FedNow, launched just eight months ago, has overtaken its main competitor, The Clearing House’s Real-Time Payments network, in terms of the number of banks on the platform. 

Nearly 600 financial institutions have joined the government’s payment network since it went live July 20, 2023, Allison Baller, vice president at the Federal Reserve Bank of Boston, said this week at the Bank Automation Summit U.S. 2024.

The Clearing House (TCH), which has been operational since 2017, had 568 financial institutions on its platform as of March 21, Rusiru Gunasena, senior vice president of RTP product management and strategy, told BAN. 

FedNow had 474 FIs compared to 509 for TCH’s RTP as of Feb. 1, according to BAN reporting. 

The government hasn’t mandated FedNow adoption, which has led to a slower adoption rate, Baller said.  

The European Union adopted instant payments within its geography last month, which allows people to send and receive payments within 10 seconds of initiating them, according to the European Council’s Feb. 26 release. The EU is mandating that all financial institutions need to provide instant payment access to consumers and businesses, while no specific timeline for that was provided.

The U.S. market is “collaborative and dependent on service providers and partners,” and nearly 90% of the FIs that are onboarded on FedNow “have gone through a key service provider,” she said. 

“We’re working through that channel pretty aggressively to onboard the downstream partners” through service providers, Baller said. 

FedNow has also been working to drive adoption by automating and digitalizing onboarding, she said. 

“If you have everything kind of ready to go, and the service provider [is] onboarding a bank, you can do it in as little as, you know, eight, nine, 10 days,” Baller said. “If you’re a more complex, larger bank, it’s going to take a lot longer.” 

TCH’s growing adoption 

TCH has seen renewed interest in its RTP network since FedNow launched, Gunasena said. 

Credit unions across the country realized that they needed to be on one of the networks, and many came to TCH due to its years of experience in real-time payments, easy onboarding and a high existing payment volume, Gunasena said. 

“If you’re joining a network, you want to join the network which has the volume and the endpoint and the reach,” Gunasena said.  

Meritrust Credit Union is evaluating how FedNow evolves and might choose TCH’s RTP over FedNow, Chief Digital Officer Wade Bruendl told BAN. 

“FedNow is not quite there yet [because] there’s not enough mass [payment volume] there to make me want to get in,” Bruendl said. “I see FedNow as an institution-to-institution settlement mechanism” and would like to see more capabilities added to the network.” 

RTP has a payment volume of $1 million a day, and TCH is “continuing to see daily volumes increasing,” Gunasena said. 

More news from Bank Automation Summit US 2024 is available here.