MSU Federal Credit Union (MSUFCU) (Off-site), headquartered in East Lansing, Michigan, is a university-based credit union primarily serving Michigan State University and Oakland University students, alumni, their families, and select employee and community groups.
In our latest Pioneers of Now profile, we spoke with MSUFCU’s vice president of commercial solutions, Nicole Dilts, to discuss the credit union’s commitment to offering services that meet the unique needs of their members, the decision to provide instant payments through the FedNow® Service and use cases driving their instant payment volume.
Q: In what way is MSUFCU currently offering instant payments through the FedNow Service? How has your volume grown over time?
A: We went live on the service in August 2023, and when we compare our volume from then to now, we’ve seen a drastic increase. If you look at our highest volume in 2023 versus our highest volume to date in 2024, our month-to-month transactions have grown 643%. We anticipated low volumes just after the launch of the FedNow Service, but now we’re seeing the growth we expected and a notable increase in transactions.
Currently, MSUFCU participates in the FedNow Service as receive-only, with plans to enable send capabilities in 2025. When we enable send capabilities, our members gain another choice between payment rails, and the ability to decide how they want the funds based on how quickly they need them. We are looking forward to offering this option because we know it will fill a gap for our members who rely on the quick settlement of funds.
Q: What have been your biggest learnings related to the FedNow Service and instant payments so far?
A: Much of what we’ve learned is around the impact of instant payments — on member expectations as well as operational efficiencies. It's interesting to consider that, even two years ago, our members didn't understand what instant payments were. Today, our members are not only using instant payments but expecting them. We receive calls from our members wondering when their funds will settle if a transaction is sent via a payment rail other than the FedNow Service. Our members want to see the funds in their account within minutes, and that speed has become a must for many of them.
When it comes to operational efficiencies, there's not much interaction required on our part for instant payments. With so little overhead compared to other existing payment methods, the FedNow Service has netted enhancements not only to the speed of transactions, but also the transparency, security and accessibility of those transactions on our side.
Q: What use cases have helped MSUFCU and your members realize this early success with instant payments?
A: I think our success is the result of both awareness and a few key use cases. Gig workers are driving the majority of our volume. A good portion of our membership is made up of university students, alumni and faculty at Michigan State University. Many students are also gig workers, and they expect — and often need — to access their funds quickly. Whether they’re rideshare drivers or delivery drivers, the ability to access their pay instantly using the FedNow Service has been a big benefit for them. We also see instant payments frequently used for account-to-account transfers, with transaction speed, again, being the main factor.
Q: Looking ahead and as you consider how you’ll expand into send capabilities, what use cases is MSUFCU targeting for future enablement?
A: We’re monitoring trends in the market and are hoping to be responsive to the use cases that are emerging as instant payments become the norm. Indirect loan funding is one use case that comes to mind, especially for auto loans. We want dealerships to send these loan opportunities directly to us and then we want to fund those loans via the FedNow Service. This will help speed up the loan process and ensure all parties get what they need on a timely schedule.
Student loan refunds are another great use case, particularly given our member base. A lot of individuals currently receive these refunds via check or ACH, but with the FedNow Service they would get those funds faster and be able to access them instantly. And I think about insurance payouts, too — in an emergency, having that insurance payout faster would help anyone compared to waiting for a check to arrive.
Q: Based on your experience implementing the FedNow Service, what advice would you share with other credit unions looking to offer instant payments?
A: My advice would be to prioritize preparation and stakeholder alignment. Assess existing infrastructure and identify what gaps need to be bridged from a technology standpoint to integrate instant payments capabilities. Once you identify those, it's going to make for a more seamless implementation.
Internal alignment is another big task related to any new service, making sure decision-makers are aligned on priorities and what it means to stay competitive in the current payments landscape. Especially for credit unions, collaboration with key vendors and partners becomes crucial, too. By closely aligning across teams early on, you can then focus on the education of your members, helping them connect to the very real benefits of instant payments in their day-to-day lives.
Pioneers of Now represent engaged financial institutions and service providers united by their commitment to early adoption of the FedNow Service (Off-site), which launched in July 2023. This is part of an ongoing series of Pioneers of Now features (Off-site).
