MSU Federal Credit Union recorded a 643% month-to-month transaction growth in its instant payments volume after integrating the Federal Reserve’s FedNow Service in August 2023, according to an interview with vice president of commercial solutions Nicole Dilts. Headquartered in East Lansing, Michigan, the university-based financial institution initially expected low transaction volumes following its rollout on the instant payment rails. Instead, member demand for immediate fund settlement drove rapid adoption across the credit union’s customer base, which primarily serves Michigan State University and Oakland University students, alumni, their families, and select employee and community groups.
August 2023 Launch Ignites 643 Percent Volume Surge
The credit union went live on the FedNow Service in August 2023 as a receive-only participant, establishing a technical foundation to handle incoming instant transactions. Comparing its highest volume in 2023 versus its highest volume to date in 2024, MSUFCU documented a 643% expansion in monthly transaction volume. Dilts stated that members who initially did not understand instant payments two years ago now view immediate settlement as a must. Members regularly contact the institution to question when their funds will settle if a transaction is sent via a payment rail other than the FedNow Service.
Gig workers drive instant payment volume
Gig workers, including university students working as rideshare and delivery drivers, form the majority of the segment driving the credit union’s instant payment volume, utilizing the FedNow Service to access their earnings instantly. Account-to-account transfers represent another frequent use case generating transaction volume. Operating the FedNow Service requires little interaction on the credit union’s part, creating operational efficiencies that improve transaction speed, transparency, security, and accessibility without adding heavy overhead costs, according to Dilts.
MSUFCU plans to expand FedNow capabilities
MSUFCU plans to roll out send capabilities for the FedNow Service in 2025, giving members another choice between payment rails based on how quickly they need funds. Following this rollout, the institution plans to target indirect auto loan funding by encouraging dealerships to send loan opportunities directly for funding via the FedNow Service. Additional future use cases include accelerating student loan refunds and expediting insurance payouts during emergency situations, replacing traditional check and ACH methods with instant settlement.
Preparation Strategies for Financial Institutions
Credit unions evaluating instant payment integration must prioritize preparation and stakeholder alignment before deployment. Dilts advises financial institutions to assess their existing infrastructure and identify technology gaps required to integrate instant payments capabilities so the transition happens without interruption.
What regions and services MSUFCU provides?
What geographic regions and communities does MSU Federal Credit Union serve?
Headquartered in East Lansing, Michigan, MSUFCU primarily serves students, alumni, and their families of Michigan State University and Oakland University, alongside select employee and community groups.
When does MSUFCU plan to launch send capabilities for instant payments?
The credit union scheduled the launch of its send capabilities for the FedNow Service in 2025, which will allow members to choose between payment rails based on settlement speed.
Which specific use cases currently generate the highest transaction volumes?
Gig economy workers—including university students driving for ridesharing and delivery services—along with account-to-account transfers generate the majority of MSUFCU’s current instant payment volume.
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