[ad_1]
Jack Henry & Associates has connected 40 of its customers to the Federal Reserve’s new instant payments services system FedNow, though they remain in a receive-only status, a company executive said Wednesday.
The bank technology services company also has 150 customers waiting in line to link to that system, Jack Henry President Greg Adelson said while presenting its fiscal first-quarter earnings report on Wednesday. The company was an early adopter of the FedNow system launched in July and it has been courting clients into the new real-time payments system.
Back in July, Jack Henry had about 80 clients “in various stages of implementation” for the new system, according to a press release at that time.
“We currently have more than 40 clients live on FedNow with over 150 contracts in the implementation queue,” Adelson said on the webcast with analysts. “We expect to have approximately 150 live customers on the network by the beginning of 2024.”
Monett, Missouri-based Jack Henry reported fiscal first-quarter net income slid 4.6% to $101.7 million for the quarter ended Sept. 30, on a revenue increase of 8% to $571.4 million, according to its Wednesday press release. The company provides payments, fraud-protection and other software services mainly to mid-sized financial institutions.
The Fed has slowly been linking more banks to the new system, designed to deliver payments in 20 seconds, or less. The around-the-clock service improves on processes today that can take hours or days. It has the potential to speed up not only consumer transfers and bill payments, but also business-to-business transactions.
Only financial institutions can connect to FedNow and the central bank has been trying to foster commercial creation of more use cases for the speedier system. So far, adoption has been somewhat lackluster, with 108 of about 10,000 U.S. financial institutions getting on board as of early last month, according to a Fed update.
Luring banks and credit unions to use the send feature, as opposed to just receiving payments, has been a particularly high hurdle, including for Jack Henry.
“Today, every client is set up for receive-only, but we expect to see more clients want to add send capabilities in early to mid-2024 as use cases become more defined,” Adelson said.
FedNow is especially aimed at drawing smaller financial institutions into using faster payments. The larger banks have been using the RTP network for real-time payments since 2017, when the bank-owned The Clearing House set up that first U.S. instant payments system.
By comparison, Jack Henry has about 210 clients live on the RTP network, with another 100 readying to add it, Adelson said. The company recorded a 66% increase in RTP transactions as of September, over the past year, with most coming from digital wallets, bank account-to-account transfers, payroll payouts and gig worker payments, Adelson said.
[ad_2]
