FedNow Surges Ahead in First Year
The Federal Reserve’s new instant payments system, FedNow, is making a splash in the financial world. Launched just a year ago, FedNow has already signed up more banks and credit unions than its competitor, the RTP network.
According to a recent article in Payments Dive, FedNow has already surpassed its rival system, RTP, in terms of participation source
Here’s a quick breakdown of the key points:
- FedNow signs up more institutions: With 800 banks and credit unions on board, FedNow has surpassed RTP’s 652 participants.
- Big banks are waiting: Despite FedNow’s lead, some of the biggest U.S. banks are still holding out. These include Bank of America, Citigroup, PNC, and Capital One.
- Why the wait? Several reasons explain the hesitation. Banks are prioritizing other tech investments and evaluating which system (FedNow or RTP) to adopt first. Concerns about fraud are also a factor.
- The Fed is optimistic: The Federal Reserve aims to sign up nearly all U.S. financial institutions. They see instant payments playing a role in various areas, such as digital wallets, online marketplaces, and bill payments.
- The future of instant payments: Experts believe participation will increase as awareness grows and the benefits become clearer. Both FedNow and RTP might coexist, catering to different needs and institutions.
This is just the first year for FedNow, and its functionality is expected to expand. The future of instant payments in the U.S. is still unfolding, but FedNow’s early lead suggests it will be a major player.
The Federal Reserve’s goal is “nothing short of making instant payments ubiquitously available and widely used in the United States,” as stated by Federal Reserve Financial Services Chief Payments Executive Mark Gould in a Q&A post [1].
Footnote:
[1] Federal Reserve Board. (2024, July 15). FedNow Service – Frequently Asked Questions. https://www.federalreserve.gov/paymentsystems/fednow_about.htm
