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SHAZAM Faster Payments Program Update

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

As of mid-August 2024, over 1,200 banks and credit unions nationwide were participating in instant payments — approximately 13% of U.S. financial institutions. The two instant payment networks currently available in the U.S. are RTP®, operated by The Clearing House®, and the FedNow® Service, operated by the Federal Reserve.

Through SHAZAM’s certified connections to both RTP and FedNow, 16% of SHAZAM® Core clients currently participate in instant payments, with several more signed up to begin before the end of 2024. Eighty percent of SHAZAM’s faster payments clients participate in both the RTP and FedNow networks.

In August 2024, our first non-SHAZAM Core financial institution joined SHAZAM’s faster payments program, implementing both RTP and FedNow Credit Receive through a collaboration with a middleware provider. Our partnership with this middleware provider will expand the reach of SHAZAM’s faster payments program beyond SHAZAM Core in the coming year.

RTP Network Growth

In Q2 2024, 82 million instant payments valued at $55 billion were processed over the RTP network. These Q2 2024 results represent 7% growth in transaction volume and a 30% increase in value compared to the previous quarter, Q1 2024.

The RTP network has been in production since November 2017. As of mid-August, 710 financial institutions were participating in RTP, of which 415 (58%) were also FedNow participants. The 295 financial institutions participating in RTP, but not FedNow, tend to be large, national financial institutions, with an average deposit account base of 980,000. Approximately 59% of U.S. deposit accounts can be reached through the RTP network.

SHAZAM introduced its RTP Credit Receive processing service in January 2021. Program-to-date, we’ve processed over 54,000 RTP transactions with a total value exceeding $27 million. The average RTP transaction size is $500, with the largest transaction program-to-date being $230,000.

The primary use cases processed through our RTP connection are:

  • “Cash out” transfers to a deposit or share draft account from a digital wallet, such as Venmo®, PayPal®, Coinbase, etc. (45%)
  • Instant payroll deposits sent by employers including Grubhub® and Uber® (24%)
  • Expedited merchant settlement for card point-of-sale transactions, instead of next business day settlement via ACH (23%)
  • Account-to-account (me-to-me) transfers between accounts belonging to the same entity, but at different participating financial institutions (4%)
  • Gambling payouts (1%)

Other, less prominent, use cases include receipt of payroll advances, payments on accounts payable, loan proceeds, loan payments, funds due in a real estate closing, insurance claims, and more.

FedNow Celebrates its First Full Year in Production

The FedNow Service celebrated its first anniversary in July 2024. As of mid-August, 923 financial institutions were participating in the FedNow network, of which 415 were also RTP participants. The 508 financial institutions participating in FedNow, but not RTP, tend to be small community financial institutions, with an average deposit account base of 27,000. Approximately 28% of U.S. deposit accounts can be reached through the FedNow network.

Transaction volume has been very low over the FedNow Service so far, which is understandable given the network has only been in production for a year. We have also observed that large, national financial institutions are the primary senders of instant payments. Given that many of the largest initiators of instant payments are TCH-owner banks, they tend to send their transactions via RTP if the receiving account can be reached via either RTP or FedNow.

SHAZAM introduced its FedNow Credit Receive processing service in September 2023. Currently, we have nine SHAZAM Core clients and one non-SHAZAM Core client participating in this service.

The primary use cases SHAZAM has processed through our FedNow connection are:

  • “Cash out” transfers to a deposit or share draft account from a digital wallet, such as Venmo (49%)
  • Instant payroll deposits sent by employers (34%)
  • Account-to-account (Me-to-Me) transfers between accounts belonging to the same entity but at different participating financial institutions (17%)

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

Source: SHAZAM Market Intelligence and Data Analytics