant payments, how they can help them meet their strategic objectives, and what solutions they’re going to use to do that. So I view all of that as the, the total addressable market for fintechs to think about, so it’s helping to equip banks to enable instant payments, but also helping to enable everyone else in the economy to utilize and fully leverage instant payments. That’s a huge opportunity set that I think fintechs are, are ideally situated to tackle.

Peter Renton  20:01

Right, right. So what are the primary use cases that are flowing through FedNow, right now? When I’m sort of sending a payment or receiving a payment, I go, wow, look, I got this right away. It’s always a surprise to me when it happens instantly. So what are the use cases that are that are being used right now?

Mark Gould  20:22

Early on, I think a lot of the use cases, the dominant use cases that we’re seeing are things like account to account transfers, where, you know, you may have a primary account, and maybe you have a brokerage account or a high yield savings account or something like that, particularly in this era where, you know, interest rates have gone up a little bit, you know, people are moving money around a lot. So we see activity in that area, wallet fundings, and D fundings, or confirmations like the things that would happen where, when you’re trying to connect a, say your checking account to a, a wallet of some sort, traditionally you might make a micro deposit or two and then confirm that that takes, you know, in some cases, days to get through. Instant payments can enable that to happen immediately and enable, you know, enable funds to move right away. And also things like earned wage access, paying gig workers, things like that, those are the kinds of things that we’re seeing right now, having said that, we’re having conversations with people about all kinds of other potential use cases. In fact, it’s, it’s pretty typical. If I go to a conference, you know, somebody will pull me aside and say, Hey, I’ve got this great idea for a use case or somebody, actually, just yesterday somebody reached out to me on LinkedIn, they had some ag related use cases in mind. So I just think there’s a lot of creative thinking going on about how they can be used. But right now, the the ones that I mentioned, are the primary ones they’re seeing.

Peter Renton  21:42

So I want to talk about RTP. Because obviously, it’s a private sector initiative has been around for several years. Do you see yourself as a competitor to RTP? I mean, what’s your relationship there? I’m curious how you think about it.

Mark Gould  21:56

So yes, we’re competitors, you know, the The Clearing House, and David Watson, who runs it, he was a guest on your show not long ago, they are a competitor in the payment space with the Federal Reserve, that we compete vigorously in the cheque clearing area, and ACH wire transfers, and now in instant payments. I think a lot of people in the financial industry and you know, some of the things that we heard in the public feedback before getting into this business was people appreciate that. They like having competition in this space. We probably tend to make each other sharper, and it probably tends to keep the level of innovation, you know, higher than it might be  otherwise. So yeah, they’re a competitor. But having said that, yeah, there’s a lot of areas where we, where we try to collaborate. So for example, when we, you know, introduced FedNow, you know, we didn’t want to just do something completely different that would make enablement across the industry difficult. So we both went live with the ISO 20022 format, which is also a format we’re adopting for Fedwire next year. So there are areas where we try to collaborate because we share the same objective of getting instant payments to be, you know, to be, like I said, broadly used, and it becomes easily available across the United States.

Peter Renton  23:12

Well I presume we’re a little ways away, right, from being able to, you know, send with RTP and receive with FedNow, if someone’s going across banks that aren’t members of both.

Mark Gould  23:21

Yeah, I think that’s right. I also think that that’s exactly the way the wire transfer system works today, where you know, some banks are members of CHIPS, some banks, primarily utilize Fedwire. And payments can move both directions. And you know, in the case of the very biggest banks in the country, they think about how one system can back to the other up. I think there there are definitely resilience benefits to having two players in the marketplace. I think the biggest issue that we’re trying to tackle right now, is the fact that between the two of us we have several hundred institutions connected to instant payments, we need many 1000s of banks connected to instant payments. That’s the primary presenting challenge that we need to tackle in the next few years.

Peter Renton  24:09

Okay, so then you’re not out to crush RTP then right? You want them to be successful, as well as FedNow to be successful. Is that fair to say?

Mark Gould  24:16

Yeah, I think that will mirror exactly what happens in all of our other payment rails, you know, in ACH and wire, and check. We’re both successful. I think our target markets are a bit different. And I see room for both of us in this marketplace.

Peter Renton  24:31

Okay, so I want to talk about the different, the mix of payment mechanisms that we have today. We have cash, card, check, ACH, wire, and now Instant Payment. You talked about some of those at the beginning of this interview. I’m curious about how you expect this mix to change over the coming decade. I mean cash just seems to be resilient, checks are still going. How do you expect that mix of all the different payment methods to change?

Mark Gould  24:57

This is the question I’m probably most afraid of answering because you’re recording it, and you’ll be able to play it back 10 years from now. I mean, honestly, I think this is absolutely going to be fascinating to watch. And I don’t think any of us know what the answer is. But I’ll tell you what I think, what my my gut tells me, my informed gut view based on everything that I see. So first of all, I think that the total number of payments made in the United States is going to grow. And I think it’s going to grow pretty significantly. And I think that because once payments, and particularly instant payments are really easy, you know, they’re easy, and they’re broadly available. I think more payments will be made, you know, I think about this, even as I order things online from Amazon, you know, you might have at one point in time, gone to the bookstore once a month, or gone to the drugstore, you know, once a week or something like that. Now, you just order things any time you want. And so the total number of transactions actually is going up. And I think the total number of payments will increase pretty significantly. I think that my own view is that cash demand will continue to rise, but transactional usage will likely decline further, it’s been declining over the past several years, even as demand for cash rises, because people like that money in their, you know, in their house, just in case, particularly in the case of natural disasters, I think that we’ll see some payments move from wire transfers and ACH into instant payments. Yeah, for example, in the wire transfer space, we see a fair number of, of wire transfers that are relatively low dollar amounts, I think they’re in the wire transfer space today, because there isn’t a great alternative. As we introduce a great alternative, I expect some of those payments to move. And I suspect some ACH payments will move also, although I don’t expect, like things like large corporate payroll systems with highly predictable payments, those are really well suited for ACH, I wouldn’t expect those to move. But I would expect, you know, some kinds of payroll payments, like I mentioned earlier, shift workers, you know, gig workers, some of those kinds of payments to move. You know, finally with respect to check,  my hope, and it’s not because I you know, harbor any ill will against anyone, but I really think that check is a case where many of those payments would be better suited for instant payments, but it’s going to take some work to get there. So I would hope over the next 10 years, we see the total number of checks written decline pretty significantly. Recognizing that that’s going to be a heavy lift.

Peter Renton  27:26

You see these headlines, instant payments means instant fraud, what are the anti fraud tools that you’re putting in place, and the banks that are using FedNow putting in place to prevent instant fraud?

Mark Gould  27:40

You know, one thing that I would just say at the outset, is you know, fraud isn’t limited to the instant payments world. In fact, you know, when I talk about checks declining, I think banks right now are going to be motivated to really think about instant payments as a way to combat fraud that they’re experiencing because instant payments are electronic and immediate. It’s not, you know, checks are mailed across the, you know, the state of the country. And, you know, I think a lot of people are experiencing, you know, check fraud via mail theft, and things like that. So, instant payments can solve some cases of fraud. Now, as it relates to fraud and the tools that we have in place, we put in a core set of tools at launch that enable banks to do things like you know, set transaction limits that are lower than, than the network level ones. And also one really important thing that we did at the outset was require anybody on the FedNow platform to report any fraudulent transaction that they receive, that’ll enable us to start building a database of any fraudulent transaction and the characteristics of it. So over time, you know, we’ll have a sense and be able to deter fraud in a way that we couldn’t, you know, at the outset, you know, we have plans to introduce additional controls, risk mitigation tools, you know, things to give banks tools to augment their own fraud control mechanisms. I think banks on both the sending and receiving side, they all have, you know, know your customer systems and fraud control tools that we see in, as our role in the middle of this, you know, as a payment operator, being able to augment but not, you know, replace the tools that they’ll be able to do because they actually know the people on both sides of the transaction.

Peter Renton  29:22

So what are the transaction limits that you impose as an entity that runs the network?

Mark Gould  29:28

So we’re at a half a million dollars right now at launch. And banks can set that lower if they choose do.

Peter Renton  29:34

Okay, so then I’m curious about sort of the short term here like the rest of 2024. Are you adding new features? I mean, how are you kind of thinking about the product roadmap for FedNow?

Mark Gould  29:48

There’s a number of things we have, you know, on the horizon. You know, one thing is that I mentioned is, you know, additional risk mitigation tools. So we’re thinking about things like threat, additional threshold, payment threshold or velocity controls that banks will be able to customize. So maybe they have different levels for business accounts versus personal accounts for, you know, things of that nature. Another thing that we’re pretty excited about is that we’re building a developer portal that will enable banks, the technical resources at banks to, you know, to interact with our own technology folks. Things like, you know, being able to look at, you know, code samples or message formats or things like that. That’s not something we’ve ever made available for any of our other services. But I actually think it could really be a further enablement tool to, again, to continue promoting utilization of the FedNow network once people get on board.

Peter Renton  30:42

Okay, so in closing, I’ve got a two part question in closing here. I want to, I want to say first, like, what’s it going to look like, let’s go out, say five years time, we’re going to talk 2029, it’s strange that actually is only five years away.

Mark Gould  30:57

I’m still having a hard time believing it’s almost March, so you know.

Peter Renton  31:00

So anyway, so in five years time in 2029, what’s it going to look like for you to consider FedNow to have been a long term success story? That’s one part of the question. And two, when do you think we’re going to hit this kind of hump where it becomes like part of the consumer expectation? Because right now, consumers do not expect instant payments. And oftentimes, they’re tricked into thinking they’re receiving instant payments, because Venmo and PayPal, and those things provide instant-like payments, but not actually moving funds, instantly. But two parts of that question, I’d love to kind of get your perspective there.

Mark Gould  31:37

So I think, you know, five years. And when I think about the the adoption of instant payments, one of the things I started doing is looking backwards, and I think it probably took us, I don’t know, probably close to 20 years to reach ubiquitous availability and adoption on the ACH network. And I talked with our team, and I said, you know, if it took us 20 For ACH, you know, we don’t have 20 years. I mean, I think we have five, let’s think about like, let’s think about five years as a reasonable time horizon for the United States to achieve ubiquitously availability of instant payments, easy for me to say. I mean, that’s going to be hard. But I think that’s that should be our shared objective nationally, because I think that the benefits to individual households and businesses are really great if we can, if we can do that. So I’ll go out on a limb and say, in five years, every financial institution will be equipped to at least receive instant payments, and many should be equipped to send them as well, businesses across the country will have started to think about how they can use instant payments to provide better service, whether it’s instant settlement payments for insurance payouts or things like that, or more quickly getting money into the hands of consumers when when they’re owed. I think closing that kind of time money gap for consumers is something that I really have a lot of hope, that five years from now, that gap between when someone has earned money and when they have access to that money, I think that’d be really powerful.

Peter Renton  33:05

Do you think that’s sort of the time where we’re gonna go over the hump, and the expectation will shift from two day time horizon to an instant time horizon?

Mark Gould  33:13

Yeah. So I think that we’ll get to that point when two things happen. One is, I’m really, I’ve said this a couple of times, I’m really counting on FOMO within the financial community, if you’re a bank that’s not sure about this, but the bank across the street is offering it, you know, that’s maybe a dangerous position to be in, just from a competitive standpoint. So I think, as the number of institutions steadily climbs, I’m really counting on FOMO. I think the other thing is, we just need to talk about success stories and talk in story terms about what instant payments are, and how they and how they work, and how they’re better. One of my colleagues had her house flooded a few years ago, and the insurance company FedExed, her a check. And when she went to go with her husband, went to go clear out their, you know, all of their damaged furnishings and things like that, they found the FedEx envelope, the workers were using as a doormat going in and out of the house. And that’s not a good payment experience. That’s not a good user experience. It’s just not a good experience for anybody. And I think there are, the world is just a target rich set of opportunities like that, that we will all discover. That’s when the tipping point will be. When people realize we’ve been doing this a certain way for a really long time. And the consumer experience and the business experience is not what it could be with instant payments.

Peter Renton  34:36

Okay, well, I look forward to that day, Mark. I really appreciate you coming on the show today. Important work you’re doing here, and best of luck with the continued rollout.

Mark Gould  34:46

Thanks very much.

Peter Renton  34:49

Well I hope you enjoyed the show. Thank you so much for listening. Please go ahead and give the show a review on the podcast platform of your choice and go tell your friends and colleagues about it. Anyway, on that note, I will sign off. I very much appreciate you listening, and I’ll catch you next time. Bye.