The landscape of instant payments in the US is evolving rapidly, driven by the dual forces of the Real-Time Payments (RTP) network and the Federal Reserve’s FedNow service.
Getting up to speed with US instant payments
Despite the complexity of the US banking ecosystem – comprising a vast network of regional, national and international financial institutions – both schemes are making significant strides toward accelerating real-time transaction adoption.
Since its launch in 2017, RTP, operated by The Clearing House (TCH), has been a pivotal force in modernising US payments, offering immediate availability, payment certainty, transparency and irrevocability on a 24/7 basis.
Similarly, the introduction of FedNow in July 2023 brought another ISO 20022-compliant system to market, aiming to expand access to real-time settlement across a broader range of financial institutions (FIs).
The Differing Goals of Instant Payments Stakeholders
While the infrastructure is in place, financial institutions and payment providers are approaching instant payments from varied perspectives.
Some see it as an opportunity to enhance customer experience and drive new use cases, while others prioritise backend efficiency, cost savings and competitive positioning.
To provide clarity, The Clearing House recently released a report examining provider strategies, shedding light on key implementation factors, core banking integration and fraud prevention measures.
One of the most critical considerations for banks and payments firms is implementation timelines, which vary significantly:
- 44% of providers can implement solutions in under three months.
- 38% require three to six months, while
- 19% take over seven months, typically due to complex integrations or customised functionality.
For financial institutions under strict budget and return-on-investment (ROI) pressures, these timelines are crucial in determining the right instant payments partner.
Legacy Integration and Fraud Prevention: Key Considerations
A major hurdle for real-time payments adoption is compatibility with legacy banking systems.
Encouragingly, all surveyed providers support both legacy and next-gen core banking systems, with some identifying as “core-agnostic”, meaning they can seamlessly integrate across multiple infrastructures.
Another key concern is business continuity – ensuring instant payments remain operational even if a financial institution’s core system goes offline.
The report found that:
- 63% of providers offer multiple backup solutions for this scenario.
- 25% provide a single backup mechanism, while
- Only 13% have no fallback provisions, potentially exposing banks to service disruptions.
Beyond technical integration, the study also highlights anti-fraud measures, cloud deployment options and reporting capabilities, with providers offering varying levels of protection and analytics tools.
These features cater to different FI priorities, whether speed to market, data visibility or expanding financial services offerings such as loan origination, insurance and accounting services.
Adoption Trends and Market Momentum
While instant payments adoption in the US is still in its early stages, demand is steadily increasing.
In Q2 2024, the RTP network processed 82 million transactions, valued at approximately $55 billion, according to TCH.
However, despite its growth, participation remains low, with fewer than 1,000 financial institutions onboarded – just a fraction of the country’s 9,000+ banks and credit unions.
FedNow, despite launching six years after RTP, has benefited from existing industry momentum, driving a steeper growth curve in its first year.
Importantly, both systems are mutually reinforcing, with greater awareness and demand for instant payments fuelling adoption across both networks.
Payments Cards & Mobile Opinion
The global shift toward instant payments is undeniable, and momentum in the US is finally accelerating.
As RTP and FedNow expand, financial institutions will need to strategically assess implementation timelines, integration requirements and fraud prevention measures to maximise value from real-time payments.
Ultimately, greater participation across both schemes will drive wider industry adoption, cementing instant payments as a cornerstone of modern US financial infrastructure.
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