New ways to move money are here, but many banks are slow to use them

Faster ways to move money exist, but many banks and businesses are not using them to the fullest. That was the message from speakers at the Money20/20 payments conference in Las Vegas on Monday. The new options include instant payments and stablecoins, which are digital currencies built to hold a steady value, such as a dollar.

What was said

Amy Burr of Federal Reserve Financial Services said customers do not care how money travels. They want it to move reliably and quickly. The money paths are often called rails. Burr said she talks with many financial institutions that "just don't want another thing." Her words: "The fatigue is real."

There is progress. McKinsey says global payments revenue grew from $1.7 trillion in 2020 to $2.6 trillion last year. Card swiping, digital wallets and more business payment tools helped drive that. Still, old technology and doubt are holding some companies back from options like stablecoins and FedNow, the Federal Reserve's instant payment system.

A warning sign from banks

Burr pointed to a newer international standard for payment messages, called ISO 20022. The Fedwire Funds Service, which moves trillions of dollars daily, switched to it last year. Banks are only beginning to use what it offers. "We're not really seeing banks and corporates using all the fields," she said, so she is a little pessimistic about programmable money.

Sam Aarons, CTO of Modern Treasury, gave a simple example. He can see his credit card purchases online, but not the receipts. He blamed decades-old software and said no one attaches that extra detail to payments.

A menu, not a switch

Aarons advised companies to treat payment rails like a menu. Some fit a given need and some do not. That means keeping ACH, a common bank transfer system some companies like for its low cost, and even paper checks. He said check volume will shrink over the years but not to zero.

Irfan Ganchi of Circle, the company behind the USDC stablecoin, agreed. A large company might use a stablecoin to send money overnight to its overseas units, then pay local suppliers with instant payments. Receivers matter too. A driver in Indonesia may want USDC, while a driver in the U.S. may want dollars.

What it means for you

Expect more speed and choice in how you pay and get paid, but not all at once. Some banks will move faster than others. Keep the options you already use, such as checks and ACH, because the experts expect them to stay.

What is not known yet

The speakers did not say when banks will catch up or which ones will lead. No timeline was given for wider use of instant payments or stablecoins.