The Clearing House’s Real-Time Payments (RTP) network has doubled its transaction volume over the past 18 months, reaching one billion transactions earlier this year. One key contributor to this growth has been an increase in its transaction limit. Since February, RTP now supports payments of up to $10 million each.
In response, The Federal Reserve’s instant payment service, FedNow, is raising its own limits as it strives to stay competitive with RTP. Starting July, FedNow will introduce a new $1 million cap for higher-value credit transfers, covering transactions such as business-to-business supplier payments, real estate deals, and payroll account funding. The default transaction limit will remain at $100,000.
Banks Like Higher Limits
These higher transaction limits have played a critical role in accelerating adoption of instant payments. According to research from Red Compass Labs, more than 80% of senior payments professionals at U.S banks say that increasing the RTP transaction limit to $10 million has enhanced its appeal. Smaller banks—those with 500 to 2,000 employees—are even more enthusiastic, with 88% saying the new limits helped. Another 84% believe that raising FedNow’s cap will make it even more appealing.
The Clearing House has highlighted several use cases that could benefit from the increased limit. These include commercial and high-value residential real estate payments, merchant settlements, supply chain payments, and cash consolidation. RTP’s first $10 million payment was made on behalf of Computershare, a global transfer agent, to another of its company accounts.
Consumers Demand More
The demand for instant payments is growing. Red Compass found that nearly half of the surveyed banks are experiencing overwhelming demand from corporate clients—three times the percentage reported in last year’s survey. Mid-sized banks, particularly those with 2,000 to 10,000 employees, are feeling the most pressure.
Perhaps ore surprisingly, retail consumers are also driving increased demand for instant payments. While just 11% of respondents in last year’s survey reported overwhelming demand from retail customers, that figure has jumped to 43% this year. In this segment, it’s the largest banks—those with more than 50,000 employees—that are facing the most pressure.
Many banks are also increasingly concerned about competition from fintechs, neobanks, and services like Zelle. Nearly two-thirds of the largest banks say their instant payment decisions are heavily influenced by the competitive pressures.
