The Federal Reserve’s instant payments network, FedNow, is gaining ground on The Clearing House’s Real Time Payments network and has added more FIs to its network than RTP since its launch in 2017.

FedNow’s exponential growth was expected, Sean Viergutz, partner in the financial services division at consultancy PwC, told Bank Automation News. “I think there were a lot of financial institutions that waited on real-time payments for a period of time to understand: Is this something I really need to do or is it a fad.” 

FedNow’s launch in June 2023 was at a key moment, when the industry was adopting real-time payments, Viergutz said. Having the choice between FedNow and RTP, which launched in 2017, has pushed real-time adoption even higher. 

As of April 21, FedNow had 1,311 FIs on its network, compared to 913 on RTP.

In the first quarter, FedNow settled 1.3 million payments, compared with 100 million by TCH, according to FedNow and TCH data.

Both networks will continue to grow as payments caps are increased and will drive B2B payments activity, Viergutz said. 

On February 10, TCH increased its payment limit to $10 million from $1 million, which more than doubled its average daily payment total to $2.5 billion from $1 billion, TCH Chief Executive David Watson told BAN. FedNow’s payment cap is $500,000 and will jump to $1 million on June 24, according to the Fed. 

Increasing the payment limit has “opened a new ranges of use cases for banks and their corporate customers, who are using the higher transaction limit to move money between accounts, for things like cash concentration, portfolio rebalancing, paying suppliers, etc,” a TCH spokesperson told BAN. 

During Q1, RTP recorded an average payment size of $3,020 compared to $37,099 for FedNow.

TCH aims to drop its cost per transaction over time to as low as ACH transfers in a bid to woo ACH clients, Watson said. Currently, TCH charges 4.5 cents per transaction for RTP compared to 0.5 cents for ACH, Watson said.