Magnify logoSubscribe To Magnify

The continued growth of faster payments

Article contributor / Janet LaFrence / Principal Product Manager, Network Products

Faster payments are gaining momentum with no signs of slowing down. As of year-end 2024, over 70% of U.S. deposit accountholders were eligible to receive instant payments, 24/7, thanks to over 1,500 financial institutions participating in The Clearing House® RTP® network, the Federal Reserve FedNow® Service, or both.

Both networks saw the total dollar amount and number of transactions increase significantly in Q4 2024. More than 915 thousand transactions, totaling over $20 billion, were settled on the FedNow Service. During the same time, the RTP network processed 98 million transactions valued at $80 billion. On January 31, 2025, RTP set a new one-day record for payments volume, settling over 1.5 million transactions valued at $1.44 billion in a single day.

If the increased demand is sparking conversations at your financial institution about implementing your own faster payments program, here are some factors to consider.

Accountholder use cases and benefits

Instant payments benefit your accountholders by providing speed, convenience, and immediate funds availability within seconds of payment initiation. These benefits are reflected in the types of instant payment transactions we are processing for our SHAZAM® Faster Payments participants:

  • Transfers from digital wallets and money management applications.
  • Instant payroll deposits and same-day wage access, which is becoming a key employee benefit advertised on job search boards.
  • Account transfers between an accountholder’s own accounts at different financial institutions and/or investment brokers.
  • Early merchant settlement, allowing merchants to receive daily credit for their point-of-sale transactions, rather than waiting up to three calendar days to receive these deposits via ACH. This particularly benefits small businesses and sole proprietors who do a large portion of their business on weekends and holidays.

Recipients in these cases have full access to funds immediately, allowing for greater financial flexibility, a key benefit for people operating on a tight budget.

Financial institution benefit

Faster payments programs allow financial institutions to provide innovative instant payment services to their accountholders. They also gives your financial institution a head start over your competitors who haven’t yet entered the market. Early adoption of instant payments allows your bank or credit union time to refine your products and processes before demand reaches a fever pitch.

A significant number of instant payments transactions today appear to be displacing payments needs that might otherwise be serviced by checks or ACH. However, instant payments, with large transaction limits of up to $10 million for RTP and up to $500,000 for FedNow, also provide a more efficient and cheaper alternative to wire transfers, such as for funds due in a real estate closing or for business-to-business transactions.

Opportunity to start small

The minimum entry point, and likely the simplest means of easing into instant payments, is to become a credit “receive only” financial institution, which enables your accountholders to receive incoming credit transfers, but not initiate them.

In this case, when a payer sends an instant payment to a deposit account at your financial institution, the payee will receive their funds instantly, within seconds of payment initiation, 24 hours a day, 7 days a week. Settlement between the sending and receiving financial institutions occurs in real-time, on a per-transaction basis, in financial institution settlement accounts at the Federal Reserve.

Onboarding process

Both FedNow and RTP provide instant funds availability to the receiving accountholders and immediate interbank settlement between the sending and receiving financial institutions, 24/7/365. However, the two networks do not interoperate. So, there may be economic and strategic benefits in participating in both networks.

Signing up as a credit receive only financial institution is a relatively straightforward process. A financial institution signs an agreement with RTP and/or FedNow and designates its chosen processor as their third-party service provider. The financial institution can then leverage the service provider’s certified, secure connection to the real-time payment networks to receive instant payments, significantly reducing their technology investment and implementation effort and timeframe.

Implementing faster payments with SHAZAM

Both FedNow and RTP expect transaction volume and the number of participating financial institutions to grow significantly over the next few years. So, it may be the right time for your financial institution to implement this emerging technology.

SHAZAM has enabled credit receive processing for both RTP and FedNow to financial institutions on its own SHAZAM Core platform as well as to third-party core platforms via published APIs available to any core vendor open to integration.

To learn more about SHAZAM’s FedNow or RTP Credit Receive Processing service, contact your SHAZAM Client Executive.