By W.B. King
After more than a year of collaboration, Tyfone and digital banking client, Star One Credit Union, built Payfinia’s Instant Payment Xchange (IPX), a solution designed to provide credit unions with a broader opportunity in the marketplace.
The Portland, Ore.-based Payfinia, a Tyfone company, represents a new era in payments, empowering credit unions to provide a faster, more secure way of moving money to improve their members’ financial lives, Keith Riddle, general manager of Payfinia, told Finopotamus.
“For members of modest means or those who may be involved in the gig economy, instant payments provide accountholders living paycheck-to-paycheck more immediate control over their monthly payments,” said Riddle, adding that IPX is an open, payments-as-a-service (PaaS) framework certified to send and receive instant payments on the FedNow Service. “For small businesses, instant payments extend the cash conversion cycle by retaining funds longer and timing payables closer to receivables.”
As a newly minted CUSO, Riddle said Payfinia’s mission is to allow institutions to easily adopt instant payments, as well as “provide a seat at the table” for smaller organizations to receive support and provide feedback.
“Payfinia is working with larger credit unions who are seeking an open-platform model for payments modernization initiatives, as well as third-party providers who can accelerate adoption of instant payments,” he noted. “Payfinia will attract and support a diverse portfolio of credit unions within the CUSO structure.”
CUSO Formation
Working with $9.9 billion Sunnyvale, Calif.-based Star One Credit Union, which supports 126,000 members, was a gamechanger, Riddle said.
“Star One’s feedback was key in the development of the IPX solution and a voice of support for forming a CUSO. The FedNow Service launched in July 2023, and it was a new paradigm for financial institutions,” he noted, adding that Star One CU invested $4.5 million to help create the CUSO.
“Star One knew it wanted to offer both send and receive capabilities and enlisted its long-time technology partner, Tyfone, to build the IPX platform and value-added services,” Riddle continued. “The end result of the collaboration was profound, as a Star One member initiated the first ‘send’ transaction on the FedNow Service via IPX platform.”
Gary Rodrigues, CEO of Star One CU, said the credit union is proud to support Payfinia and its vision of making instant payments accessible to all account holders in the U.S. “The IPX solution empowers our members to take control of their cash flow,” he noted in late 2024. “So far, the IPX solution has displaced 25% of same-day ACH transactions, with 53% fewer fraud losses compared to same-day ACH and an 83% reduction in operational overhead for P2P payment networks.”
The $746 million Mountain Home, Idaho-based Pioneer Federal Credit Union, which supports more than 50,000 members, is a recent IPX solution adopter.
“Pioneer FCU is dedicated to introducing solutions that make a real difference in our members' financial lives. Adding an instant payments solution was a no-brainer,” noted Tracey Miller, SVP of operations at Pioneer FCU. “With IPX, we’re empowering our members to manage their finances more effectively and provide immediate access to their funds.”
To date, the Payfinia CUSO has 10 credit union clients that are live on the IPX solution, with more schedule to onboard, Riddle noted.
Metrics Tell the Tale
With IPX, Riddle further explained that a credit union can process, post, and settle funds between institutions in mere seconds. Star One CU provided the following user statistics:
Fraud reduction: IPX has demonstrated a 51% lower fraud per dollar than same day ACH and a 4.25 times lower fraud per dollar than peer-to-peer payments, addressing a critical industry challenge.
Operational efficiency: Star One CU reported 4 times lower accounting staff resource requirements and 10 times lower member support calls for instant payments compared to Zelle.
Adoption and migration: Within six months, 23% of same-day ACH transactions moved to FedNow Send, with a 30% increase in “Send $” per transaction, and the volume of same-day ACH transactions transitioning to FedNow doubled (2.5 times).
Productivity gains: The transition to IPX has led to significant improvements in operational efficiency and customer satisfaction, demonstrating the platform's effectiveness and the innovative impact on the industry.
Cash management: Accountholders have recognized that they can move money instantly on the weekend instead of moving money early in the week. Weekend volumes are 1 to 2 times that of Friday volumes, showcasing the flexibility and convenience provided by IPX – the instant payment widget is embedded in members’ existing payments options and as a standalone widget, enabling easy access and streamlining FedNow adoption.
From a technology onboarding stance, Riddle said adoption and roll out uses a streamlined “plug and play” approach.
“Leveraging an open application program interface (API) gateway, IPX easily connects with a credit union’s existing technology systems,” he explained. “In most cases, credit unions can start receiving payments via IPX in 90 days to 180 days to integrate within a credit union’s core platform, digital experience provider, and third-party services (OFAC/AML, etc.), depending on the needs of the credit union.”
Increasing Demand for Instant Payments
In Riddle’s view, 2025 will be a “watershed” year for instant payments, noting that as of February 9, 2025, The Clearing House’s RTP [real-time payments] network will increase its transaction limit from $1 million to $10 million per transaction.
“This is a strong indicator of the increasing demand for instant payments. Whether it's a mortgage closing or merchant settlement, financial institutions and businesses leveraging the RTP network are expanding instant payment capabilities to critical B2B use cases that benefit from the increased transaction limit,” he shared. “In the future, the FedNow Service will follow suit, as use case capabilities mature, and transaction volume increase accordingly.”