Latest / Fintech Conversations with Fexingo: Banking, Payments, and Financial Software Companies / How Fintechs Use Real-Time Bill Payments for Cash Flow Management
Transcript
- Lucas: Let's talk about something that sounds boring but is actually a huge deal in fintech right now: how you pay your bills. Luna: Boring? I think millions of people with late fees would disagree. Lucas: Fair point. The thing is, we've been living in a world where bill payments are slow, batch-processed, and opaque. You schedule a payment today, but the money doesn't leave your account for two days. And the merchant doesn't get notified for another day after that. That uncertainty wreaks havoc on cash flow — especially for small businesses. Luna: So real-time bill payments solve that? Like, instant confirmation? Lucas: Exactly. There's a fintech called Float — not to be confused with the buy now pay later company — that's built a platform around this. They connect to users' bank accounts via open banking APIs, and when you schedule a bill payment, the money moves in seconds and the payee gets an immediate confirmation. No more wondering if it cleared. Luna: And they do this on existing payment rails? Or do they need something like FedNow? Lucas: Both, actually. For domestic payments in the US, they use the RTP network — that's the Clearing House's real-time payments system — and FedNow, which launched in 2023. Internationally, they leverage faster payment schemes like the UK's Faster Payments or India's UPI. The key is that they've built a layer on top that handles scheduling, notifications, and reconciliation. Luna: So the user sees the payment as 'paid' instantly, even if the merchant's bank doesn't update until later? Lucas: Right. But with RTP or FedNow, the merchant's bank gets the money and the confirmation message in real time too. So the merchant can release goods or services immediately. For a plumber or a freelance designer, that means getting paid and starting work the same day, not waiting for checks to clear. Luna: I can see how that helps cash flow. But what about consumers? Is the value just avoiding late fees? Lucas: That's a big part of it. Float's data shows their users reduce late payments by about 40 percent in the first six months. But there's also the credit score impact. If you're paying your credit card bill in real time, you can keep your utilization lower because the payment posts before the statement closes. That's a direct boost to your FICO score. Luna: Wait — so you can schedule a payment for the day before your statement cuts, and because it's instant, the lower balance gets reported? Lucas: Exactly. That's a hack that's been around for years, but it only works if you know exactly when the statement closes and the payment clears fast. Real-time payments make it reliable. Float actually offers a feature that auto-schedules payments based on your statement cycle to optimize utilization. Luna: That's pretty slick. But isn't there a risk that people overdraw their accounts if payments go through instantly? With a two-day delay, you have a buffer. Lucas: That's the flip side. Float addresses it with a feature they call 'liquidity guard.' Before a payment goes out, they check your balance and pending transactions. If you'd go negative, they flag it and give you options — delay the payment, pay from a linked savings account, or even use a short-term credit line they offer. Luna: So it's like overdraft prevention, but real time. That makes sense. I'm curious about the business model — how does Float make money? Lucas: They charge a small per-transaction fee — usually 50 cents for a bill payment, or a monthly subscription of around five dollars for unlimited payments. For businesses, they have a tiered plan based on payment volume. They also earn interchange on the credit line product, but that's secondary. Luna: Fifty cents per payment — that's comparable to a stamp. But for a business processing hundreds of payments a month, it adds up. Lucas: Sure, but compare that to the cost of a late payment. For a small business, a late payment on a utility bill could mean a reconnection fee of fifty dollars. Or worse, a damaged credit rating. Float's pitch is that the fee is cheaper than the alternative. Luna: And for consumers, avoiding a thirty-nine dollar late fee on a credit card makes the fifty cents look like a bargain. Lucas: Exactly. Now, the bigger picture here is that real-time bill payments are part of a broader shift toward 'request to pay' systems. Instead of you manually initiating each payment, the biller sends a request, and you approve it — or set up rules to auto-approve. That's where this gets really interesting. Luna: Like, 'I'll pay any utility bill under two hundred dollars automatically'? Lucas: Yes. And you can set conditions — only if the balance is above a threshold, or only between certain dates. This is essentially programmable payments. It's what fintechs like Plaid and TrueLayer have been enabling with open banking. Float is one of the first to apply it specifically to bill pay. Luna: Do banks feel threatened? Because they've been offering bill pay for decades, but it's slow and clunky. Lucas: Some are partnering. For example, JPMorgan has integrated with Finicity for account aggregation, but they haven't built their own real-time bill pay product yet. Smaller banks are actually using Float as a white-label solution. They slap their own branding on it and offer it to customers without building the tech themselves. Luna: So Float becomes the infrastructure behind the scenes. That's a smart play. Lucas: It is. And the market is huge. According to a 2025 report from McKinsey, the global bill payments market processes over 150 billion transactions a year. Even if real-time captures just 10 percent of that in the next five years, that's 15 billion transactions. At fifty cents each, that's seven and a half billion dollars in fee revenue. Luna: And that's before you add on the credit and subscription revenue. I see why VCs are piling in. Lucas: Float raised a Series B in March at a nine-hundred-million-dollar valuation. Their investors include Accel and Bond. But they're not the only player. There's also a company called PayIt that focuses on government bill payments — property taxes, parking tickets — and they've seen huge adoption. And in Europe, there's a firm called BillFront that does something similar for B2B invoices. Luna: So it's not winner-take-all. Different verticals, different geographies. Lucas: Right. The technology is relatively standardized — it's all about the integrations and the user experience. Float's edge is that they've built a really clean mobile app with predictive scheduling. They use machine learning to suggest the optimal payment timing based on your cash flow patterns. Luna: Speaking of cash flow, let's talk about the small business angle more. How does this change how a small business runs? Lucas: Consider a landscaping company. They get paid by customers via credit card, but they have to pay their suppliers — say, for mulch and equipment — by check or ACH. That timing mismatch creates a cash flow gap. With real-time bill pay, they can schedule supplier payments to go out the same day they receive customer payments, minimizing the gap. Luna: And they get instant confirmation, so they know the supplier has the money. That builds trust. Lucas: Exactly. Float actually offers a dashboard that shows your cash position in real time, updated with every payment. So you're not waiting for bank statements to reconcile. For a business owner, that's like having a CFO in your pocket. Luna: I want to challenge something, though. If these payments are instant, doesn't that put pressure on the business to always have enough liquidity? With the old delay, you had a float period. Lucas: That's a real concern. But the counterargument is that the float period was an illusion — you still owed the money, and if you didn't have it, you were just kicking the can down the road. Real-time payments force better discipline. And Float's liquidity guard helps prevent overdrafts. Luna: Fair. So what's the adoption curve look like? Are consumers and businesses actually using this? Lucas: Adoption is still early, but growing fast. Float reported that their user base doubled in the first quarter of 2026. A survey by Aite-Novarica found that 30 percent of US consumers would be interested in real-time bill pay if their bank offered it. The biggest barrier is awareness — most people don't know it exists. Luna: That's where fintechs come in, marketing directly to consumers. Float's been running ads on social media targeting freelancers and gig workers. Lucas: Yeah, exactly. And they're seeing strong retention — once people try it, they stick with it. The convenience is addictive. Luna: Alright, so before we wrap, I want to talk about the bigger picture. What does this mean for the future of money movement? Lucas: I think we're moving toward a world where all payments are real time, and bill pay is just one use case. The infrastructure is already there. The question is whether banks will embrace it or get disintermediated by fintechs. My guess is we'll see a mix — banks providing the rails, fintechs providing the user experience. Luna: Kind of like how Apple Pay sits on top of the card networks. Lucas: Exactly. And if that happens, the winners will be the companies that make the experience frictionless. Float, PayIt, and others are racing to own that layer. Luna: One more thing — are there any risks we haven't mentioned? Security? Fraud? Lucas: Real-time payments do introduce new fraud vectors. If a payment is instant and irrevocable, a scammer can drain an account before the victim even notices. The industry is responding with ai based fraud detection that flags unusual payments in milliseconds. Float uses behavioral analytics to block suspicious transactions. Luna: So the same speed that makes it convenient also makes it dangerous. But they're building safeguards. Lucas: Right. And regulators are paying attention. The Consumer Financial Protection Bureau has been looking at real-time payment fraud and may require stronger authentication. But overall, the trend is clear: faster payments are coming, and bill pay is one of the first big applications. Luna: If these conversations are useful for what you're building or running, listener support is what keeps this show ad-free. You can help at buy me a coffee dot com slash fexingo. Lucas: Appreciate that. And speaking of building, let's go back to Float's roadmap. They're planning to launch a feature later this year that lets users set up recurring payments with conditional logic — like 'pay the electric bill only if it's under $300, otherwise notify me.' Luna: So it's like IFTTT for bills. I love that. It gives users control without requiring constant attention. Lucas: Exactly. And that's where this gets really powerful. Eventually, your bank account could become a programmable platform where payments happen automatically based on rules you set. Float is one of the first to make that a reality for everyday bills. Luna: It feels like we're only scratching the surface. I'd love to see a version for rent payments — that's a huge pain point. Lucas: Funny you mention that. Float is actually piloting a rent payment feature in three cities right now. They're partnering with property management software to offer instant rent payments with confirmation. If it works, that could be a game changer for both tenants and landlords. Luna: No more 'the check is in the mail.' Lucas: Exactly. And no more waiting for it to clear. That's the promise of real-time payments — not just speed, but certainty. And Float is proving that certainty has real value.