Carvana has implemented request for payments technology and instant payments capabilities for down payments on vehicle purchases, allowing consumers to obtain their vehicle faster.

The online used-car dealership has integrated financial services provider Plaid’s RFP technology, which leverages The Clearing House’s real-time payment (RTP) network to streamline the consumer-to-business payment process.  

The payments feature, accessible via the Carvana website and app, allows a customer to connect to their bank account and submit a payment instantly, whereas other payment options like electronic checks (ACH) can take several hours or even days to process, Matt Dundas, vice president of finance at Carvana, told Bank Automation News‘ sister publication Auto Finance News. Less secure methods pose more risk to Carvana if the payment doesn’t go through, he added. 

RTP offers “all the benefits of ACH with none of the downsides,” Dundas said, noting that Carvana currently allows instant transfers only for down payments but may explore other use cases down the road. 

Plaid’s RFP capability allows businesses to request payments from consumers, according to a June 9 release. 

How instant payment works  

To utilize this feature, Carvana customers will: 

• Opt in to pay-by-bank during the payment verification process;  

• Be prompted to link their bank account and give consent in their bank app; and 

• Confirm the transfer amount to complete payment.  

Not all banks accept real-time payments. 

“There’s only so many banks that have implemented [RTP] at this point,” Brian Dammeir, head of payment and financial management products at Plaid, told AFN. He said the largest banks are among the first to implement payments technology.  

“It’s really about the long tail of smaller institutions and credit unions over time to sort of round out the solution,” he said. 

At Carvana, consumers must use one payment method for the full amount as the process doesn’t allow real-time payments to be split among multiple bank accounts, Dundas said. 

Instant payment evolution growth 

Instant payments have gained popularity as lenders search for affordable ways to streamline processing time, reduce fraud and allow for faster exchange of goods and services. 

Truist and Credit Acceptance Corp. are among the financial institutions that have adopted the instant payment tool. TD Auto Finance and Lithia Motors launched instant payment capabilities in 2022.

Carvana has used other Plaid technology for years, including a tool that allows consumers to link their bank accounts during the sale, providing Carvana with data useful in underwriting and verification processes, Dundas said. This allows Carvana to verify a customer’s income by analyzing the flow of deposits through their bank account, he said.

The two companies later expanded their integration with business-to-consumer instant refund payments before venturing into the RFP solution.

While Carvana is the first vehicle retailer to use Plaid’s solution for RFP for vehicle purchases, Plaid is exploring other opportunities in auto, Dammeir said.

“We see [potential for] wide applicability of this across the auto industry,” he said, without confirming if other auto retailers are in talks for the tool.  

Carvana’s originations totaled $2.7 billion in the first quarter, a 44.1% year over year increase.

Editor’s note: This article first appeared on Auto Finance News, a sister publication to Bank Automation News.