By p2pbusinesspayments September 10, 2025
Instant payments are revolutionizing how money moves in the United States. Businesses, consumers, and financial professionals are embracing new systems that transfer funds in real time, eliminating the delays of traditional methods.
In this article, we explore the Real-Time Payments (RTP) network and the Federal Reserve’s FedNow service – the two key instant payment rails in the U.S. – and look beyond what the future holds.
We’ll cover how these systems work, their differences, benefits for various users, current adoption trends, challenges, and emerging innovations.
The goal is to provide an up-to-date, comprehensive guide that’s accessible to all types of businesses and individuals, highlighting expert insights and the latest data in the U.S. payments landscape.
Understanding Instant Payments
Instant payments refer to electronic fund transfers that are completed within seconds, with funds immediately available to the recipient 24/7/365.
Unlike traditional bank transfers (such as standard ACH credit or wire transfers) that might take hours or days and only settle during banking hours, instant payment networks operate continuously, even on weekends and holidays.
This means a small business can receive a customer payment at 11 PM on a Sunday and use the funds right away. Immediate access to money improves cash flow and convenience for both individuals and companies.
These systems offer irrevocable payments – once a payment is sent and confirmed, it cannot be reversed (barring a special error resolution process between banks).
Immediate confirmation is provided to both sender and receiver, giving certainty that the money has been delivered. In short, instant payments combine the speed of handing over cash with the safety and reach of electronic banking.
Why now?
The push for faster payments has grown as people and businesses expect real-time service in the digital age. Mobile apps and online services have made peer-to-peer payments feel instant (think of Venmo or Zelle), but those often use intermediate steps behind the scenes.
True instant payment networks settle funds in seconds at the banking infrastructure level, ensuring finality. Other countries rolled out faster payment systems years ago (the U.K. launched Faster Payments in 2008, and the Eurozone has SEPA Instant).
The U.S. has been catching up, and now with RTP and FedNow, instant payments are becoming mainstream domestically. Below, we dive into the two primary U.S. instant payment systems – the private-sector RTP network and the public FedNow service – and how they compare.
Real-Time Payments (RTP) Network – A Proven Solution
Real-Time Payments (RTP) is an instant payment network launched in 2017 by The Clearing House (TCH), a consortium of major banks. It was the first new core payments infrastructure in the U.S. in decades, designed to enable immediate money transfers between banks.
RTP operates nationwide, allowing any federally insured U.S. depository institution (banks and credit unions) to participate and send/receive instant payments.
Transactions on the RTP network settle in real time through a joint, prefunded account at the Federal Reserve – meaning participating banks contribute funds in advance to a pooled account to cover outgoing payments.
This pre-funding ensures that when a payment is sent via RTP, it can be immediately settled and guaranteed, with the network providing instant confirmation to both the sending and receiving institution.
Key features of RTP include:
- 24/7/365 Operation: Banks on the RTP network can send and receive payments at any time, day or night, year-round. Funds are available to the recipient within seconds of initiation, even outside normal banking hours.
In fact, about 42% of RTP transactions occur during evenings, nights, or weekends, highlighting how users take advantage of around-the-clock availability. - Speed and Finality: An RTP payment typically completes in seconds (often under 15 seconds). Once received, the funds are irrevocably in the recipient’s account (except in rare error cases handled between institutions).
Immediate confirmation messages are sent to both payer and payee’s banks to notify them of success. - ISO 20022 Messaging: RTP uses the modern ISO 20022 financial messaging standard, which carries richer data with payments. This allows additional information (like invoices or remittance details) to accompany transactions, which is useful for businesses reconciling payments.
- Transaction Limits: Initially, RTP had a per-payment limit of $25,000, which increased over time to $100,000 and later $1 million. As of early 2025, RTP raised its transaction limit to $10 million.
This high limit opens the door for large-value uses like corporate treasury payments, real estate transactions, and brokerage transfers on the RTP network. The average RTP payment, however, is small – about $719 in 2024 (up from $514 in 2023) – indicating many everyday and business payments are being sent. - Open Access: The network is open-loop – any bank or credit union can join if they meet technical requirements. By the end of 2024, 675+ financial institutions (banks and credit unions) had joined RTP.
These participants cover a large share of U.S. bank accounts (TCH estimates about 90% of U.S. demand deposit accounts are reachable via RTP, thanks to many large banks participating).
Notably, about 90% of RTP participating institutions are community banks or credit unions, showing that it’s not just for big banks. Smaller institutions have been onboarding via service providers to extend instant payments to their customers. - Use Cases: RTP supports a variety of payment types – person-to-person (P2P), consumer-to-business (like instant bill payments or e-commerce payments), business-to-business (B2B supplier payments), and more.
Over 285,000 businesses are using the RTP network each month for things like supply chain payments, bill pay, merchant settlements, insurance payouts, and other B2B transactions.
Consumers also use RTP for account-to-account transfers (e.g., moving money between their own accounts at different banks) and P2P payments through banking apps.
A feature called Request for Payment (RFP) is part of RTP, allowing a business or individual to send a structured payment request that can be fulfilled instantly by the payer – essentially an electronic invoice that can be paid in real time.
This capability is seen as a potential “silver bullet” for boosting adoption, especially for small businesses seeking faster bill payments. - Immediate Confirmation & Transparency: RTP transactions are tracked end-to-end. Both sender and receiver get confirmations when the payment is credited.
This transparency is a big improvement over ACH or checks, where senders may not know when (or if) the payment was received without additional communication.
Growth: Since its launch, RTP usage has grown steadily, and it accelerated as instant payments gained attention in recent years. In 2024 alone, RTP processed 343 million transactions totaling $246 billion, up 38% in volume and 94% in value from 2023.
The network handled nearly 98 million transactions in Q4 2024 (a record quarter), and was averaging over 1 million payments per day by the end of that year. This growth corresponds with more banks joining and more customers becoming aware of real-time payment capabilities.
According to The Clearing House, 42% of RTP payments occur outside normal business hours, showing people value the convenience of instant availability at any time.
RTP’s increasing transaction limit (now $10M) also reflects its move into larger-scale corporate payments. For instance, with a $10 million cap, real estate closings, large supplier payments, and cash pooling transactions can be done instantly over RTP.
The expansion of use cases from small-value transfers to high-value corporate transactions indicates RTP is evolving to serve a broad spectrum of payment needs.
The FedNow Service – A New Entrant by the Federal Reserve
FedNow is the Federal Reserve’s instant payment service, launched in July 2023 to provide nationwide, bank-to-bank real-time payments.
It is the U.S. central bank’s response to the demand for faster payments, ensuring that even institutions that are not owners of The Clearing House (and even the smallest community banks) have access to a real-time payments infrastructure.
FedNow is essentially a public-sector parallel to the private RTP network, and it operates with similar always-on availability and immediate fund settlement.
Key aspects of the FedNow Service:
- Federal Reserve Operated: FedNow is run by the Federal Reserve, which means it’s backed by the central bank’s infrastructure and mandate to serve the entire banking system.
Participation is open to all federally insured depository institutions in the U.S. (this includes over 9,000 banks and credit unions, large and small).
This broad eligibility aims to level the playing field, allowing small banks and credit unions to offer instant payments without relying on a private-sector competitor or intermediary. - Launch and Early Participants: FedNow launched with a pilot cohort of 35 banks and credit unions and the U.S.
Treasury in July 2023. Early adopters included some major banks like JPMorgan Chase and Wells Fargo, as well as smaller institutions and service processors. From that starting point, adoption has expanded rapidly. - 24/7 Instant Settlement: Like RTP, FedNow operates continuously, enabling payments at any hour, any day. It uses the Fed’s existing network of Fed master accounts for settlement – each participating bank settles instant payments through its account at the Federal Reserve (or that of a correspondent if it doesn’t have its own Fed account).
When a FedNow payment is initiated, the Fed debits the sender’s master account and credits the receiver’s master account in real time, ensuring funds are settled with central bank money. - Transaction Limits: At launch, FedNow had a default transaction limit of $100,000, which banks could opt to increase up to $500,000 per payment. In 2025, the Fed announced an increase of the FedNow limit to $1 million (effective from late June 2025) to support larger use cases.
This doubling from $500K to $1M is paired with new risk management tools (more on that below). Even with a $1M cap (lower than RTP’s $10M), FedNow can cover a wide range of consumer and business transactions – and the Fed has indicated it may adjust limits over time based on industry needs.
Notably, in its first year the average FedNow payment was around $22,000, significantly higher than the average RTP payment. This suggests that early FedNow usage skewed toward larger-value transfers (for example, corporate account transfers or higher-value disbursements), even as overall transaction counts were initially low. - Features and Tools: FedNow uses ISO 20022 messaging (like RTP) for rich data with payments. It also introduced a Liquidity Management Tool – a feature allowing participants to transfer funds between their FedNow accounts and other Federal Reserve accounts instantly, even when traditional systems like Fedwire are closed.
This helps banks manage liquidity for instant payments outside normal hours. Additionally, FedNow has built-in fraud mitigation and control options at the network level. Banks can set up parameters such as account activity thresholds, value limits, and negative lists to monitor and control usage by different customers or processors.
These controls, combined with the upcoming account activity monitoring feature, let institutions tailor risk management – for example, a bank could allow a trusted business client higher daily instant payment limits while limiting a new retail customer’s usage until more history is established. - Connectivity: Banks can access FedNow directly or through service providers. One distinct capability of FedNow is that a bank can designate multiple service providers or processors to send payments on its behalf (all settling to the same Fed master account).
This means an institution could use one processor for person-to-person payments and another for corporate payments, for instance. The FedNow network’s design allows oversight across those multiple senders (e.g., consolidated fraud monitoring), which adds flexibility.
By contrast, the RTP network currently limits each participant to a single connection processor, which can complicate things for banks using multiple vendors – although third-party solutions exist to bridge that gap. - Adoption and Participants: FedNow is still new, but adoption has been growing quickly. By January 2025 (about 18 months after launch), over 1,200 financial institutions were on FedNow.
This number actually surpassed RTP’s participant count in a short time, showing strong interest especially from community banks and credit unions.
However, it’s important to note that many banks joined as “receive-only” participants initially – they can receive instant payments, but have not enabled sending functionality yet.
This is often due to caution around fraud risk and the technical effort required to enable outbound payments. In fact, as of early 2025, roughly 1,100–1,400 institutions had joined FedNow, but the majority were only receiving, not sending.
Over time, more will likely turn on send capabilities as they upgrade systems and put risk controls in place. The Federal Reserve and industry experts see expanding send capability as the key to unlocking FedNow’s full potential. - Usage and Growth: In its initial months, FedNow’s transaction volumes were modest, but they have been rising sharply. In the last quarter of 2023, FedNow processed about 0.9 million transactions (915,000) with a total value of only $13 million – essentially a pilot-scale volume.
One year later, by Q4 2024, quarterly volume reached 915,000+ transactions (bringing the full-year 2024 total to ~1.5 million payments), and the value transferred in Q4 2024 exceeded $20 billion.
That spike in value (from millions to tens of billions) indicates that larger payments (like corporate disbursements or interbank transfers) started flowing through FedNow as more participants came online.
Indeed, FedNow’s payment value grew over 1000-fold year-over-year by late 2024. By Q2 2025, FedNow saw explosive growth: it processed about $245 billion in transactions in just that quarter, a staggering increase from only $492 million in Q2 2024.
Such growth suggests FedNow is entering an acceleration phase, likely as several larger banks and corporate users ramped up activity. While FedNow still trails RTP in total number of transactions, it has closed the gap in total value transferred faster than many expected.
This rapid adoption curve aligns with patterns seen in other countries – once a critical mass of banks offer the service, growth can become exponential. - Use Cases: FedNow is intended to serve many of the same use cases as RTP. Early uses include P2P payments (e.g., instant person-to-person transfers as an alternative to apps like Zelle), business-to-consumer payouts, and business-to-business payments that benefit from quick settlement.
The service’s 24/7 nature also makes it attractive for industries operating around the clock. For example, the online gaming and gambling industry sees potential in instant deposits and withdrawals for players at any time.
FedNow can ensure winnings or deposits are moved instantly, matching the always-open nature of digital gaming platforms.
Another interesting use case is insurance payouts for disaster claims – instead of waiting days or weeks for checks, people affected by floods or fires could get relief funds instantly, which 75% of consumers indicated they’d prefer for insurance claims according to Fed research.
On the corporate side, treasury and cash management can leverage FedNow for moving funds between accounts in real time, and even for certain securities or capital call payments that require quick finality.
As FedNow’s transaction limit increases to $1M, we expect to see more corporate and high-value uses like real estate closings, large supplier payments, and payroll funding being done through instant payments. - Costs: The Federal Reserve has invested heavily in FedNow (over $100 million in development during 2023 and about $246 million in operating expenses in 2024).
For participating banks, there are fees per transaction (just a few cents) and setup costs, but the Fed has tried to keep pricing affordable.
Even so, about 60% of banks in one industry survey cited the upfront cost of adoption as a major barrier to implementing instant payments.
Many smaller institutions rely on their core banking software providers or third-party processors to add FedNow capability, which can involve upgrades and expenses. Over time, as technology providers integrate FedNow and RTP into their platforms, the cost and complexity should decrease.
RTP vs. FedNow: Key Differences and Similarities
Both RTP and FedNow are instant payment rails enabling payments in seconds, 24 hours a day. They have more in common than not: each uses ISO 20022 messaging, provides immediate confirmation and settlement finality, and supports similar use cases.
In fact, many in the industry view them as complementary options rather than strict competitors – banks can choose to use one or both networks depending on strategy. That said, there are some notable differences in their design, ownership, and current capabilities. The table below summarizes key points:
| Aspect | RTP Network (The Clearing House) | FedNow Service (Federal Reserve) |
|---|---|---|
| Launch Date | 2017 | 2023 (July) |
| Operator | Private sector (The Clearing House, owned by consortium of banks) | Public sector (Federal Reserve) |
| Access | Any federally insured U.S. bank or credit union can join (currently ~675+ participants), often via third-party processors. | Any federally insured U.S. bank or credit union can join (1,200+ joined by early 2025). Broad Fed membership outreach. |
| Reach | ~90% of U.S. deposit accounts reachable (due to participation of largest banks). Primarily used for domestic U.S. payments. | Potential to reach all 10,000+ U.S. FIs over time (already outpacing RTP in count). Domestic U.S. payments only (for now). |
| Settlement Mechanism | Real-time settlement via a joint prefunded account at the Fed (participants must prefund and manage liquidity in that joint account). | Real-time settlement across individual Fed master accounts (each bank’s Federal Reserve account is debited/credited per transaction). Liquidity managed via Fed accounts. |
| Transaction Limit | $10 million per payment (as of 2025, increased from $1M). | $500,000, increasing to $1 million in 2025. The Fed may adjust this further over time. |
| Typical Transaction Size | ~$700 average payment (many low-value consumer/business payments). Primarily small to mid-sized transfers, with capability for larger ones. | ~$22,000 average payment initially, indicating many early transactions are larger (e.g., corporate uses). Expected to also serve small payments as usage broadens. |
| Notable Features | Request for Payment (RFP) invoicing feature available on-network for bill payments. Mature system with high volumes and proven reliability since 2017. | Liquidity Management Transfers (move funds between Fed accounts instantly). Network-level fraud controls (e.g., centralized negative lists, activity thresholds). New service with evolving features. |
| Connectivity Model | One processor connection per participant (banks often connect via a single tech provider). Banks rely on their processor for certain functions (e.g., negative list for fraud). | Allows multiple sending processors per bank with centralized oversight. Offers built-in options to set customer-level limits and shared fraud checks across processors. |
| Ownership & Governance | Bank-owned network (TCH is owned by large commercial banks). Governance by its private stakeholders, under Fed oversight for systemic stability. | Publicly governed by the Federal Reserve (central bank), which is accountable to the public and has a mission of broad financial services access. |
| Pricing to Banks | Transaction fees (a few cents per item) and monthly fees, set by TCH. Volume discounts for owners. | Transaction fees (e.g., $0.045 per credit transfer) and participation fees set by Fed. Aimed to be affordable for all sizes of institutions. |
| Innovation Pace | Continuously adding capabilities like richer messaging and integrations (e.g., document exchange). Backed by big-bank tech investments. | Rapid early enhancements (e.g., adding features like request-for-pay, fraud tools, and API integrations). Backed by Fed resources and industry collaboration. |
| Ubiquity Strategy | Expansion via bank consortium and partnerships with core processors. Reaches most deposit accounts through key bank participation. | Expansion via Federal Reserve’s network to onboard thousands of institutions. Aims for ubiquitous availability across all U.S. banks and credit unions. |
As shown above, the biggest structural difference is ownership: RTP is a private network run by the largest banks, whereas FedNow is a public utility run by the central bank. This affects how quickly each may innovate and how they attract participants.
Some banks prefer the Federal Reserve’s services (FedNow) because they already use the Fed for things like ACH and wire transfers, and they trust the Fed’s neutral governance. Other banks were comfortable joining The Clearing House’s RTP earlier, especially the big banks that co-own TCH.
In practice, many banks — especially larger ones — are choosing to participate in both networks, to maximize reach and redundancy. Until both rails achieve near ubiquity, offering both ensures a payment can reach as many other banks as possible.
- Transaction limits differ but are converging: RTP’s leap to $10 million in 2025 far exceeds FedNow’s $1 million cap. RTP therefore currently accommodates certain large corporate transactions that FedNow (until it potentially raises further) cannot.
However, the vast majority of everyday payments fall well below even the lower limit. Both networks are likely to adjust limits based on demand – for example, the Federal Reserve has stated it will continue working with industry and could raise FedNow’s limit over time as needed.
On the flip side, FedNow’s built-in fraud mitigation options (like setting velocity limits per customer segment) are currently more granular than RTP’s network-level controls, which rely on banks’ own systems or third-party solutions for equivalent protections.
This is partly because FedNow learned from RTP’s early experience and from fraud trends in other fast-payment systems, building these tools from the start. - Settlement models: While a bit technical, it’s worth noting the difference in how money moves behind the scenes. FedNow uses each bank’s account at the Fed for settlement, which is straightforward and similar to how Fedwire or ACH settle (but in real-time).
RTP uses a joint account that all participants fund in advance – this requires banks to manage a balance on deposit dedicated for RTP transactions. If a bank is sending more money out than it’s receiving, it must monitor and top up its RTP joint account funds to avoid hitting limits.
Some smaller banks find this prefunding model a bit challenging for liquidity management, and may prefer FedNow’s approach where their existing Fed account is used (often with surplus balances or automated funding via Fedwire during the day).
In practice, banks will manage liquidity for both rails, and tools are available to help (e.g. liquidity transfers in FedNow, funding agent services for RTP). - Overlap and Interoperability: Today, RTP and FedNow are distinct networks – they do not directly interoperate. A payment started on RTP can only reach banks on RTP, and likewise for FedNow.
However, a bank that connects to both can effectively bridge the gap by choosing the network for each payment. Some industry experts predict banks will use “routing hubs” or intelligent payment routers to send payments via the best network available, eventually making the choice invisible to customers.
There is significant overlap in membership (many institutions have signed up for both), but not a total overlap. Until full ubiquity is achieved, banks may run both services in parallel. Unlike some countries where one national faster payment system handles everything, the U.S. may continue with dual networks for the foreseeable future, which gives banks and businesses options.
Competition might also drive improvements – for example, the launch of FedNow has challenged RTP to enhance its services and possibly lower costs, which benefits users.
As one payments executive quipped, choosing between FedNow and RTP might feel like choosing “Pepsi vs Coke” – similar core function with slight differences in flavor. Many institutions are opting not to choose one exclusively, but to leverage both.
Adoption and Growth Trends in the U.S.
The U.S. instant payments landscape is growing rapidly, but it’s still in the early stages of adoption relative to its full potential. Both RTP and FedNow show strong upward trajectories in usage, albeit from different starting points.
Data Source: The Clearing House & Federal Reserve (FXC Intelligence analysis). This chart compares quarterly payment volumes (in millions of transactions, lines) and values (in USD billions, bars) for RTP and FedNow during 2024.
FedNow’s volume (gray line) started much lower than RTP (blue line) but its value (gray bars) grew quickly, especially in late 2024. RTP, being more established, handled far more transactions (blue line) and larger total value (blue bars) throughout 2024.
RTP Network growth: Since 2017, RTP had a steady climb as more banks joined and integrated it into their offerings. By the end of 2024, RTP was approaching a tipping point: it moved nearly a quarter-trillion dollars that year and hit a daily run-rate of 1+ million transactions.
The growth in 2024 (38% volume, 94% value increase) was partly fueled by rising business use and perhaps competitive pressure from FedNow’s launch. The Clearing House reported a notable milestone in mid-2024: the RTP network processed over $1 billion in a single day for the first time (on June 28, 2024).
This indicates both transaction frequency and average values have been climbing. Indeed, the average RTP transaction value rose 40% in 2024 (to $719), suggesting more business payments and higher-value transfers are flowing through.
Importantly, customer demand is driving this growth. Surveys show that 86% of businesses and 74% of consumers in the U.S. reported using some form of faster or instant payments in 2023.
Whether through services like Zelle, PayPal, Same Day ACH, or RTP/FedNow, people are getting accustomed to speed. And roughly 3 out of 4 of those businesses and consumers said they look to their bank to provide instant payment services.
This underscores that banks offering RTP/FedNow can meet a clear expectation from their customers, which in turn drives banks to adopt these capabilities or risk losing customers to faster-moving competitors.
FedNow growth: In just its first year and a half, FedNow ramped up from near zero to transferring tens of billions of dollars a quarter. The number of participating institutions crossing 1,000+ within 18 months is a strong sign of interest.
However, the majority of those are still receive-only, so the next hurdle is converting those into full send-and-receive participants. The Federal Reserve is actively encouraging more adoption; it has been engaging with banking industry groups and offering onboarding assistance.
The data from Q2 2025 hint that some larger banks or processors turned on higher volumes, given the $245 billion processed that quarter. If that data is an indication of an ongoing trend, FedNow might catch up to RTP’s throughput sooner than expected, at least in terms of value.
In terms of number of transactions, FedNow has a long way to go – 1.5 million transactions in all of 2024 (FedNow) vs. 343 million (RTP) is a massive gap.
But the trajectory is what matters: industry experts note that instant payment adoption tends to be slow at first, then explosive once critical mass is reached. The U.S. may be on the cusp of that acceleration phase for FedNow.
It’s also notable that FedNow’s introduction appears to have expanded the pie of instant payments rather than just cannibalizing RTP.
The presence of a Federal Reserve option gave many smaller banks confidence to join faster payments, and the publicity around FedNow’s launch raised awareness among businesses and consumers, which boosted overall demand.
In an ironic twist, FedNow’s launch acted as free marketing for RTP as well – The Clearing House saw spikes in RTP usage around the same period, as banks promoted instant payments generally.
Both networks are now growing, suggesting the U.S. market is big enough and sufficiently in need of faster payments that both FedNow and RTP are flourishing. In the long run, widespread adoption might naturally plateau with instant payments becoming a standard utility, but for the next few years, significant growth is expected.
Future growth outlook: The Federal Reserve has expressed that FedNow should become as ubiquitous as the Fed’s other services (like ACH) in the coming years. Some analysts predict that within about 3 years, instant payments could make up 25% of all electronic transactions in the U.S..
Reaching that level means many more banks enabling instant payments and consumers/businesses actively choosing them over slower methods.
We’re already seeing progress: for example, credit unions and community banks view instant payments as critical to customer satisfaction and retention, with two-thirds of surveyed small banks seeing it as a way to keep customers happy and funds within the bank rather than leaving to fintech alternatives.
The network effects are strong: as more banks enable sending, more endpoints can be reached instantly, which in turn encourages further adoption and usage.
One area to watch is interoperability and partnerships. There are efforts to ensure that service providers and banking software can seamlessly interface with both FedNow and RTP.
Fintech companies are also integrating instant payments into their platforms – for instance, some payment processors and accounts payable platforms are adding FedNow as a payout option.
This means businesses using those platforms might be tapping into FedNow without directly interfacing with it. Over time, instant payments might become a behind-the-scenes feature that end-users simply expect (for example, when you get paid by your employer or get a disbursement, it could automatically use one of the instant rails if both banks support it).
To sum up, adoption is rapidly rising but still with plenty of room to grow. The U.S. has thousands of financial institutions and millions of users who have yet to fully experience instant payments.
The coming years will likely see both wider reach (more banks, credit unions, fintechs joining) and deeper usage (more transactions per user, higher value uses). Instant payments are on track to move from novelty to normalcy, much like how online banking and mobile payments eventually became everyday things.
Benefits of Instant Payments for Businesses and Consumers
Instant payments via RTP and FedNow bring a range of benefits to different users across the economy. Here are some of the key advantages and use cases:
- Improved Cash Flow for Businesses: Small businesses and large enterprises alike benefit from getting paid faster. Instead of waiting days for an invoice payment to clear, a business can receive money and immediately use the funds (for payroll, inventory, etc.).
This is especially helpful for cash-sensitive small businesses. Real-time payments also enable just-in-time payments – companies can time their payments to exactly when goods are delivered or services completed, optimizing working capital.
For instance, a retailer can pay a supplier the moment goods arrive, or a contractor can get paid upon job completion without delay. - Consumer Convenience and Financial Control: Individuals can send money to family or friends instantly, split bills at restaurants without awkward IOUs, or pay their rent/utility at the last minute without incurring late fees.
If an emergency arises (say, a friend needs urgent cash), instant payments can transfer funds in seconds, any time. Consumers also enjoy real-time confirmation – you know if the money reached the intended account right away, reducing uncertainty. - Bill Payment and Requests for Payment: Both RTP and FedNow support a Request for Payment (RFP) capability, which can streamline billing.
A company can send an electronic bill (request) to a customer through the banking network; the customer can then pay instantly with a click, directly from their bank account, with all details linked.
This can simplify things like utility bills, subscriptions, or e-commerce checkouts. For customers, it’s a convenient way to pay without manual entry of amounts or worrying about due dates (requests can come with due date and late fee information).
For businesses, it speeds up collection and improves reconciliation since the payment carries the invoice reference. - Payroll and Gig Economy: With instant payments, employers or payroll providers can offer off-cycle or on-demand payments to workers.
For example, the gig economy and freelance platforms can pay out earnings immediately after a task is completed, which is a competitive advantage in attracting workers.
Even traditional employers could offer an “earned wage access” feature (sometimes called daily pay) using instant payments, so employees don’t have to wait for the biweekly paycheck if they need funds sooner. - Disbursements and Refunds: Many scenarios where entities need to disburse funds can be improved with instant payments.
Insurance claim payouts are a prime example – when someone is dealing with an accident or disaster, getting claim money instantly can be crucial (no need to wait for a check in the mail).
Similarly, governments or organizations issuing emergency relief funds (think of disaster relief or pandemic aid) could push out money to recipients in minutes rather than mailing prepaid cards or checks.
Customer refunds (e.g., for a returned product or canceled service) can also be processed in real time, improving customer satisfaction. - E-commerce and Retail Payments: Real-time payments can be used as an alternative to card networks for online purchases or retail payments.
For instance, a merchant could accept an RTP or FedNow payment (via a pay-by-bank checkout option) which would immediately debit the customer’s bank account and credit the merchant.
This avoids card transaction fees and the risk of chargebacks (since instant payments are irrevocable once authorized). It could also speed up merchant settlement – they get the money right away instead of waiting a day or two for card settlement.
While still an emerging use, some payment processors are exploring instant bank payments as a cheaper, faster checkout method for online shopping. - B2B Payments & Treasury Management: Businesses making payments to other businesses benefit from the speed and finality.
Supply chain finance can be enhanced – for example, a buyer could pay a supplier instantly upon receiving goods, or provide quicker payment in exchange for a small discount, improving supplier cash flow.
Companies can also manage their own funds across multiple bank accounts in real time (for example, sweeping funds from regional bank accounts to a central account at the end of day, using instant rails instead of waiting on ACH).
Treasury operations like funding a payroll account on payday morning can be done in seconds rather than initiated a day before. - Reduced Payment Risk and Failure: With instant payments, the confirmation is immediate and the funds are guaranteed (assuming no fraud).
This means a payee doesn’t worry about bounced checks or ACH returns due to insufficient funds – if they got the payment, it’s good.
From the payer’s perspective, they know the payment has been received, avoiding situations where a lost check or processing delay could cause missed deadlines. This mutual certainty is valuable for trust and reduces the need for follow-ups. - Modernization and Competitive Advantage: For banks and credit unions, offering instant payment services is increasingly seen as a must-have to remain competitive.
Customers are starting to expect their bank to offer the ability to send and receive money instantly just as they expect mobile banking or online bill pay.
Financial institutions that adopt RTP and FedNow can differentiate themselves as innovative and customer-centric, potentially attracting tech-savvy consumers and business clients. In contrast, those that lag may risk customer attrition to banks or fintechs that offer faster payment options.
Overall, instant payments bring an array of “people-first” benefits – they solve real problems like waiting for money, uncertainty about payment timing, and cash flow gaps. They empower individuals and businesses to manage money in real time, aligning with the on-demand expectations of today’s digital economy.
As more users experience these benefits (often without even knowing the name of the networks behind them), the demand for instant payments is likely to keep growing.
Challenges and Considerations
While the future of instant payments is promising, there are several challenges and considerations to address as RTP and FedNow continue to expand:
- Technology Integration and Cost: For many banks, especially smaller community banks and credit unions, integrating a new real-time payments system can be a heavy lift.
Legacy core banking systems were not built for 24/7 operation and immediate posting. Upgrading these systems or layering new payment hubs on top requires investment.
In industry surveys, about 60-73% of financial institutions cited significant challenges with legacy systems and the cost of implementation as barriers to instant payment adoption.
Financial institutions need to modernize their tech stack or use third-party service providers to handle connectivity to RTP/FedNow.
The good news is many core system vendors and fintech firms (Finzly, Fiserv, Jack Henry, ACI, etc.) now offer “FedNow-ready” or “RTP-ready” solutions, which can cut down integration time.
In fact, some banks have managed to go live on FedNow in a matter of weeks by using cloud-based service providers. Still, the initial hurdle of cost and complexity is real and is slowing some institutions from enabling send capabilities. - Fraud and Security: Instant payments, by virtue of being instantaneous and irrevocable, present new fraud risks.
If a fraudster tricks someone into sending money via an instant payment, there is no built-in mechanism (like a credit card chargeback or a delayed ACH revocation) to easily recover the funds.
This type of scam – often called authorized push payment (APP) fraud – has been an issue in other countries’ faster payment systems. U.S. banks are cautious of similar risks, which is one reason many started with receive-only to better understand fraud patterns.
Both networks have anti-fraud measures: FedNow’s toolset allows banks to set limits and flag unusual patterns, and banks can also use out-of-band customer verification or confirmation for high-risk transactions.
Education is crucial: consumers and businesses need to be aware to never send instant payments to unknown or unverified parties, as it’s essentially like sending cash.
Regulators and industry bodies are working on guidelines for liability in fraud cases, but currently the onus is largely on the sending bank and customer to be vigilant.
Despite these concerns, it’s worth noting that traditional payment methods also have fraud (checks can be forged, ACH debits can be unauthorized, etc.), and real-time analytics and verification can mitigate many instant payment risks. - Operational Adjustments: Banks used to batch processing (like nightly ACH file processing) have to adapt to an “always on” mode.
This means changes in operations such as customer support (what if an issue arises at 2 AM?), reconciliation processes, and liquidity management. For RTP, banks must manage prefunding – ensuring their balance in the RTP joint account is sufficient at all times or arranging overdraft coverage with a funding agent.
For FedNow, banks need to manage their Federal Reserve account balances, especially during off-hours when Fedwire is closed (though the Fed’s liquidity tool helps by allowing some transfers even when Fedwire is down). Smaller institutions might rely on correspondents or bankers’ banks to handle some of this.
There’s also the matter of connecting to the networks: some banks use the FedLine connection for FedNow and a separate connection for RTP via a third-party, and ensuring both run smoothly 24/7 requires IT resources and monitoring. - Interoperability Gaps: As mentioned, RTP and FedNow don’t talk to each other directly. This means initially, instant payments are not truly universal – if a bank only uses FedNow, it cannot instantly send to a bank only on RTP.
Workarounds are emerging: for instance, a bank can maintain accounts at a correspondent that bridges networks, or payment service providers might offer a “smart routing” service.
In the long run, the ideal would be interoperability or consolidation so that it doesn’t matter which network a bank is on.
Industry conversations are ongoing about whether there could be a linking mechanism (perhaps standardized directories or message translation) to connect FedNow and RTP transactions.
Until then, businesses and consumers might occasionally encounter an issue where they want to send an instant payment but the other institution isn’t reachable on the same network.
This situation should diminish as more institutions join both or either network – already, the overlap of FedNow and RTP participants is significant and growing. - Awareness and Education: Many end-users (consumers, small businesses) are still unaware of instant payment options or do not realize their bank offers it. They might continue using slower methods simply out of habit.
Banks need to educate customers on the availability and proper use of instant payments. For instance, a small business owner might not know they can request a real-time payment from a client instead of waiting for a check.
Similarly, consumers who are used to Venmo or PayPal might not realize their banking app could send money instantly to someone at another bank (often banks integrate Zelle for person-to-person, but in the future that could be enhanced by direct RTP payments).
Greater public awareness will likely come as more banking apps prominently feature instant transfer options and success stories spread. - Regulatory and Policy Considerations: Regulators are generally supportive of faster payments because of the efficiency and economic benefit. However, they are also watchful about potential systemic risks and financial inclusion.
One concern is that if some banks cannot afford to implement instant payments, their customers might be left behind (e.g., rural or small community bank customers). The Fed’s involvement with FedNow is partly to ensure universal access.
Another aspect is consumer protection: as instant payments become common, there might be calls (as in the UK) for stronger measures to protect consumers from scams and misdirected payments, possibly even rules for reimbursement in fraud cases.
Additionally, both networks must maintain strong resilience and cybersecurity, as they become critical infrastructure. Downtime in a real-time system can be very disruptive, so there’s emphasis on redundancy and testing.
So far, both RTP and FedNow have had solid uptime records, but as volumes grow, they will be tested by higher loads. - Adapting Business Processes: From the perspective of businesses, adopting instant payments might require some process changes. For example, a company’s accounting department might be used to a predictable cycle of payments (e.g., they pay all suppliers on certain days).
With real-time payments, they have the flexibility to pay anytime, but they need to decide how to integrate that into cash management.
Also, receiving money instantly means businesses might need to update their accounts receivable processes – if a payment is received at 11 pm, their systems should record it and maybe release an order immediately.
These are good problems to have (faster payments), but it requires internal adjustments. Corporate treasury systems are being updated to handle instant payments, and some enterprise resource planning (ERP) software now include RTP/FedNow integration. - Fees and Business Model: While instant payments are relatively low-cost per transaction, banks will consider how to price them for customers.
Some banks might offer free instant payments for retail customers as a value-added service (similar to how person-to-person payments via Zelle are often free to use). For businesses, banks might charge a small fee per payment or include it as part of a treasury management package.
The economics of instant payments will evolve – banks have to invest in the infrastructure, but they may save money in the long run (for example, instant payments can be cheaper than sending a wire for a high-value transfer, and they might reduce check processing costs).
There could also be new revenue opportunities, like providing enhanced remittance data or payment tracking for a fee. In any case, clarity on fees and ensuring they’re reasonable will affect adoption, especially for cost-conscious small businesses that might stick to free slower methods if instant costs too much.
So far, many institutions are positioning instant payments as a must-have service rather than a big revenue generator, prioritizing customer retention and attraction over per-transaction profit.
Despite these challenges, the momentum behind instant payments suggests that solutions and adjustments are underway across the industry. Collaboration through industry groups (e.g., U.S. Faster Payments Council) is helping share best practices on fraud prevention, operational readiness, and interoperability.
As the technology matures and more success stories emerge, many of these hurdles will be overcome, much like how the banking industry tackled the shift to online banking or mobile deposit in the past.
Beyond RTP and FedNow: What’s Next for Instant Payments?
As instant payments become established in the U.S., attention turns to the future developments that could further transform payments. “Beyond RTP and FedNow” encompasses several exciting possibilities:
- Ubiquity and Standardization: In the near future, instant payments are expected to become ubiquitous – available at essentially every bank and used by a large portion of customers.
The Federal Reserve’s goal is to reach broad nationwide coverage, making instant payments “as commonplace as ACH transfers are today”. This implies that sending an instant payment will be a standard option in all banking apps and corporate payment systems.
Achieving this ubiquity will likely involve continued outreach and possibly mandates or incentives (for example, there have been discussions if the Treasury might eventually require instant payment options for certain government payments, which would spur all banks to participate).
The networks themselves might not merge, but from a user perspective they will be just two pipes connected to your bank – you won’t necessarily know or care which one is used for your payment, as long as it gets there instantly. - Higher Limits and New Transaction Types: Both networks have shown willingness to increase transaction limits, and this trend will continue if there’s demand. We might see FedNow’s limit climb further (perhaps to match RTP’s or beyond, over time).
As comfort with the systems grows, more high-value transactions could migrate from traditional wires to instant payments, especially for domestic transfers.
It’s possible that eventually there could be no hard transaction limit except what a bank sets for their customer, effectively making instant payments viable for even very large corporate transactions.
Another aspect is enabling different transaction types like bulk instant payments (e.g., sending a file that results in many individual instant credits – currently each transaction is initiated individually).
Also, recurring instant payments (standing orders that execute at set times but settle instantly) could be offered, merging the convenience of automated billing with the speed of instant rails. - Cross-Border Instant Payments: One of the “holy grails” identified by payments experts is cross-border instant payments – the ability to send money between countries in real time as easily as domestic transfers.
While RTP and FedNow are domestic networks, there are efforts globally to link instant payment systems across borders. For example, the BIS (Bank for International Settlements) has a project (Nexus) exploring connecting different countries’ fast payment systems.
In the future, FedNow or RTP could potentially interconnect with systems in other countries (perhaps via currency exchange providers or bilateral agreements). Imagine being able to send dollars to Europe and have them automatically convert to euros and instantly deliver through Europe’s SEPA Instant system, all in seconds.
Some early steps are being taken in other regions (e.g., Singapore and Thailand linked their domestic instant payment systems for cross-border transfers). FedNow’s cross-border potential has been discussed, but it likely needs to achieve more domestic maturity first.
The private sector is also looking at solutions: for instance, a U.S. bank could use a stablecoin or a partner network to bridge an instant payment to another country, then credit through that country’s instant network – a concept the Faster Payments Council has explored with stablecoins.
While true global instant payments may be a few years off, “beyond” FedNow and RTP certainly includes making international transfers faster and cheaper, whether by linking systems or leveraging new technology. - Digital Currencies and Stablecoins: Speaking of technology, one big question is how cryptocurrencies and central bank digital currencies (CBDCs) will interplay with instant payments.
Some argue that with FedNow and RTP offering 24/7 instant settlements, the appeal of certain stablecoins for domestic payments might diminish (since the traditional banking system now has similar capabilities).
However, stablecoins (like USDC, USDT, or even the newly launched PayPal USD) and any future Digital Dollar could still play a role, especially for cross-border and decentralized finance use cases.
Stablecoins operate on blockchain networks and can move value globally at any time. They might compete with traditional instant payments or find a niche alongside them.
For example, stablecoins might be more efficient for cross-border or as a medium in crypto marketplaces, whereas FedNow/RTP are the choice for domestic regulated transactions.
There is also the possibility of integration: a bank could use stablecoins as a settlement mechanism for instant transfers, or convert stablecoins to cash via instant rails.
Some fintech companies are exploring hybrid models where a payment originates as a crypto transaction and then is delivered as a real-time payment into a bank account (or vice versa).
Regulatory clarity will shape this space – currently, FedNow does not support cryptocurrency or blockchain integration directly. But the landscape is evolving, and the existence of fast, efficient blockchain payments will push RTP and FedNow to continue improving to remain competitive in speed and cost.
Ultimately, many observers envision a coexistence of instant payment systems and stablecoins, where users choose the best method per their need.
Traditional instant payment networks offer bank-grade security and regulation for domestic payments, while stablecoins might offer advantages in global reach and programmable finance. - Innovation in Services and Overlays: Beyond simply moving money, the future will bring smarter services built on instant payment rails. One example is smart contracts or conditional payments – the ability to program a payment to occur only when certain conditions are met.
While blockchains are known for this capability, similar ideas can be applied in traditional systems via trusted third-party services.
Another area is richer data exchange: RTP already supports sending related documents or messages with payments (useful for invoicing, remittance info). We may see more adoption of these capabilities, leading to more automated reconciliation and less paperwork.
Request for Payment (RFP), which we discussed, could evolve into a standard way to do electronic bill presentment and payment, potentially reducing the need for checks or even cards in some bill pay scenarios.
Also, expect to see more consumer-facing innovation: for instance, wallet apps or messaging platforms might integrate with banks to trigger FedNow payments (imagine paying someone from within a chat app, but using your bank’s instant payment network in the background).
There’s already talk of exposing FedNow through APIs for third-party initiators – the FedNow Service has introduced APIs to streamline certain functions, and banks/fintechs will build on that. - Competition and Cost Efficiency: With two major instant payment networks, there will be a continued push for efficiency. The Clearing House and the Fed will each try to make their service attractive.
This could mean competitive pricing, or at least preventing costs from rising. It could also lead to improvements like easier onboarding (reducing the friction for a bank to join).
We’ve already seen TCH rapidly boost RTP’s limit after FedNow’s arrival and FedNow adding features quickly to meet bank demands. Such healthy competition can spur better features and service for everyone.
Eventually, if instant payments become a public good, there could even be discussions on interoperability or consolidation, but that’s speculative. For now, competition is driving both networks to innovate and expand. - Integration with Other Payment Types: Instant payments won’t entirely replace other payment methods in the short term. Instead, they’ll coexist with Same-Day ACH, wires, card networks, and checks, each serving certain needs.
However, the lines may blur. For example, the ACH system might continue to improve speed (but it’s still not real-time; currently same-day ACH has end-of-day settlement).
Wires are instant but only during business hours and are expensive; some wire transfers (like certain business-to-business high value payments) could migrate to RTP if limits allow, to save cost and gain 24/7 availability.
The check usage will likely continue to decline as digital alternatives cover more use cases – instant payments can accelerate that for things like personal payments or business vendor payments that used to rely on checks.
Card payments (debit/credit) have their own established role for consumer purchases due to rewards and widespread acceptance, but we might see more instances of “pay by bank” using instant payments, particularly for online or bill transactions where cards’ benefits are less critical. In the long run, all these systems may interconnect more.
Banks might route a payment through the most efficient rail available (for example, an urgent payment goes via FedNow, a bulk payroll might still go via ACH if cost is priority over immediacy, etc., but the user interface could harmonize these choices).
In summary, the future of instant payments is not just about RTP and FedNow operating as they are today, but about building an ecosystem where money moves as fast and seamlessly as information. That includes connecting different systems, leveraging new technologies, and expanding use cases.
The people-first impact will be significant: faster access to money, more financial inclusion (imagine gig workers or low-income households getting funds immediately without check cashing fees or prepaid card delays), and greater economic agility.
The U.S. has entered this real-time payments era a bit later than some peers, but it’s moving quickly to leapfrog with multiple innovations at once.
Frequently Asked Questions (FAQs)
Q1. What are the FedNow Service and RTP network, and how do they differ?
A1. FedNow and RTP are both U.S. instant payment systems that allow money to be transferred between bank accounts within seconds, any time of day.
FedNow is operated by the Federal Reserve (the U.S. central bank) and launched in 2023, whereas RTP (Real-Time Payments) is operated by The Clearing House (a private bank consortium) and launched in 2017.
Both offer real-time, final transactions, but they differ in some features. For example, as of 2025 FedNow’s transaction limit is $500,000 (rising to $1 million), while RTP allows payments up to $10 million.
FedNow has built-in tools for liquidity transfers and fraud mitigation via the Fed, whereas RTP uses a prefunded model and has features like Request for Payment for invoicing. Importantly, they are separate networks – a bank has to join each to send/receive on that network.
Many banks participate in both to maximize reach. In summary, both FedNow and RTP achieve the same goal (instant payments), but FedNow is the Fed’s platform for all banks, and RTP is the private-sector platform initially adopted by larger banks. They complement each other and are more alike than different in everyday use.
Q2. Can individuals and small businesses use FedNow and RTP, or are these only for big banks?
A2. Yes, individuals and businesses of all sizes can use FedNow and RTP payments, but access is through their financial institutions. These networks are not apps that a person downloads; rather, they are behind-the-scenes payment rails that banks and credit unions connect to.
If your bank or credit union offers instant payments (sometimes labeled as “Real-Time Payments” or an instant transfer option in your online/mobile banking), then you as a customer can send or receive money instantly via that bank.
Small businesses can use instant payments for paying vendors, receiving customer payments, etc., through their bank’s online portal or integrated software that supports it.
Community banks and credit unions are heavily involved – roughly 90% of RTP participating institutions are community banks or CUs, and FedNow participation includes many small institutions. So it’s not just for big banks at all. Even if a small business’s primary bank is a local bank, that bank can use FedNow/RTP to give them instant payment capabilities.
It’s worth checking with your bank to see if they offer real-time payments and under what conditions (e.g. some may enable incoming credits automatically but require you to sign up for sending capability).
Q3. How do I send an instant payment? Do I need a special app or account?
A3. To send an instant payment via RTP or FedNow, you typically just use your bank’s existing online banking or mobile app – if they have enabled the feature.
Look for options like “Send Money Instantly” or “Real-time transfer” or you might see Zelle for person-to-person payments (Zelle in some cases uses the RTP network behind the scenes for certain banks).
You don’t need a separate account; it uses your checking or savings account funds. The key is that both your bank and the recipient’s bank must be connected to an instant payment network. Often, the bank will automatically route the payment through RTP or FedNow if it sees the other bank can receive it.
When you initiate a transfer, if the feature is available, the interface may indicate the money will be sent in seconds. For business payments, if you use a payment portal or treasury system, there may be an option for “real-time payment” in the method.
In short, you don’t need a new app – use your bank’s platform. If your bank doesn’t support it yet, you won’t have the option until they join the networks. The number of banks offering instant payments is rapidly growing (over 1,200 banks and credit unions are on FedNow, and around 700 on RTP as of early 2025), so availability is increasing.
Q4. Are instant payments safe and secure? What about fraud?
A4. Security is a top priority for both FedNow and RTP. The networks themselves are highly secure, using bank-grade encryption and authentication (since they operate through the Federal Reserve or The Clearing House systems that banks use).
In terms of safety of the funds, both provide immediate and final settlement – there’s no risk of a payment “bouncing” once confirmed, which eliminates certain fraud risks like check kiting or ACH returns.
However, the main security consideration is on the user side: because payments are instant and final, if you are tricked into sending money to a scammer, it’s very difficult to recover. This type of fraud (social engineering scams) is something to be vigilant about.
Banks are implementing safeguards such as transaction limits, customer verification, and monitoring of suspicious activity. They might alert you or even pause an unusual payment (for example, if a normally inactive account suddenly tries to send a large sum at 2 AM, the bank’s fraud system might flag it).
As a user, you should treat instant payments like cash – only send to people or businesses you trust, double-check recipient details, and be wary of unsolicited requests for money. The good news is, if you are the receiver, once you get the money, it’s yours – there’s no reversal (except if you choose to refund).
Overall, the system is secure, and banks are continually improving fraud detection around it, but always exercise caution and good cyber hygiene (just as you would with any financial transaction).
Q5. Will instant payments replace ACH transfers, wire transfers, or paper checks?
A5. Over time, instant payments are expected to handle a large share of transactions, but other payment methods will likely continue to coexist for the foreseeable future. Here’s a breakdown:
- ACH transfers: These are used for things like payroll direct deposits, recurring bill payments, and more. Instant payments (RTP/FedNow) could take over some of these use cases, especially one-time or urgent payments, and indeed some businesses are exploring using RTP for faster payroll or vendor payments.
However, ACH is deeply entrenched and works fine for non-urgent, bulk payments (often at lower cost for very high volumes). We may see ACH continue but with reduced volume as more moves to instant, and ACH itself might evolve (e.g., increasing usage of Same-Day ACH for speed).
The two can also complement each other – a business might use ACH for regular payments but switch to RTP for exceptions or last-minute changes. - Wire transfers: Wires are typically for high-value, same-day transfers (like closing on a house or large corporate payments).
Instant payments can potentially handle many of these now, especially as limits increase (RTP allows up to $10M, covering a lot of wire transactions). Instant payments are cheaper than wires in most cases and don’t have cutoff times.
We’re already seeing some shift, and as banks get more comfortable, a portion of wire transfers (especially domestic ones) could migrate to the real-time rails.
Banks might reserve wires for extremely large transactions above instant payment limits or for complex situations like certain international transfers until cross-border instant options emerge. - Paper checks: Checks have been declining for years, and instant payments will likely accelerate that decline. For person-to-person or person-to-business scenarios, an instant payment is a far superior experience to mailing a check.
Business-to-business check usage (still surprisingly high in the U.S.) could also drop as companies adopt electronic invoicing and instant pay options.
It’s plausible that in a decade or so, checks become quite rare (used maybe only in very limited cases or by those resistant to change).
Many businesses and banks see instant payments and digital requests for payment as a key tool to finally replace checks, especially for things like bill payments and contractor payments.
In summary, instant payments will grow and take a significant share, but other methods will stick around to handle certain niches or legacy processes. We’re in a transition period where businesses and consumers are gaining new choices.
The expectation from experts is not an overnight replacement, but that instant payments will become a new normal for most payments, while ACH continues for some recurring/bulk needs, wires for some ultra-high-value or international cases, and checks possibly fading to a very minor role.
Q6. Do RTP and FedNow support cross-border payments or only within the U.S.?
A6. Currently, RTP and FedNow are for domestic U.S. payments only. They settle in U.S. dollars between U.S. financial institutions. If you need to send money internationally, you typically still have to use other methods (wire transfer via SWIFT, international ACH, money transfer services, etc.).
However, there are efforts to connect real-time payment systems across borders in the future. For example, there’s discussion about linking FedNow with other countries’ instant payment networks or using technologies like blockchain to bridge different currencies.
Some private solutions are also emerging – for instance, a fintech might convert a dollar payment to a stablecoin, send it abroad, and convert to local currency, all in a matter of minutes (leveraging instant settlement at each step).
The idea is to eventually make cross-border payments as fast as domestic ones, but that requires overcoming currency exchange and regulatory hurdles. The Federal Reserve has hinted that FedNow could have cross-border potential down the line, but nothing official yet.
So for now, think of FedNow/RTP as instantaneous within the U.S. only. If you send an RTP payment, the recipient must have a U.S. bank account that’s part of the network.
In the future, we might see integrations that allow a payment originator to seamlessly send money to, say, Europe or Asia, with the domestic leg using RTP/FedNow and then handing off to a similar instant network abroad.
Work is being done on global interoperability, but until that materializes, you’ll need to use other channels for international transfers.
Q7. What does the future hold for instant payments in the U.S.?
A7. The future of instant payments is exciting and evolving. In the next few years, you can expect:
- Wider adoption: More banks and credit unions enabling both sending and receiving. It’s likely that instant payments will become a standard offering at virtually all financial institutions, much like having an ATM card or online banking is standard today.
Industry experts predict a significant portion of payments will be real-time in a few years (one estimate is 25% of electronic transactions within 3 years). - More use cases: As people become aware and comfortable, instant payments will be used in more scenarios. Paying contractors, real estate transactions, retail purchases via QR code or app, etc., could all leverage instant transfers.
We’ll also see innovations like instant payment upon delivery (e.g., when a package arrives, the payment is released at that moment), and broader use of request-to-pay as a way to initiate payments. - Inter-network collaboration: We might see steps toward interoperability between FedNow and RTP – for example, a directory that helps route a payment to whichever network the recipient is on, without the sender needing to know.
Both networks will also keep raising their transaction limits and improving features like fraud prevention tools. - Integration with digital wallets and fintech: Expect services like PayPal, Stripe, Square, etc., to use instant payments under the hood where possible.
Already some are connecting (for instance, PayPal and Venmo can use instant transfers to your bank that ride the RTP network). We’ll likely see a tighter integration such that moving money between bank accounts and fintech apps happens in real time. - Potential link with digital currency: If the U.S. were to introduce a Central Bank Digital Currency (CBDC) or if regulated stablecoins become mainstream, those could operate alongside instant payment rails.
It’s conceivable that your digital wallet could convert a stablecoin deposit into a bank instant payment or vice versa, making moving money between blockchain and bank system fast and seamless. - Cross-border improvements: Over a slightly longer horizon, sending money abroad could become faster by connecting real-time systems or through new technologies.
In short, the trajectory is towards faster, smarter, and more universal payments. From a user perspective, the goal is that you won’t have to think about it – payments will just occur in real time as the default, much like information moves on the internet.
The payments industry is heavily focused on this future right now, so we’ll continue to see rapid developments in the instant payments space. It’s an exciting time, and both businesses and consumers stand to benefit greatly as these changes unfold.
Conclusion
Instant payments are rapidly moving from novelty to norm in the U.S. financial landscape. The RTP network and the FedNow service are at the forefront of this transformation, bringing Americans the ability to send and receive money within seconds, at any time.
For businesses, this means improved cash flow, more efficient operations, and new opportunities to delight customers with fast service. For consumers, it means greater convenience, financial control, and an end to waiting days for funds to clear.
The U.S. market’s focus on faster payments has led to two robust systems that complement each other. RTP, with a several-year head start, demonstrated the value of real-time payments and continues to innovate (with higher limits and features like Request for Payment).
FedNow, backed by the Federal Reserve’s reach, has accelerated adoption among a broader range of institutions and is pushing the envelope on ubiquity and risk management. Both will coexist, and together they are driving payment speeds “up and to the right,” as evidenced by surging volumes and values in the past year.
Crucially, this evolution is happening with a people-first approach: the goal isn’t just new tech for tech’s sake, but solving real problems – whether it’s a family needing instant access to funds, a small business avoiding late fees, or a large company optimizing its treasury operations.
Trust and security remain paramount, and ongoing efforts aim to ensure that speed doesn’t compromise safety or inclusivity. Looking beyond the current systems, the future of instant payments holds even more exciting possibilities.
We can anticipate a world where instant, 24/7 payments are the default, reaching across borders and perhaps interacting with digital currencies, all while maintaining the security and reliability users expect from the banking system.
Achieving that future will require continued collaboration between banks, fintechs, regulators, and technology providers.
In conclusion, the shift to real-time payments is one of the most significant upgrades to the U.S. payments infrastructure in decades. It stands to benefit virtually everyone – from financial professionals managing complex transactions to everyday people splitting a lunch bill.
Businesses of all types, from local merchants to large corporations, should start exploring how to integrate instant payments into their operations to stay competitive and meet customer expectations.
With RTP and FedNow laying the groundwork, and ongoing innovation “beyond” on the horizon, the coming years will solidify instant payments as an essential part of modern commerce. The future of instant payments is bright, fast, and happening now.