Financial institutions across the United States are experiencing a significant shift in payment processing. The demand for real-time payments has grown due to consumer expectations for instant fund transfers and immediate transaction confirmations. Traditional payment systems are being reevaluated to meet these evolving needs. The introduction of new real-time payment networks has accelerated this transformation.​

Two prominent networks leading this change are The Clearing House’s RTP network and the Federal Reserve’s FedNow Service. Both aim to provide instant payment capabilities, operating 24/7 to facilitate immediate fund transfers. Understanding the features and benefits of each network is crucial for financial institutions aiming to modernize their payment systems.

The Clearing House’s RTP network: A proven solution

Launched in 2017, The Clearing House’s Real-Time Payments (RTP) network has established itself as a reliable platform for instant payments. The network supports immediate fund transfers with real-time settlement, operating continuously without interruptions. As of 2024, the RTP network has processed over 343 million transactions, totaling $246 billion in value. Participation has expanded to over 650 financial institutions, reflecting widespread adoption. ​

The RTP network accommodates a wide range of transaction types, including person-to-person, business-to-business, and consumer-to-business payments. A transaction limit of $1 million per payment makes it suitable for various use cases. The network’s infrastructure supports ISO 20022 messaging standards, facilitating rich data exchange and interoperability. Financial institutions can leverage these features to offer innovative services to their customers.​

Adoption of the RTP network has been driven by its ability to meet the needs of both consumers and businesses. Over 150,000 businesses utilize the network for real-time payments, a 50% increase since December 2022. Consumers also benefit, with more than 3 million individuals sending account-to-account payments monthly.

Financial institutions of all sizes participate in the RTP network, with 90% being community banks and credit unions. This inclusivity ensures that a broad spectrum of customers can access real-time payment services. The network’s design supports scalability, allowing institutions to grow their payment capabilities as needed. Continuous enhancements, such as the introduction of Request for Payment and document exchange features, further increase its value proposition. ​

The Federal Reserve’s FedNow service: A new entrant

The Federal Reserve introduced the FedNow Service in July 2023 to expand real-time payment capabilities nationwide. The service enables financial institutions to offer instant fund transfers, operating continuously to meet customer demands. At launch, 35 banks, including major institutions like JPMorgan Chase and Wells Fargo, participated in the service. FedNow aims to complement existing payment systems and enhance the overall U.S. payment infrastructure. ​

FedNow supports a per-transaction limit of $500,000, accommodating a variety of payment scenarios. The service utilizes ISO 20022 messaging standards, promoting interoperability and rich data exchange. A liquidity management tool facilitates real-time liquidity transfers between participants, ensuring smooth operations. These features position FedNow as a modern and flexible payment solution.​

Participation in FedNow is open to all federally insured depository institutions, promoting inclusivity. Smaller banks view the service as an opportunity to offer real-time payment capabilities without relying on larger competitors. The service’s design supports scalability, allowing institutions to expand their payment offerings over time. Continuous enhancements are anticipated as adoption grows.

FedNow’s introduction reflects a broader trend towards instant payments in the United States. The service aims to meet the evolving expectations of consumers and businesses for faster, more efficient payment options. Financial institutions can leverage FedNow to improve operational efficiency and reduce transaction costs.

Early adoption of FedNow offers strategic advantages for financial institutions. Implementing the service can position institutions as forward-thinking leaders in the payments space. The ability to offer real-time payments can enhance customer satisfaction and retention. Institutions can also differentiate themselves in a competitive market.​

Comparing RTP and FedNow as real-time payments options

Both RTP and FedNow aim to provide instant, 24/7 payment capabilities with immediate settlement. They utilize ISO 20022 messaging standards, promoting interoperability and data-rich transactions. However, there are notable differences between the two networks. Understanding these distinctions is crucial for financial institutions.​

RTP is operated by The Clearing House, a private entity, while FedNow is managed by the Federal Reserve. This difference in ownership may influence adoption strategies and regulatory considerations. RTP has a higher per-transaction limit of $1 million, compared to FedNow’s $500,000 cap. This makes RTP more suitable for higher-value transactions like corporate payments. FedNow is more accessible to smaller institutions due to its public infrastructure and broad eligibility. Both networks support ISO 20022, but RTP has had more time to mature operationally.

FedNow offers liquidity management tools not currently provided by RTP. These tools help financial institutions manage their funds across participating accounts in real time. RTP, on the other hand, offers services like Request for Payment, which enhances bill pay capabilities. Institutions can choose the network that aligns best with their operational needs.

RTP currently supports a wider range of use cases and has a larger participant base. FedNow is newer but designed to scale quickly with broad support from the Federal Reserve. Both networks are interoperable with core systems that support ISO 20022, helping ensure future scalability. Choosing one or both can help institutions stay competitive in an evolving market.

Leveraging both networks for real-time payments redundancy and innovation

Using both RTP and FedNow can offer strategic redundancy and risk mitigation. If one network faces a service interruption, the other can serve as a reliable fallback. This dual-network strategy ensures business continuity for real-time payments. It also gives institutions the flexibility to manage payment traffic efficiently.

Offering services through both networks enhances innovation potential. Financial institutions can design use-case-specific solutions tailored to transaction types, sizes, and customer preferences. Customers may benefit from lower costs, faster services, and better availability. This drives competitive differentiation and customer retention.

Network diversity also helps institutions stay ahead of regulatory or technical changes. With real-time payments growing rapidly, compliance requirements may evolve. Supporting both platforms prepares institutions to adapt to market or policy shifts more easily. It also reduces vendor lock-in and enhances operational agility.

Institutions can use APIs and low-code integration platforms to connect to both networks. This simplifies development and allows teams to deploy features faster. Seamless integration also improves backend efficiency and reduces reliance on legacy systems. Institutions can focus on delivering customer value rather than managing infrastructure complexity.

Dual-network connectivity allows for smarter routing and intelligent payment decision-making. Transactions can be directed to the most cost-effective or time-sensitive network. Real-time analytics and payment orchestration can optimize routing strategies. Financial institutions gain more control and insight into their payment operations.

Supporting RTP and FedNow together also aligns with long-term digital transformation strategies. Offering real-time payments through multiple rails positions banks to meet tomorrow’s customer expectations. It strengthens trust and boosts the perception of being technologically advanced. For financial institutions, this creates both short- and long-term advantages.

Making real-time payments work for your institution

Modernizing payment systems with RTP and FedNow enables faster, smarter financial services. Financial institutions that embrace both networks position themselves to lead in digital transformation. Dual-network support enhances reliability, innovation, and customer satisfaction. Investing in real-time payments is not optional—it’s a competitive necessity.

Volante Technologies provides the tools and expertise to help financial institutions integrate RTP and FedNow quickly and efficiently. Our cloud-native, low-code platform accelerates deployment with API-ready and ISO 20022-native capabilities. With connectivity to over 100 domestic and international networks, Volante supports a unified approach to real-time payments. Speak with one of our payments experts and see how we can help your financial institution grow with real-time payments.