Not long ago, on a perfect spring Saturday afternoon, my Gen Z son, Luke, was ready to take a financial step forward and invest his hard-earned lawn-mowing money into a depreciating and relatively dangerous asset called a dirt bike. As his dad, I was obligated to remind him of his financial future. “Are you sure?” I asked. “This money, invested properly, could be a down payment on a house in 15 years.” Luke did not flinch; he was locked in. That’s okay, I thought. I was looking forward to a riding partner.

We’d done our research. We knew what size bike he needed and found the right model available locally. We also confirmed the list price. What we didn’t know was how we were going to pay – finance, credit card or cash? For me, this was an opportunity to pass on to my progeny some financial knowledge – especially about the differences in not only what you pay (a little “wheeling and dealing”), but how you pay (lessons learned from my own experience in the world of payments).

I was also curious about what the dealership offered, knowing that businesses are increasingly coming on board with real-time payment rails such as FedNow® and RTP®. Even small businesses are learning that real-time payments offer benefits in speed and liquidity, enabling 24/7/365 movement of funds with immediate confirmation. Businesses that offer real-time payments can improve cash-flow forecasting and reduce working-capital buffers – while also offering their customers convenience and immediacy.

So now, with the dirt bike and accessories chosen, (helmet, boots, gloves, kickstand) it was time to sit down with the finance manager – we’ll call him Mr. Finance for this story – to negotiate the final price and complete the transaction. This was an opportunity to discuss payment options and how they impact Luke as a buyer and Mr. Finance as the seller.

Option 1 – Finance through the dealer. The interest rate wasn’t great: 8% for three years. I went to my loan calculator app and showed Luke how this option would cost him $640 in interest. He declined. He had the money saved up and didn’t want or need to pay more.

For the dealer, financing is neither final nor irrevocable – and if something goes wrong, the dealer has recourse.

Option 2 – Credit card. I asked Mr. Finance if I could put it on a credit card. That would be good for me: Luke would pay me in cash and I could get cash-back rewards. Mr. Finance said no; dealership policy limits card purchases at $1,000. I asked if that was due to not wanting to pay the interchange fee, but that wasn’t the concern as much as the dispute process: They had gotten burned by customers who paid with a card and claimed it was fraud – and the dealer never recovered their inventory. Hmmm, okay. That option is out.

For the dealer, credit card is neither final nor irrevocable and the dealer has potential recourse – but maybe not.

Option 3 – Cash. “Of course, we’ll take cash,” said Mr. Finance, “although it’s not preferred.” In a lower-volume, but higher-dollar business, dealing with high volumes of cash can be a liability for the business, as well as for the employee walking around with a bundle of cash – also requiring daily runs to the bank. We didn’t bring cash anyway.

Cash is final and irrevocable – but a bit of a pain.

Option 4 – Cashier’s Check. This was an option, but would have required more planning on our part. We hadn’t gone to the credit union for the check and Luke didn’t want to wait until Monday; neither did the dealership, as it opened the possibility of losing the sale.

Cashier’s check is final and irrevocable, but with a bit of friction on the part of the customer.

Option 5 – Wire. Nope. Neither our community bank nor credit union offer online consumer wire transactions. That’s the norm with community financial institutions and common for the big ones, too. And even if online transfer was an option, it is not possible on a weekend.

Wire transfers are final and irrevocable with intentional friction from the FI – but only available on weekdays.

Option 6 – ACH credit. Not this either. If we had the ability to generate a one-time ACH credit via online banking, that would be nice – but it’s not a generally available option, except in BillPay, which this is not. Also, it’s a Saturday, and like a wire, ACH also takes a few days to clear as it needs to run through the Federal Reserve, which only operates on weekdays.

ACH credit is neither final nor irrevocable, only available on weekdays – and not generally available as a one-time payment.

Option 7 – An Instant Payment via FedNow or RTP. To me, this is a perfect use case – but I suspected it was a no-go or Mr. Finance would have offered it in the first place. Still, I took this as a great learning experience for Luke, as well as an educational opportunity for the dealer. So, I decided to engage. I asked: “Out of curiosity, where does this dealership bank? What’s your annual revenue? Have you calculated the float on selling a product today, but not receiving settled funds for a few days?”

He was a bit suspicious, but also curious. I explained, “If the dealership banked with an FI that participated in an Instant Payment network – and if my FI did as well – then I would have the ability to create a one-time irrevocable payment credit directly from my son’s checking account to your business checking account in seconds.”

“No way,” was Mr. Finance’s perked-up reaction. “Way,” said I.

I continued, “If your dealership had Instant Payments in place, we would make the transfer, you could refresh the account activity screen in your online banking portal and see funds posted immediately.” He was blown away and I could see the gears turning in his head.

With Instant Payments, the dealer would eliminate float on receivables, making it possible to schedule outgoing payments on the due date. It has a tremendous benefit of optimized and transparent cash flow, which can lead to better working capital and more interest earned.

Instant Payments are final and irrevocable, instant and painless.

“So how do we sign up for this?” Mr. Finance asked. I smiled. “Give me some time,” I said. “I need to sell our payments hub to your bank and to my credit union, too.”

The reality is, we are getting there. The participant list continues to grow, and as businesses latch on to the value proposition, they may shop around for an FI that offers it – or become even more loyal when their trusted FI rolls it out.

Postscript: So, How Did They Take the Money?

Option 8 – Personal check. That’s right: The payment instrument that has been around for hundreds of years. Businesses understand checks. Consumers (above a certain age) know to bring a checkbook to a closing or a dealership. This is, however, a behavior that’s changing with the increased ubiquity of a growing instant payments network.

My son did not have a checkbook, nor had he ever written a check, so I wrote one. Then we settled up via an account-to-account transfer.

Oh, and the check? Written on Saturday, it posted the following Wednesday.

On the way home, Luke is all smiles. He says, “Dad, what about the wheeling and dealing you promised?”

“Son, I got ‘em to throw in a free kickstand!” I exclaimed. He laughed at me and I deserved it.

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