FedNow marks one-year anniversary — what you need to know

July 20 marks exactly one year since the Federal Reserve announced the launch of its quick payments FedNow Service.

That means it’s a great time to check in on what’s been a paced but steady adoption of what many view as a payments central nervous system. And it makes sense to track continued rising participation in The Clearing House’s RTP Network, a competing platform.

Broadly speaking, the technology for both allows customers at participating financial institutions to make and receive payments at any time, domestically and across borders, and with funds immediately available to use.

The primary difference between the two is FedNow’s Federal Reserve backing compared to the privately run RTP by The Clearing House, a consortium of the largest U.S. commercial banks. But as interest in the Fed platform brewed, so did renewed attention on the six-year-old RTP. In fact, RTP logged its first $1 billion single day of transactions a few weeks ago, on June 28.

The latest BAI Executive Report: Modernizing payment methods featured a lead article summing up U.S. participation in an end-to-end payments ecosystem: “What will it take to get more banks plugged into FedNow and RTP?”

In that article, we learn that the U.S. is lagging other major economies in widespread quick payments adoption. Progress is influenced by the magnitude of a U.S. banking system built on 9,000-plus financial institutions and because domestic participation remains voluntary. Roughly 50 countries have real-time payments platforms.

RTP data shows that its platform processed about 82 million transactions in the second quarter, totaling $55 billion. That compares to the same quarter a year earlier when there were 57 million transactions reaching a combined $29 billion. There were 652 banks and credit unions on RTP at the end of the second quarter of 2024, up from 340 at the end of 2023’s second quarter.

The Federal Reserve has not yet released FedNow participation data.

To boost uses for FedNow, the Fed recently launched a user group to promote collaboration on payment technology across network members and it rolled out a digital onboarding process to speed adoption. The Fed also announced additional security controls to mitigate fraud.

Real-time payment transactions overall within the U.S. are projected to increase at a 31.7% compounded annual growth rate (CAGR) by 2028, according to ACI Worldwide’s Prime Time for Real Time Global Payments Report. One of the main contributors to that prediction hinges on having both of the two major networks operating at the same time, which they currently are, and an increasing number of banks and credit unions signing up.

Broad-based enrollment in FedNow and RTP will occur as more financial institutions connect and “as the conversation evolves from just moving money to more about the overall flow of the transaction,” says Bridget Hall, ACI’s leader of real-time payments for the Americas, in the BAI Executive Report article.

For now, fraud safeguards and a liability framework top a long checklist toward mass adoption of unified payments technology, but progress continues.

And in the near term, institutions are either incorporating multiple real-time payment options within their internal ecosystems or achieving the value of real-time payments via non-real-time payment solutions for select clients, such as presettlement access to ACH payments, experts detailed in the article.

Further, because the U.S. has multiple solutions in the ecosystem, there is some degree of hesitancy around giving up being able to select which solution would be best for each use case, those experts said.

Here are a selection of articles and podcasts that BAI published on FedNow in the leadup to its launch and in the year since the platform went live.

FedNow is live… now what

A game changer in real-time payments

FedNow’s competitive value for smaller banks

Juggling fast payments processing in real time

How FedNow and other real-time payments change the fincrime landscape

Mitigating ‘instant’ fraud in instant payments

Rachel Koning Beals is Senior Editor with BAI.