FedNow turns instant payments into a must-have for banks and credit unions
The FedNow instant payments service went live in July, bringing the Real-Time Payments Network some competition. Experts are encouraging banks and credit unions of all sizes to think about signing up. For many small and midsize businesses, the service is likely to become a must, even though customers on the retail side could take longer to see the value. Having instant payments also could inject bill pay programs with fresh vigor.
The FedNow instant payments system creates opportunities for banks and credit unions of all sizes, facilitating new ways for them to generate revenue from both business and retail customers. But it also creates strategic, pricing and marketing challenges.
FedNow — a set of payment rails run by the Federal Reserve — went live with a group of early adopters in July. It competes with the private sector’s Real Time Payment Network, which launched in 2017.
The RTP network processed 58 million transactions in the second quarter of 2023, and use has been increasing rapidly since early 2020.
Backers of instant payments point to this trend as evidence that the concept is catching on. They contend that widespread adoption by financial institutions is not a matter of if, but when.
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