The PaymentsJournal Podcast

The U.S. is home to 36 million small businesses—99.9% of all businesses—and roughly 11 million of their owners are already credit union members, according to Velera’s CU Growth Outlook 2026. The opportunity, then, isn’t simply to win new small business members. It’s to turn existing relationships into deeper, more valuable ones.

In a PaymentsJournal Podcast, Velera’s Vice President of Marketing Carrie Stapp, and Vice President of Product Management Sheba Carnes, as well as Brian Riley, Co-Head of Payments at Javelin Strategy & Research, discussed how credit unions can capitalize on this opportunity. That means finding the sweet spot between big banks and single-service fintechs—combining the personal service and community connection that small businesses value with the tools and capabilities they expect.

The growth of the small business market comes at a moment when credit unions are facing slower consumer loan growth, greater competition for deposits and continued pressure on margins. Serving small businesses can help address all three challenges: They need lending, they need to maintain operating deposits and they need to use a variety of payment services that create additional revenue opportunities.

And this market is growing in ways that play to the strengths of credit unions. AI technology has lowered the barriers for entry to small businesses, allowing entrepreneurs to launch faster and operate more efficiently with smaller teams. With fewer people on staff, these businesses are more likely to turn to outside experts—including their credit union—for help with areas such as payments and data analysis. As those businesses succeed, credit unions should position themselves to grow alongside them.

“Many business owners have been forced to look elsewhere as their business grows and their financial needs become more sophisticated,” said Carnes. “We see the industry having a tremendous opportunity to evolve and to become the financial partner that the businesses don’t outgrow.”

This is especially important because small businesses rarely rely on just one financial institution. Velera’s study found that 86% of SMBs use multiple financial institutions, with the average business using three. One reason, perhaps surprisingly, is that small business accounts tend to be sticky: Once a business begins working with a financial institution, there is little incentive to switch.

As a result, credit unions are not necessarily losing these SMB relationships to other institutions; they are sharing them. The challenge is getting a larger share of the relationship, particularly as a business’s needs become more sophisticated.

That’s where credit unions can begin to fall behind. As small businesses grow, they increasingly look for reporting and analytics capabilities, more advanced business rewards programs and payment solutions that allow them to seamlessly move money in and out of their businesses while tracking finances and inventory. If a credit union can’t provide those capabilities, another financial institution or fintech can fill the gap.

This is where one of the credit union sector’s traditional strengths becomes especially valuable.

Credit unions have always excelled at service, and small businesses especially value having a personal relationship with someone they can call when they need help. That relationship can give credit unions a meaningful foothold with business owners, but it can’t be the entire proposition.

“Winning on trust, service and relationship banking is something that the larger financial institutions and the fintechs are going to have a hard time replicating,” said Stapp. “That allows us to be the differentiator, especially when those small business owners are looking for the consultation and the location of their bankers to be there to help them set everything up and to grow and adjust with their needs.”

Personal service alone is no longer enough. Credit unions need to make themselves indispensable to small businesses, both personally and technologically.

“Business owners want frictionless onboarding, an intuitive mobile experience and real-time visibility into their finances,” said Carnes. “The expectation now isn’t really choosing between the high-touch service and the great technology. Businesses expect both.”

Payments are a natural place to deepen those relationships. They sit at the center of virtually every business operation, from paying suppliers and accepting customer payments to managing expenses. Businesses need help integrating these processes with their other software, and those payment relationships also give credit unions valuable insight into how the business operates.

In other words, payments can do more than generate revenue. They can help credit unions better understand their business members and create additional opportunities to support them as they grow.

Credit unions are competing on two fronts—big banks on one side and fintechs on the other. Each brings a different set of strengths to the small business market.

Fintechs like Stripe offer turnkey payment products that can be easy for businesses to adopt. But their offerings tend to be fairly focused. Small businesses, particularly as they grow, need a more holistic approach to managing their finances.  

Large national banks can provide a broad range of products and services, but they can lack the personal connection that smaller businesses value. Credit unions, by contrast, are embedded in the same communities as their small business members.

“The big bank strategy is to go in with very aggressive credit lines, because they lack what credit unions have, which is the personal relationship with the customer,” said Riley. “You’re working in the same area. Their business is not out of a New York based business or a large call center somewhere else. And that’s a homecourt advantage that’s really important.”

“You own the local market as a credit union in a lot of ways,” he said. “You’re not dealing with some large bank where you’re just an account number—you are dealing with the personalization that goes with going through a credit union.”

The foundation is already there. Velera’s research shows that credit unions are starting from a position of strength when it comes to serving small businesses.

“Many of the attributes that they reported directly to us align with all of our strengths,” Stapp said. “The community focus, the personalized service, access to a dedicated banker, all of that consultative approach—in addition to being a low-fee offering, which is really important to these small businesses when they’re getting their feet under them and getting them on the ground.”

For credit unions, that means looking beyond the traditional business account and considering where existing relationships can go next. Members who own businesses could be natural candidates for small business relationships, while non-members are prime candidates for developing a full-service relationship. Once these small businesses are under the credit union’s umbrella, they present a wide variety of cross-sell opportunities.

And for businesses already on the credit union’s business side, the relationship can evolve as the organization does. Growth may bring increasingly sophisticated needs, including treasury services and back-office management.

The challenge is making sure the credit union is ready at every stage, not just to win the small business relationship, but to keep expanding it as the business grows.

“Make sure that you’re not allowing your business members and prospects in your general area to outgrow the products and solutions that you have to offer,” said Stapp. “You need to be continually evolving with them. Not just ‘Am I serving their needs today?,’ but ‘Am I equipped to solve where my small businesses are going?’ Utilize that personalized service and dedicated banker model to really understand where those small businesses are headed, so that you can be a step ahead.”

The post How Credit Unions Can Win Over Small Businesses appeared first on PaymentsJournal.

For years, payments have largely fallen into two camps: horizontal platforms built to serve a broad range of businesses, and vertical solutions designed around the specific needs of a particular industry.

But businesses increasingly need both. They want the flexibility and scale of a horizontal platform without giving up the specialized capabilities that come with a vertical solution.

That’s where diagonal thinking comes in. Rather than choosing between scale and specialization, diagonal thinking brings the two together. With a diagonal perspective, payments infrastructure can serve multiple use cases without sacrificing the depth required for each application.

Take healthcare, for example. A healthcare provider may need to manage patient payments, insurance transactions, payroll, benefits and other financial workflows, each with its own requirements. Historically, that could mean stitching together multiple solutions. A more diagonal approach can bring these capabilities together through a single platform while still accounting for the nuances of the healthcare industries.

In a recent PaymentsJournal podcast, Stephen Faust, CEO of Dash Solutions, and Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, detailed the diagonal approach to payments and the use cases where it can make an impact.

While this perspective aims to bring the best of both vertical and horizontal worlds to organizations, the ultimate objective is to make transactions so unobtrusive and embedded that end users can focus on their business, not payments.

One of the main drivers of more diagonal solutions has been the substantial rise of vertical software providers. According to McKinsey, vertical-specific software now accounts for more than half of payments-adjacent small- to medium-sized enterprise spend. 

“One of the big things that was an accelerator for this was COVID,” Faust said. “I heard at a conference someone say, ‘There’s been more changes in payments in the last five years than in the 50 years before that,’ and it’s true. Things are rapidly changing.”

Three key factors are driving this shift. First, modern APIs allow organizations to overhaul their payments operations without rebuilding their core infrastructure. This flexibility, combined with today’s digital environment, means more companies are equipped to integrate APIs and work directly with payments providers. 

The infrastructure supporting embedded finance is also rapidly maturing. McKinsey research forecasts that embedded payments will grow by more than 30% annually through 2034.

Artificial intelligence is another important factor. AI can now handle operational complexity that previously required custom builds or additional staff, making it increasingly feasible to tailor payments capabilities to specific organizational needs.

“AI is not only allowing payments companies to move faster and configure solutions more uniquely, but it’s also letting the payers eliminate manual processes on their end,” Faust said. “That’s providing more opportunity for them to look at modernization to drive efficiencies and cost savings, and in a greater user experience. The growth could be more than 30%, the payments industry is expected to continue to boom for many years, and it’s an exciting place to be.”

Along with these technology-driven shifts, organizations are feeling the pain points associated with legacy payment methods.

“Where there are greenfield opportunities and where the APIs come in are in some of these spaces that have been difficult to conquer—the disbursements, the reimbursements, and the refunds,” Hirschfield said. “Now, when you add these APIs and new efficiency layers into it, it’s much easier versus going the old school way, like writing a check that no one really wants to do.”

“Having these opportunities to engage in technology makes all the smaller markets ready to grow and grow fast,” he said.

Beyond the inefficiencies that can weigh down business processes, legacy payment methods can have an impact on the customer experience. Fueled by the digital and mobile ecosystem, customers now expect speed, choice, security, and flexibility—and businesses are increasingly aware of these expectations.

Together, these factors are driving an imminent transition in which trillions of dollars in payments will shift from legacy formats to modern protocols. 

“When the payer looks on their side and they’re saying, ‘I have all these check processes that potentially are manual,’” Faust said. “’I’ve got reconciliation processes, I’ve got abandoned property escheatment processes, I’ve got check fraud processes, and I’m not delighting my customer, I’m creating a burden for them.”

“They want to change,” he said. “Now, AI can eliminate barriers on their side and get them to the point that says, ‘OK, I’m ready to turn this on, and I’m ready to drive that efficiency and that modern experience for my customers, which is opening up these opportunities.’”

One of the most compelling examples of diagonal thinking in payments can be found in the large public research university use case. Institutions of higher learning manage massive ecosystems spanning multiple operations, many of which require payment capabilities.

However, the needs of each department can be dramatically different. Payments may be issued for employee payroll, student refunds, research participant payments, student-athlete per diems, and employee rewards.

What’s more, each payment type can come with its own compliance and reporting requirements. This makes an event like sending a college football team to an end-of-year bowl game a herculean effort for universities, involving the coordination of travel and accommodations for student-athletes, coaches, managers, security staff, band members, and others. 

These trips involve an array of payments that may be executed and reported properly, something most universities weren’t built to manage. In this application, a diagonal solution provides a single interface that addresses all the institution’s needs.

“Universities are fascinating because they’re incredibly sophisticated organizations in everything they do except business, like getting people paid for all these different things,” Hirschfield said. “They’re so disparate, where you talk about a clinical trial that might be paid out of one thing with one process, paying the athletes and their per-diems out of another payroll, and especially short-term payroll employee and student payments in another.”

While this is a challenging process, it is also an area where end users expect payment speed, accuracy, and choice.

That has not always been the case at colleges and universities. Traditionally, for example, a student refund might have required the student to visit the bursar’s office, pick up a paper check, and then cash or deposit it.

With a diagonal approach, the refund can instead be delivered digitally via email or text message in near real time. The student can click a link and access multiple ways to receive the funds. Depending on the available options, they may be able to receive the refund on a digital prepaid card, via an ACH transfer to their bank account, or even have it sent to their Venmo or PayPal account.

“The university is a cool example because we can go in as a single provider and support all those various solutions from one interface,” Faust said. “Now, they don’t have to have a new contract and vendor partner for each of the payments. One can do all of them and they have a single repository platform where they can see all these payments, get reporting, and digitize them and modernize them in an efficient way.”

“They’ve got tremendous scale, and they can drop all their scale onto the horizontal platform but have a specific vertical experience for each of these payments, be them restricted, reloadable, consumer funds, corporate funds, or whatever it may be,” he said.

While the university environment is ripe for a diagonal approach to payments, organizations across industries can benefit from customizable payments solutions that adapt to their specific use cases. Advances in technology, especially AI, are making this increasingly possible and giving organizations a powerful tool to meet the evolving needs of their customers.

However, diagonal thinking is less about customization for customization’s sake and more about combining the scale of a broader platform with the specialization that varying use cases demand.

“The days where we build off-the-shelf products that are one-size-fits-all for businesses are over,” Faust said. 

Adopting this diagonal approach has become imperative in the current business environment. Moving forward, payments processors won’t be differentiated by the platform offering the greatest scale or the lowest fees. They will be distinguished by their ability to embed payments so deeply and seamlessly into workflows that users can take their presence for granted.

“It starts with listening to the industries, understanding what their needs are, and focusing on the features in the technology that matters—versus building a lot of fluff that looks cool but that no one uses,” Faust said.

“The people receiving payments expect these things now, and the user experience has to be great,” he said. “It needs to be simple; It needs to be clear. They need to understand why they’re getting paid, and they love the ability to have access to it quickly and with choice on how they want to use it. Those are the things I’d be focusing on if I was going after this market.”

The post The Next Evolution in Payments: Diagonal Thinking appeared first on PaymentsJournal.

The more banking moves onto a smartphone, the harder it becomes for financial institutions to create a tangible connection with their customers. Yet as more of the banking relationship becomes digital, consumers continue to seek experiences that feel personal and distinctive—from personalized products and luxury brands to rewards, upgrades, and exclusive access. 

That creates an interesting opportunity for the physical payment card. Far from becoming irrelevant, the card can serve as one of the few tangible expressions of a customer’s relationship with their FI.  

In a PaymentsJournal Podcast, Mikko Kähkönen, Vice President of Card Products at Giesecke + Devrient, and Brian Riley, Director of Credit at Javelin Strategy & Research, discussed how issuers are rethinking the card through new materials, distinctive design, and carefully crafted experiences—turning a familiar payment tool into something that can inspire recognition, loyalty, and sense of status.  

The premium card offers issuers a physical representation of the banking relationship, often made from innovative materials and designed to be handled and used everyday. These cards can generate greater engagement and, in some cases, a higher share of wallet than standard cards.  

“A great premium card design turns into customer segmentation, customer segmentation turns into customer experience,” said Kähkönen. “People enjoy unboxing and showing off the shiny objects they get from their financial institution. That gives a great marketing boost to the program. There’s a lot to be had in premium cards for issuers globally.” 

Consumers increasingly want products that reflect who they are and how they see themselves. They value personalization, quality, distinctive design, and a sense of exclusivity. A premium card isn’t necessarily competing with the convenience of the digital wallet. The phone may be the primary payment device, but the physical card serves a different purpose, providing a sense of recognition, identity, ownership, and tangible connection. 

At the same time, issuers face a crowded market in which everyone is competing for the same aspirational consumers, from high-net-worth individuals to the mass affluent. The challenge is finding ways to differentiate an offering in a category that is, by design, a commodity. An American Express Black card, for example, doesn’t move through an authorization any faster than a Chase Freedom card.  

“That’s where the card design comes in,” said Riley. “It’s a way to distinguish a portfolio. We know from lots of studies that it appeals to people for different reasons, different drivers behind the type of metal, type of coating, and so forth. It really does play an important role in distinguishing customer and adds value to how the card is positioned.” 

The most successful issuers are not treating the physical card as an isolated product. Instead, they are making it part of the broader digital journey.  

A consumer can go into their bank’s app or website, customize their card, and order it while receiving a digital version immediately. Notifications can keep them updated on the card’s delivery, building anticipation before it arrives. And when the welcome package finally lands, some customers even record themselves opening it.  

“The customer feels really recognized before the first transaction with the card even takes place,” said Kähkönen. 

In that sense, the payment card may have become more important as consumers’ financial lives have become more digital. From the issuer’s perspective, it becomes a calling card for the financial institution itself.  

As branch networks have declined, consumers have fewer opportunities for physical interaction with their banks. A distinctive card helps maintain that connection, keeping the institution physically present in the customer’s everyday life. 

For that reason, many banks have looked to distinctive materials to make their cards stand out. Metal cards have become a well-established and growing segment of the premium market.  

“When I got my first metal card four or five years ago, what I liked about it was when you throw it on a counter, there’s a thump,” said Riley. “You know it’s a real thing.” 

But, as with any premium proposition, expectations continue to rise. That’s where ceramic enters the picture—a material associated with luxury watches and jewelry, as well as exceptional durability. Its resilience gives it a sense of permanence that few other card materials can match. 

The tactile experience is distinctive, while its weight and feel set it apart from conventional plastic cards and even many metal products. Its unmistakable sound when placed on a table can turn a simple payment moment into a statement. 

“The ceramic is really fascinating, because it combines two worlds,” said Kähkönen. “There’s this sort of craftsmanship, and a material which has not really been present in our industry previously.” 

Ceramic also allows for bolder color options, because the pigments are integrated into the material itself. Combining zirconia powder and pigments creates different hues, resulting in a sleek, highly crafted aesthetic that can appeal to affluent consumers looking for something beyond the conventional metal card. 

“In the premium segment, these innovatively designed cards will become increasingly crafted and personalized,” said Kähkönen. “They may even turn experimental, with the possibility of limited edition card programs that are sold as collectibles.” 

As payment experiences disappear into digital channels and become part of the background of everyday life, the physical card may take on a different role.   

“I don’t believe that the physical card is disappearing or anything like that, but its purpose is evolving to membership in a kind of broader ecosystem or, on the other hand, a narrower, more exclusive association,” said Kähkönen. “But the card can also include exciting new features on top of what you see today. You can use your card for authentication to your mobile wallet, or it can be your access and trust anchor into stable coins and crypto, features above and beyond the day-to-day transaction.” 

“That’s something we’re committed to,” he said. “That’s our vision also going forward. We’re working on defining the next era of premium payment cards.”

The post Making Physical Cards Matter in a Digital World  appeared first on PaymentsJournal.

Fraudsters no longer need to reinvent their tactics from scratch. With artificial intelligence and increasingly sophisticated access to consumer data, they can test new approaches quickly, learn what works, and adapt before financial institutions have time to catch up.

That speed is forcing banks and other financial institutions to rethink how they authenticate customers. One approach gaining traction is ownership authentication, a process that looks beyond whether an application’s information matches a particular account. During a PaymentsJournal Podcast, John Gordon, CEO of ValidiFi, and Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research, explored how this approach can help financial institutions connect seemingly minor signals, identify emerging risks, and stay ahead of the adaptive fraud schemes.

Artificial intelligence has made it possible for criminals to create new schemes and fraudulent identities in a matter of minutes. AI has fueled the rise of several types of scams, including account takeovers and bank impersonation. Some fraudsters use AI to submit account applications across multiple institutions, while others use it to gather information about existing customers, allowing them to mimic typical behavior and evade detection.

One way financial institutions are responding to those evolving threats is through ownership authentication. Rather than focusing solely on a new account or one that appears to be involved in fraud, this approach seeks to understand the consumer across their broader financial relationships. It incorporates factors such as ownership, payment history, account stability, and behavioral changes that can reveal emerging risk.

Verified accounts generally outperform better than the broader population in terms of fraud outcomes, but those results can improve further when institutions add an additional layer of authentication. Simply verifying that account details match the person opening the account is no longer enough.

“Just because an account is open and valid and it belongs to a particular consumer, there are still aspects that drive different decisions for the financial services provider based on fraud and risk connotations,” said Gordon. “If an account is open, valid and belongs to the applicant, if that applicant has an email address that’s less than 30 days old, the increase in risk is skyrocketing.”

It’s no longer enough to examine a single aspect of a consumer’s identity or behavior. Matching personally identifiable information (PII) to an account at a single point in time doesn’t provide a complete picture. Financial institutions increasingly need to take a holistic view of the consumer and assess whether the information provided remains consistent over time.

“Taken individually, you may miss the signals of a brand new email address or phone number—all these things that maybe don’t seem that that risky on the surface,” said Sando. “When you put them all together, it becomes a serious risk factor for this particular consumer. Fraudsters are bypassing a lot of checks that they normally wouldn’t have in the past because they have AI enabling them.”

Fraudsters, for example, may begin an account takeover with seemingly innocuous changes, such as updating a marital status or utility information. On their own, these changes may not raise an alarm.

Over time, however, those changes can be combined with a new credit card, a new debit card, and a utility bill to make the activity appear legitimate. Individually, each signal may seem insignificant. Together, they can reveal a much stronger pattern of potential fraud—one that can be missed when institutions examine each signal in isolation.

Ownership authentication can also play a role in addressing fraud associated with buy now, pay later plans. As these options have become a prominent part of the consumer economy, they have made it easier for people to spread payments over time for purchases they may not be able to afford upfront.

For some consumers, even extended payment schedules can become difficult to manage. And as a result, first-party fraud may become a more deliberate strategy for consumers who are unable or unwilling to repay what they owe.

“All of those consumers are providing bank account and routing numbers at application, and we have the ability to access all of that data,” said Gordon. “When you look at that information together, you can see the status of the most recent transactions tied to those accounts. Is there a history of stop payments, frozen accounts, or other first-party fraud indicators? By evaluating those factors collectively, you give yourself much greater protection.”

“For those of us a certain age, that brings back a lot of connotations from 2008 where the consumer pressures were increasing and increasing,” he said. “And as a result, saying they felt like their best option was bankruptcy.”

Consumers often care less about who provides a financial service than whether the experience is convenient. But that emphasis on convenience can create risk, particularly when providers are reluctant to introduce anything that could add friction to a transaction.

As research has shown, many consumers will abandon a payment process when they encounter unwanted friction. But merchants and payment processors are increasingly learning that friction doesn’t have to be all-or-nothing. It can be targeted and managed based on the level of risk.

For example, if an applicant attempts to open a bank account using information associated with more than four Social Security numbers, that should trigger additional scrutiny. Similarly, if an applicant uses a relatively new or undeliverable email address, the institution may require a higher level of authentication.

Consumers may be frustrated by these additional steps, but they are also becoming aware that friction is sometimes necessary to protect their accounts and financial information. The challenge is finding the right balance between a seamless experience and appropriate security.

“We’re actually finding now that 50% of consumers are prioritizing the security of their PII that they’ve entered into that application,” said Sando. “If they don’t find that to be secure, they’re going to drop out of that process and you’re going to have abandonment issues.”

Ownership authentication falls under the broader category of “smarter friction.” It means understanding the customer experience, centering the end user, and providing safeguards that consumers can understand and recognize as necessary.

Most importantly, it recognizes that every account applicant is different.

“There is no one-size-fits-all,” said Gordon. “You’ve got to have the ability to tailor solutions to the application. How well-known is that consumer to you? That should drive a lot of the defense that you stand up.”

“You validate what’s happening on that end. You marry that with the risk that you could potentially be facing. And that’s where you get that smarter friction.”

Read ValidiFI’s latest intelligence report

The post Ownership Authentication: Fighting Fraud Losses and First-Party Risk appeared first on PaymentsJournal.

The payment card was supposed to disappear. As digital wallets, embedded payments, and mobile-first experiences reshaped commerce, the physical card seemed destined to follow the path of other outdated tools. Instead, it has found a new role—not just as a simple way to pay, but as a platform of identity, access, rewards, and deeper customer engagement.

 According to the Federal Reserve’s 2025 Diary of Consumer Payment Choice, credit cards accounted for 35% of U.S. consumer transactions in 2024, with debit cards adding another 30%—making cards, combined, the dominant way Americans pay. That dominance holds even as mobile wallets grow, since most mobile payments are still funded by an underlying credit or debit card rather than replacing one. Their staying power comes from their ability to deliver experiences that extend well beyond the transaction itself.

In a PaymentsJournal podcast, Michael Hughes, General Manager of Arculus by CompoSecure, and James Wester, Co-Head of Payments at Javelin Strategy & Research, explored why the physical card remains relevant and how innovative brands are transforming it into a powerful tool for building loyalty, creating new consumer touchpoints, and strengthening relationships between issuers and the people they serve.

Predictions that digital wallets and virtual payment methods would make physical cards obsolete have not materialized. Much like the continued appeal of tangible products in an increasingly digital world, consumers still value the physical experience of a payment card—particularly as cards have evolved into more premium formats, such as metal designs and customized offerings. 

When consumers hold metal cards and drop them on the table, Hughes said, they like the sound and the way they feel, along with a real sense of pride the cards carry. That lines up with consumer research: a global study from Capuchin Behavioural Science found that 72% of consumers would use their payment card more often if it were made of metal instead of plastic.

However, the future of the physical card depends on its ability to deliver more than payment functionality. The greatest risk isn’t digital replacement, but becoming a commodity that serves only a single purpose. To remain relevant, cards must continue evolving in ways that create value for both consumers and issuers.

Today, cards are already expanding into new roles, including venue access, authentication, loyalty, and rewards. This is creating an opportunity for the card to become a central point of engagement that helps brands build stronger and more meaningful connections with customers.

Hughes sees an opportunity to redefine what a payment card can be. “Every issuer wants its card to be top of wallet,” he said. “Traditionally, that just meant being the card a customer reaches for at checkout. Hughes describes a much broader version of top of wallet: issuers can drive additional engagement through the card issuer’s app, prompting cardholders to tap their card to earn rewards, verify their identity, or otherwise interact with the brand. That’s a level of engagement traditional payment cards were never built to deliver.

Advances in data collection and analytics have allowed issuers and brands to better understand customer behavior and create more personalized experiences. A co-branded card with a team such as the New York Yankees, for example, can reveal more than spending patterns—it can provide insight into fan interactions, including visits to Yankee Stadium and other brand touchpoints.

“Banks have traditionally issued credit cards to earn fees”, Hughes said. “But viewed from another angle, a card can become an engagement tool—combining programs an issuer would already be offering, like loyalty, rewards, or event access, into a single experience. That shifts the value from simply earning points and interchange fees on payments to delivering customer engagement and the revenue that engagement generates.”

Wester added: “We tend to think of use cases in terms of financial or quasi-financial transactions, whether it’s rewards or points or tokens. But ultimately it’s about identifying that person and saying, OK, you are who we want to be interacting with. And now you can take the data from that interaction later and say, we’re going to do things with that.”

As authentication increasingly moves into software-based solutions, consumers are often required to leave a transaction, retrieve a verification code, and return to complete the purchase. While these processes provide security, they interrupt the user experience and create opportunities for frustration or cart abandonment.

“If I can take my branded card and allow [the customer] to validate who they are just by tapping [the card] to the phone, the engagement remains constant,” said Hughes.

Physical cards offer another avenue for simplifying authentication while maintaining security. Reducing friction can improve both customer engagement and protection, as overly complicated security processes may discourage users from completing necessary steps to safeguard their accounts.

“The weakest link in security is always the person,” Wester said. “The less friction in the process, the better it is for consumers.”

Because payment cards have been part of consumers’ financial routines for decades, issuers often overlook their potential as a broader engagement tool. A multifunction card can support dozens of new use cases, from loyalty and access to authentication and personalized experiences.

Hughes advises picking the two or three use cases specific to whatever customer segment an issuer is targeting, and nailing them. That’s an area he believes Arculus is especially good at helping organizations diagnose—it’s not just about the concept, but about designing the application so it’s simple and easy to engage with, not confusing. Issuers only get a couple of chances before a frustrated customer decides they’re done.

The key to unlocking the card’s full potential is creating functionality that improves the user experience while driving greater usage. As engagement grows, the resulting data can help issuers and brands continue refining experiences and building stronger relationships with customers.

Hughes’s takeaway for issuers is to align incentives and metrics across product, finance, and merchant teams, then ask a simple question: what value can this card bring customers, and how will you measure it? That discipline, he said, is what separates programs built for the short-term versus the ones that last.  Physical cards were never at risk of disappearing, only of becoming irrelevant. The ones that evolve from solely a payment instrument to an active engagement platform are the ones with a strong future.

The post Physical Cards Reimagined—More Than a Payment Tool appeared first on PaymentsJournal.

There is a growing disparity between hype and reality when it comes to agentic commerce. This is not so much a critique of AI agents’ capabilities, or the infrastructure that has rapidly emerged to support them, as it is an indication that this model is still in its early stages.

Many merchants still associate the term “agent” with independent sales organization (ISO) reseller agents, rather than artificial intelligence.

In a recent PaymentsJournal podcast, Hilla Peled, SVP of AI & Data Science at Nuvei, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed agentic commerce from the merchant perspective, where the primary concern is how businesses can earn customer trust as this emerging model evolves.

Although questions remain around the model, that does not mean the progression toward agentic commerce is slowing. On the contrary, now is the time for merchants and providers to develop strategies and prepare for widespread AI agent interactions.

Despite the apprehension surrounding agentic commerce, there is little debate that AI now plays a significant role in consumers’ lives. It has become a go-to resource for a wide range of tasks, and commerce is no exception. Shoppers are already using AI to compare prices and discover products, and autonomous agentic personal shoppers represent a natural extension of this trend.

Most merchants are eager to support this shift, but not if it requires compromising funds or expanding PCI scope.

“Merchants aren’t saying, ‘give me a shopping agent,’ but they want to be prepared to the extent that their customers show up with shopping agents,” Apgar said. “Largely, they’re trying to figure out what this means, which standard will prevail, and how they should look at their architecture and their position in agentic commerce.”

Many businesses are closely examining how the technical details will be resolved, including how transactions will settle and which standards will govern interactions.

One of the most important questions is agent ownership, whether an agent is acting on behalf of the consumer, the merchant, or the AI company that developed it. Establishing this responsibility will influence how all parties approach agentic payments.

The ultimate objective is to create trust in the process by ensuring that an agent reliably executes its assigned tasks and delivers an outcome that meets customer expectations. This is no small feat, given the range of fraud and security concerns, including the potential for bad actors to manipulate agents, consumers, or merchants for malicious purposes.

The answers to many of these questions remain unclear, meaning the space will likely experience uncertainty and adjustment as it matures.

“One of the biggest things that we observe is the gap between what customers are doing when adopting the public agents versus what the PSPs and acquirers are willing to take on,” Peled said. “Everyone is now just preparing themselves to the point where agentic commerce will become much wider.”

“We know that 1.5% of purchases in the U.S. have been agentic, which is huge when you think of the current state of agentic commerce,” she said. “At the same time, both customers and merchants and any business across e-commerce today is wondering, ‘What is the next thing they need to do in order to be ready when agentic commerce will explode?’”

To better understand the current state of agentic commerce, Nuvei conducted a study examining consumer attitudes and behaviors. The study found that only around 1% of respondents wanted fully automated AI purchasing, while 56% said they would never allow an AI platform to spend without their approval, regardless of the amount.

While these findings may appear to challenge the future of agentic commerce, previous technology shifts have demonstrated that consumer preferences can evolve rapidly.

“If you remember in 1995, almost nobody wanted to put a card number online, but we know where we are at today” Peled said. “The demand isn’t for autonomy, it’s for the trust trails that make delegation safe. In payments, volume has always followed trust and the infrastructure decisions are being made now, years ahead of the volume.”

There are clear parallels between the growth of e-commerce three decades ago and the emergence of agentic commerce today.

Along with initial concerns about security and fraud, many believed certain products could never be successfully sold online. For example, some experts argued that online clothing and footwear sales would struggle because consumers preferred trying items on before making a purchase.

Agentic commerce may encounter and overcome similar barriers, but potentially at a much faster pace.

“Javelin research picked out a few categories—including travel, B2B and commodity purchases—that we think will be the first to earn shoppers’ trust using an agent, but it’s not going to take 30 years like it did for e-commerce to evolve,” Apgar said. “The tech is moving so much faster that it will reach a maturity point and a tipping point for agentic commerce much sooner than it took e-commerce.”

The accelerated pace of innovation and adoption has already been demonstrated by generative AI.

“The AI space has been around for 17 years and the pace that AI has evolved in the last 12 to 18 months is just unprecedented,” Peled said. “There was always evolution, but what we see now with the capabilities and with the actual adoption shows that the hype about agentic commerce is not just hype. People are adopting agents because they understand their power and agents are becoming stronger and more capable very quickly.”

This means organizations should prepare for change sooner rather than later, especially businesses serving younger or more tech-savvy customers.

However, merchants should recognize that agentic commerce is not simply a gateway to new markets. Instead, it represents a fundamental shift in how commerce operates.

“The reality is that this is existing purchase volume. AI doesn’t magically give people more money to spend,” Apgar said. “These are existing purchases that are going to go from whatever channel they’re being made in today—whether it’s retail, e-commerce, or mobile—and be converted to agentic.”

“Where is the early impact of that going to be? Which merchants will be impacted the most? Early adopters have the ability to pick up market share from lagging competitors,” he added.

The potential for early adoption is why many merchants are closely monitoring the evolution of agentic commerce and attempting to identify the point at which it reaches mainstream adoption.

“They understand that at some point, others will eat their lunch if they’re not adopting early,” Peled said.

For merchants determining how to move forward, there are practical steps they can take. The first is to audit existing infrastructure and assess whether it can support orchestration without custody. Next, merchants should build first-party capabilities so they are not forced to reintegrate solutions later.

Retailers should also stay dialed into market developments and regularly reevaluate their roadmaps. Given the pace of change, this process should occur every few months rather than every 12 to 18 months. This will help ensure that merchants’ technology stacks are prepared as agentic commerce becomes more widespread.

To stay ahead of the curve, Nuvei recently completed a live agentic commerce proof of concept. In collaboration with Visa, Arvato Systems, and fashion brand Kings and Priests, the initiative demonstrated an agentic transaction executed through a unified workflow, all within shopper-defined parameters like spending limits and approved categories.

“We launched a live Visa transaction where an AI agent purchased, paid inside the merchant’s own experience and cleared across multiple European issuers,” Peled said. “The hard part was never teaching an agent to buy; that’s what agents know how to do. It was giving issuers and schemes across markets a reason to approve a purchase that no human initiated. That is a trust problem, not an AI problem.”

The post Delegation with Limits: What Merchants Want from Agentic Commerce appeared first on PaymentsJournal.

Most businesses have no shortage of customer data. They know who their customers are, how they pay, when they tend to pay and, in many cases, exactly when a payment goes wrong. The harder question is what to do with all that information—particularly when a customer falls behind.

That makes collections less of a data problem than an action problem.

Automated intelligence can bridge that gap, using customer information to determine what should happen next and creating a more effective, individualized approach to collecting payments. In a PaymentsJournal Podcast, Robyn Burkinshaw, CEO and Founder of Blytz, and Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research, discussed how incorporating AI into actionable reminders can enhance the payment experience for customers and businesses alike.

In payment collections, basic automation typically follows a fixed set of rules: send a reminder on a certain day, make a call when an account becomes past due or retry a payment at a predetermined time.

Automated intelligence takes a different approach. Rather than simply following a schedule, it looks at what is happening with the customer and uses the data a business already has to determine the next best action.

That could mean choosing the right message, channel, timing, tone, or payment option for a particular customer or account. Instead of leaving customer data sitting in a database, automated intelligence turns that information into an active workflow.

The result is a more differentiated experience. Higher-risk accounts can receive a more thoughtful, targeted path to payment, while lower-risk customers can move through a faster, more streamlined self-service experience.  In both cases, the approach better reflects what the individual customer actually needs

“It’s different when you’re talking to a customer who’s a day late than when you’re talking to a customer who hasn’t responded in three months,” said Burkinshaw. “Intelligence is going to pick up on those nuances to make the experience better for the customer, and thus make the experience better for the merchant.”

Consider a customer with variable income. Another generic past-due reminder may not help them make a payment. What they may need instead is flexibility: the ability to pay part today and the rest later, use a different card, pay by ACH, or set a Promise to Pay without having to call during business hours. 

“The notion of differentiated and customized experience is commonplace at the high end of the market,” said Miller. “It is what financial services companies talk about all the time in terms of surfacing offers for well-qualified consumers, or analyzing their transactions to see what next thing might be useful to sell them. The same set of technical capabilities should be applied to this particular use case in a way that drives not just incremental gains, but substantial gains in productivity.”

The idea behind the 90/10 rule is that roughly 90% of customers will do what the business wants them to do—make their payments regularly and on time. The remaining 10% are more likely to require additional attention.

Automated intelligence can help businesses keep the 90% moving through a streamlined process while focusing resources on the 10% who need more support. Just as importantly, it can help identify which accounts actually require that attention.

A customer who pays late every Friday but has never missed a payment should be approached differently from someone who has ignored every outreach attempt for three months. Those distinctions are easy to overlook when every account follows the same rules. Automated intelligence can identify those patterns and use them to shape the next best action.

“That’s the shift,” said Burkinshaw. “The future isn’t more reminders, it’s more relevant reminders, and it’s the ability to take immediate action from that reminder.”

A declined payment should not automatically become a collections event. The customer’s card may have expired. Their payday may have shifted. They may simply need to pay part of the balance today and the rest on Friday.

Automated intelligence can help identify what is behind a failed payment and offer the most immediate, realistic path forward. Instead of treating every payment failure as delinquency, it can help businesses distinguish between a temporary obstacle and an account that genuinely requires collections intervention.

“We don’t just throw it over the wall and expect our collectors to dial for dollars,” said Burkinshaw. “We’re giving them prescriptive data that makes them more able to make surgical decisions about the problem that needs resolving.”

That changes the experience on both sides. For the payer, the experience becomes less punitive and more focused on finding a workable solution. For the business, it can mean better use of collector time and resources, with human attention focused on the accounts where it can make the biggest difference.

“We continue to see use cases where people are sent to the principal’s office,” said Miller. “Nobody thinks that we should have a padded chair where you wait in the hall outside—it’s a wooden bench. It’s uncomfortable. But that’s not how you actually resolve the issue in a way that’s favorable to all the participants.”

Traditional automation gives every account essentially the same set of marching orders, regardless of the circumstances. Automated intelligence goes a step further, using the information already available to determine what action makes the most sense for each situation.

That makes AI less of an abstract concept and more of a practical tool. Its value doesn’t necessarily come from putting AI front and center. In fact, some of its most useful applications may be the ones customers barely notice.

“Over the next five years, AI is going to disappear,” said Miller. “You won’t even know when you’re using it.”

As AI becomes increasingly embedded in the business environment, automated intelligence offers a practical way to put it to work. Artificial intelligence may operate behind the scenes, but it can make the automation itself more responsive, helping businesses determine when, how, and where to engage customers in order to collect payments as efficiently and effectively as possible.

“The next chapter of payments isn’t about offering more ways to pay,” said Burkinshaw. “It is about knowing which option matters the most in the moment. What we’re building around automated intelligence gives merchants the ability to truly meet customers with the right message at the right time, with the right payment path, before friction becomes failure.”

“Let’s not automate failure,” she said. “Let’s automate success. Give customers the ability to succeed before we punish them for failure. This is the future of payments. Be in front of it. Don’t be behind it.”

The post From Data to Action: How Automated Intelligence Is Changing Collections appeared first on PaymentsJournal.

Criminals are increasingly aware of the signals banks use to identify “good customers”—and they are using that knowledge to evade detection.

At the same time, legitimate customers are adopting behaviors that were once considered tried-and-true risk signals. Data breaches and privacy concerns, for example, have spurred many consumers to use VPNs, a behavior that was once viewed as a reliable fraud red flag.

The result is a growing inversion of traditional fraud signals: legitimate customers can look suspicious, while sophisticated criminals can appear trustworthy.

In a recent PaymentsJournal podcast, Diarmuid Thoma, Head of Fraud and Data Strategy at AtData, Jose Pallares, Senior Director of Product Management at Experian, and Jennifer Pitt, Senior Fraud Management Analyst at Javelin Strategy & Research, discussed the convergence of these patterns and how they are reshaping the fraud landscape.

This ambiguity has created an environment in which bad actors are thriving and consumers are losing confidence in financial institutions. To combat this threat, financial institutions must adopt methods that are both broader and more granular to accurately identify fraud.

Technology has accelerated this shift, but the underlying challenge is familiar. Whenever fraud systems learn to identify certain behaviors, criminals adapt to avoid them.

“Back when I was doing fraud review 20 years ago, if somebody was on a mobile device or a mobile number, that was slightly riskier because landlines were safer statistically,” Thoma said. “Whereas now if you gave a landline, that’s kind of a weird thing. There’s a natural part to that, and people have to keep that in mind, there are these shifts and profiles evolve.”

In the past, the prevailing fraud prevention philosophy was to build models capable of detecting abnormalities and inconsistencies. However, criminals are all too aware of this strategy, and it has instead become a blueprint for avoiding detection.

Artificial intelligence has also allowed bad actors to deploy these tactics at scale. With a few prompts, even technologically unsophisticated criminals can generate multiple synthetic profiles and manage them at scale.

They are also becoming more patient and strategic in how they carry out illicit activities.

“Once they had an account, they used to run up the account quickly, do a bust-out, and then run away,” Pitt said. “They don’t do that as much anymore. What they do is they make the account look legitimate over time. To skirt the detection on the forefront, they’re building up that identity with non-financial accounts. They might open up an email account, and once that identity becomes legitimized and verified at one organization, other organizations see it as more legitimate. It’s building that credit profile.”

These capabilities have allowed bad actors to manufacture trust at a time when it is more difficult than ever to discern an individual’s intentions. This is partly because consumers have also rapidly adopted technologies like AI and social media, especially among younger and more digitally native generations.

“The behavior profile of a good consumer is completely different than it was even five years ago,” Pallares said. “Fraudsters now think or look like good consumers, and consumers—from a fraud systems angle—look completely messy and risky. So how do we level up our existing fraud systems to catch and look at those things differently?”

Beyond potential fraud losses, gaps in fraud infrastructure often cause legitimate customer activity to be misclassified as fraudulent. As a result, the customer experience suffers.

These errors often occur at a time when organizations’ relationships with customers are most tenuous.

“There are a lot who from early account set up are coming in and they’re spending a lot,” Thoma said. “They’re doing exactly what you’d be worried about from a commercial point of view, somebody comes in and spends a lot very fast and that’s concerning.”

This exemplifies one of the main drivers of false positives: verification often hinges on a single transaction, point in time, or identity element.

This short-sighted view can create significant issues for all customers, particularly high-value users. Their behaviors may raise numerous flags, as they may travel frequently, use multiple devices, and leverage a variety of payment methods.

“I’ve seen from a bank perspective that good customers were off-boarded because there were signals that they thought were fraud, and it was essentially a false positive where identity elements were flagged as fraud that really weren’t,” Pitt said. “And I’ve seen bad customers get on-boarded because of the same thing. Basically, the decision was wrong, and I’ve seen that a lot.”

Left unaddressed, these issues can lead to friction, abandonment, and reduced lifetime value, creating a compounding effect on operations and, ultimately, revenue.

This revenue drain can go unnoticed by financial institutions. While many institutions have processes in place to measure fraud, there is often no ready gauge for fraud misclassification.

“I think it’s probably a lot bigger than what we think because we just can’t measure it with any degree of accuracy,” Pallares said. “To compound the problem, there are fraud models that are being fed data, and these edge cases that result in false positives don’t make it into the fraud models for behavior. What you’re being measured on doesn’t allow for these edge cases to reduce the risk on those types of consumers.”

The answer is not to abandon fraud signals, but to put them in context. A single transaction, device, or identity element can raise a question, but it shouldn’t determine whether a customer is trustworthy.

Financial institutions should take a longitudinal approach to fraud identification, looking at how a customer’s behavior develops over time. Consistent identity markers, such as a longtime email address, established device, or history of legitimate activity can provide valuable context that an isolated anomaly can’t.

This also requires fraud models that can adapt as consumer behavior changes. A behavior that once indicated risk may become commonplace, while new patterns may emerge as technology and consumer habits evolve.

“Trust is not binary, it’s built,” Pallares said. “You have to look across your different consumer touchpoints and what a consumer is doing, instead of saying, ‘I verify them at account opening, go wild.’ And trust can be revoked. Anytime something looks out of the ordinary and it’s not verified, there’s certain lightweight controls that people can put in place to make sure that once-verified is not always-verified.”

That broader view can’t always be found with a single institution. Fraud, payments, and customers experience teams need to share data and intelligence so that decisions are based on a more complete understanding of the customer. Extending that approach across institutions can provide an even stronger defense, particularly as fraudsters move between organizations and manufacture identities across multiple accounts.

“When we talk about siloes, it’s within organizations, but it’s also across organizations and across different industries that we need to be sharing,” Pitt said. “Have they been flagged before at another organization? Wouldn’t that help your organization to know if it’s been flagged before, because you wouldn’t onboard that identity? Right now, the exact same synthetic might be used at 100 different banks because fraudsters know that banks aren’t talking.”

The challenge is determining which signals represent legitimate complexity and which indicate coordinated fraud. A consumer with little financial history may simple be new to the system, while someone who rapidly establishes connections across multiple organizations may warrant greater scrutiny.

The goal, then, is not to find customers who look perfect on paper. It’s to identify customers whose identities and behaviors have been earned over time.

In a fraud environment where appearances can be manufactured, history becomes one of the most valuable indicators of trust. Financial institutions need the technology, data, and partners to uncover that history and distinguish between customers who look trustworthy and those whose identities and behaviors have earned that trust over time.

“When you’re selecting them, it has to be an uncorruptible history because now AI can create history in certain fields,” Thoma said. “In your vendor selection, you look for stuff that can give you the history that is isolated from that, that cannot be replicated, that cannot be created within a week or two and generated. It’s earned history, and that’s really important.”

The post Why Fraudsters Look Trustworthy and Good Customers Look Suspicious appeared first on PaymentsJournal.

When Same Day ACH launched a decade ago, the primary use case was for exceptions—such as in emergency payroll transactions, time-sensitive bill payments, and other situations where traditional ACH settlement timelines were too restrictive.

Those use cases remain relevant, but they represent only a fraction of how Same Day ACH is used today. As organizations have gained greater familiarity with the option and recognized the value of faster settlement, adoption has expanded dramatically.

In a recent PaymentsJournal podcast, Devon Marsh, Managing Director of ACH Network Rules and Risk Management at Nacha, and Ben Danner, Senior Debit Analyst at Javelin Strategy & Research, discussed the evolution of Same Day ACH, the forces driving its growth, and the opportunities that could shape the next phase of faster payments.

The broader lesson from the past decade is that payment speed is not simply a question of getting funds from one account to another as quickly as possible. For many transactions, the important consideration is finding the right balance among speed, predictability, risk management, and operational efficiency. Same Day ACH has emerged as an important part of that equation, providing faster settlement while preserving the reach and established processes of the ACH Network.

Same Day ACH began with transaction volumes in the millions. A decade later, it is used for nearly 1.5 billion transactions annually.

In many respects, Same Day ACH has become a microcosm of the broader ACH Network. The average dollar value of a Same Day transaction is now nearly equivalent to the average value of transactions processed across the ACH Network overall. That convergence is significant: it suggests that Same Day ACH is no longer confined to a narrow set of specialized use cases, but it is increasingly being incorporated across the same range of payment activities served by traditional ACH.

“In the decade since its launch, Same Day ACH has evolved from a credit-only transaction capped at $25,000 to a robust, mature fast rail transacting both debits and credits up to $1 million,” Marsh said. “Now, after the early introduction of debit transactions and after two increases to the per-transaction limit—with another slated for September of 2027—Same Day ACH serves every use case in the ACH Network except for international transactions.”

The growth is equally striking from a dollar value perspective. Same Day ACH moved roughly $20 billion in its first year, compared with approximately $4 trillion in 2025, with the ACH Network on track to process even greater value this year.

That evolution reflects more than simply increased adoption. The capabilities of Same Day ACH have expanded as well. The first phase supported credit-only transactions, while subsequent changes broadened functionality and increased transaction limits, giving organizations more flexibility in determining when faster ACH settlement makes sense.

“The majority of the volume now is on debit, but the majority of the value is on ACH credit,” Danner said. “ACH credits are used for earned wage access, payroll, gig economy transfers and payouts, as well as business payments. So lots of use cases which have expanded beyond where it was initially. Thinking about debit, that’s where you’ve got the originator pulling the funds—bill payments, loan payment, subscriptions, and taxes—where all of that use has been growing as well.”

One of the most important drivers of Same Day ACH adoption is something that can be easy to overlook in discussions about faster payments: the strength and ubiquity of the existing ACH infrastructure.

Businesses, consumers and government agencies rely on ACH payments for payroll, bill payments, account funding, vendor payments, and other recurring or high-volume transactions. Organizations and consumers are familiar with the payment method, and financial institutions have established systems and processes for supporting it to scale.

Same Day ACH builds on that foundation rather than requiring the market to adopt an entirely new payment rail.

“Ease of adoption has driven the growth of Same Day ACH,” Marsh said. “Same day transactions are processed on existing infrastructure, they use existing formats, and they’re subject to the same familiar processes as future-dated ACH transactions. And they can reach virtually every deposit account in the U.S. with both debits and credits.”

Danner added: “Both consumers and businesses want choice and flexibility.  Same Day is fine in many use cases or perhaps even the standard ACH transaction. The key is having that choice of speed and that flexibility to choose.”

There are now more payment choices than ever, including instant or near-real-time options which have emerged in recent years. However, real-time payments also bring their share of considerations. Instant payments are often irrevocable and lack a debit capability. Both of these factors figure into one’s choice of payment.

Although there are use cases where these payments make sense, Same Day ACH can often provide a balance of speed, efficiency, reach, and predictability—particularly for payments where immediate settlement is not essential.

“We recognize that some payments travel faster than Same Day ACH, and some travel slower,” Marsh said. “Different payment scenarios have different needs based on the timing, the value, and the business processes involved.”

“For a vast number of situations, we believe that Same Day ACH optimizes many of these considerations,” he said. “It provides the benefit of speed as well as the efficiency of batch processing. It enables businesses and consumers to complete payments in urgent situations.”

One of the key aspects of this efficiency is that the structure and schedule of Same Day ACH transactions allow organizations time to plan and leverage these payments strategically, which can maximize the value of the payment for both payor and payee.

From an accounts payable perspective, most businesses aim to hold on to funds as long as possible to optimize cash flow and liquidity. This also allows for greater accuracy within accounting metrics such as days payable outstanding and gives organizations more effective insights into their operations.

Same Day ACH can provide these benefits while accelerating settlement, making it an important option between instant payments and traditional ACH.

“Payments that benefit from that faster settlement time include payroll and contractor payments and transfers,” Danner said. “If you think about Same Day ACH credits, that is going to be primarily about accelerating disbursements, letting businesses get money into the account faster.”

“If you think about ACH debits on the other side, it’s about accelerating the collections,” he said. “The benefit there is that the biller or that merchant can pull the funds sooner and reduce that time between the initial payment initiation and receiving those funds in their account, which has cash flow benefits.”

From the early days of Same Day ACH, demand has been driven by a broader shift in expectations around payment speed, especially in commercial payments. That demand is likely to become even more consequential as the range of transactions eligible for Same Day ACH continues to expand.

In September 2027, the Same Day ACH per-transaction limit is scheduled to increase to $10 million. The change represents one of the most significant expansions of the payment type since its introduction and could broaden the range of transactions for which Same Day ACH is economically and operationally viable.

While transactions above the current $1 million per payment threshold represent a relatively small share of overall payment volume, they can represent substantial value and operational importance. Raising the limit has the potential to bring new categories of payments—and new groups of originators—into the Same Day ACH ecosystem.

For some organizations, the higher threshold could also simplify payment operations by making Same Day ACH viable across a greater share of their ACH activity rather than requiring them to use different payment methods based on transaction size.

“It’s about extending those capabilities and one of those being that per-payment limit, which is certainly going to expand use cases,” Danner said. “I’m thinking about use cases, and it’s things like high-value commercial real estate transactions or large enterprises needing to transfer money between accounts that need that speed. You could certainly cross that threshold into $10 million.”

Commercial real estate provides one example of the opportunity. Although certain jurisdictions or transaction requirements may call for a wire transfer to execute a closing itself, Same Day ACH can potentially support other high-value activities surrounding the transaction, including commission payments and escrow funds.

The first decade of Same Day ACH demonstrated that organizations value the ability to move money faster without abandoning the reach and infrastructure of ACH. The next decade could be defined by a broader question: not simply whether a payment can move faster, but how organizations can use different speeds and payment methods strategically across the operations.

“Same Day ACH will continue to gain momentum as more receivers recognize its benefits,” Marsh said. “Businesses, in particular, that receive Same Day ACH transactions will begin to originate Same Day for their own payments. Originators will convert more future-dated activity to same day because their customers want it and because it’s easy to adopt.”

“An increased dollar limit, demand, and ease of use will be the things that drive Same Day ACH growth in the coming decade,” he said.

The post 10 Years Running, Same Day ACH Continues to Break New Ground appeared first on PaymentsJournal.

ACH may be one of the payments industry’s most established networks, but it’s far from standing still. With new Rules taking effect this September—and another significant change already slated for 2028—financial institutions are facing a steady stream of adjustments that could affect how they process transactions, make funds available, and manage compliance.

Earlier this year, Nacha implemented Rules aimed at bolstering financial institutions’ automated push payment fraud protections and cultivating a risk-based approach to fraud detection. This September, additional changes are coming down the pike, geared toward optimizing rules for International ACH Transactions (IATs) and funds availability for non-Same Day ACH transactions.

In a recent PaymentsJournal podcast, Devon Marsh. Managing Director of ACH Network Rules and Risk Management at Nacha, and Ben Danner, Senior Debit Analyst at Javelin Strategy & Research, discussed the reasoning behind the Rules and how financial institutions should adapt to new processes and strategies.

Understanding these Rules is critical, not just to maintain compliance, but also to increase efficiency and prepare for the next evolution of ACH.

When a payment crosses a border, even if only part of the transaction does, the Rules governing it can become considerably more complicated. That is part of what Nacha is addressing with its definition of an International ACH Transaction.

One of the most significant imminent changes is that the definition of IATs will be recalibrated, not replaced.

“When people hear there’s a new definition, they think the definition has changed,” Marsh said. “The revision sought to provide clarity, so there is really no conceptual change in what type of transaction should be called an International ACH Transaction. What changed in the definition was the way it was worded—hopefully, it’s a more accessible definition now and Originators can understand better what they need to code as an IAT when they create an ACH entry.”

When approaching the new definition, the first step for any ACH Network participant that facilitates IAT entries—including Originators, Originating Depository Financial Institutions (ODFIs), and Receiving Depository Financial Institutions (RDFIs)—is to study the definition and compare it against the types of transactions they currently process.

In this process, some organizations that currently create IATs may discover that transactions they have historically considered IATs will not fall under the updated definition. Others may find that transactions previously treated as domestic payments actually meet the definition of an IAT.

Once institutions have ascertained how to appropriately apply the definition, the next step is to educate personnel and begin classifying transactions accordingly. This will make the process more streamlined and better suited to the growing global economy.

“It’s about clarity, which determines the obligations attached to the transaction,” Danner said. “Clarifying definitions around International ACH helps for more accurate compliance screening. It’s better, more accurate data to assess risk for all institutions across the [ACH] Network.”

“Part of a larger trend is that cross-border is growing,” he said. “According to Nacha data, over 121 million IATs were processed in 2024. This shift in thinking about screening and risk monitoring and definitional clarity is even more important as cross-border volume grows.”

But classification is only one part of the equation. For customers, one of the most tangible effects of a Nacha Rule change is much simpler—when can they actually use their money?

That question sits at the center of another important change this September. The updated Rules around funds availability for non-Same Day ACH credit entries will change when RDFIs must make funds available—and remove a condition that has been in place for years.

For many years, the Nacha Rules have stated that an RDFI that receives next-day credit entries by 5 p.m. must make those entries available to receivers by 9 a.m. local time on the settlement date.

One component of the updated Rules will remove the 5 p.m. condition. Beginning Sept. 18, funds must be made available by 9 a.m. on the settlement date, regardless of when the file was received.

For example, if an RDFI receives a file in a 6 a.m. file distribution from its ACH Network Operator, the institution will be expected to make the credit entries with that settlement date available by 9 a.m.

“Most RDFIs that we talked with in developing this Rule already did that as a matter of practice,” Marsh said. “That 5 p.m. condition was a requirement, but posting transactions received after that wasn’t a violation. It didn’t say if you receive after 5 p.m. you can’t post; it was saying if you receive before 5 p.m., you must post.”

“Most RDFIs, in the interest of making funds available to their receivers, would receive files well after 5 p.m. and make those available by 9 a.m. on the settlement date,” he said. “So, most of the RDFIs probably didn’t have a change to implement, they just had to ensure they were complying with this new Rule.”

At first glance, that may sound like a relatively narrow operational adjustment. But the change illustrates a broader point: even seemingly small changes to Nacha Rules can force institutions to rethink how their systems, teams, and processes work together.

And Nacha has accounted for the fact that not every institution operates on the same clock. In exploring the removal of the 5 p.m. condition, Nacha considered that there are several financial institutions located significantly east of the Atlantic Time Zone and west of the international date line.

For example, there are financial institutions in the U.S. territory Guam. These institutions may receive files that are not even available to them before 9 a.m. local time on the settlement date. This is why Nacha established an exception—a carve-out for institutions that are not logically or physically capable of complying with the Rule.

While these changes may cause a short-term shift for financial institutions, they can have substantial impacts for customers, including potentially earlier access to payroll, benefits, refunds, and other ACH credits.

“If you think about what non-Same Day ACH credits are used for, it’s things like payroll benefits, government benefits, refunds, and invoice payments,” Danner said. “Perhaps with this change in window, it could be those payments could be available earlier, which could improve cash flow or reduce wait times—all the benefits of receiving a faster payment, particularly for these time-sensitive payments.”

By the time the new return reason code R90 takes effect in March 2028, institutions will have plenty of time to prepare. The question is whether they will use it.

“The reason we developed the new code R90 is because R16 paired two return reasons that were not necessarily logically connected,” Marsh said. “There’s returning due to sanctions obligations that the new code will take on, and R16 will remain the return reason code for account frozen.”

“The best explanation for why we need to separate those out is because once the ODFI and the Originator receive a return back, they may need to do different things based on what the actual reason was,” he said.

Splitting these return reasons into two separate codes is designed both to provide clarity on the origination side and to offer the RDFI a discrete code for returns related specifically to sanctions compliance obligations.

There is another important difference with R90: when the clock starts.

Under the usual return process, institutions generally have two banking days to return an entry, with the clock tied to the settlement date. R90 works differently. The two-day window begins when an RDFI determines that the payment has triggered its sanctions compliance obligations.

In practice, this gives institutions more time to investigate a payment before the return deadline begins. For example, an RDFI might initially accept an entry but flag it for further review. If that review later determines that the payment has triggered its sanctions obligation, the two-day window starts at that point—not when the payment originally settled.

“This isn’t unprecedented,” Marsh said. “There is a return reason code R23 that is used when an RDFI is notified by a Receiver that the Receiver has declined a credit entry, and that’s when the clock starts. This is similar in that respect: the clock is still two banking days, but it starts at a specific point in time.”

The R90 change exemplifies Nacha’s efforts to make the ACH Network more efficient and secure for banks and their customers—but banks must still do their share. That is precisely why 2028 may deserve attention now.

“It’s back to the theme of providing more accurate data,” Danner said. “It gives Originators better, clear information about what actions they’re going to need to take when a payment’s returned. This can affect the screening workflows and exceptions handling and communication and compliance procedures for OFAC compliance and risk monitoring. It’s important for ACH Operators and FIs to prepare to implement this new code.”

The temptation may be to focus on the September changes and worry about R90 later. But the institutions that wait until 2028 is around the corner may find that the hardest part was never the code itself; it was everything that had to change around it.

“The reason they need to start paying attention to it now is that developing a new return reason code requires programming and it requires technical development—and that could have a long lead time,” Marsh said. “Budget planning, IT planning, business requirement documentation, all those steps necessitate a longer lead time than simply a change in practice. Standing up the code is why it has a long lead time.”

The broader lesson is that ACH modernization is not happening in a single leap. It’s unfolding through a series or targeted Rule changes, each designed to improve clarity, speed, security, or efficiency.

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