RTP (Real-Time Payments) and FedNow, the two immediate payment platforms in the United States, recently reported Q2 2025 results showing impressive growth in number of transactions and the value transmitted through each system.
RTP which was launched in 2017 through The Clearing House (TCH), reported 1.18 million payments each day with a total daily value of $481 billion in payments, a 195% leap in value from the previous quarter.
FedNow, created by the Federal Reserve, went live in July 2023. Its quarterly volume grew 62% to 2.1 million payments with an average daily value of $2.7 billion, up more than 400% over the previous year.
“RTP is seeing about 1.2 to 1.3 million transactions a day,” said Greg MacSweeney, a spokesman for TCH. “FedNow saw that in its entire first quarter, so we’re doing in one day what they’re doing in a quarter.”
“I think FedNow is going to fail,” said Dan Awrey, professor of law and finance at Cornell University, speaking on a panel organized by journalism students at Northwestern University. Awrey goes into more detail along with proposals to update the U.S. payments system, in his 2024 book “Beyond Banks — Technology, Regulation, and the Future of Money.”
“If I tried to imagine a system that was designed not to work, not from a technological perspective but from a governance perspective, we’re pretty close to it.”
The Fed has been very limited with its commentary on FedNow so I was pleased to find a YouTube interview with Federal Reserve governor Christopher Waller speaking at the Global Fintech Fest in Mumbai, India a year ago. He said the Fed encouraged the private sector to develop faster payments. (See Business Today (BTTV) on YouTube featuring Federal Reserve Governor Christopher J. Waller speaking at the Global Fintech Fest in Mumbai, India)
“The largest banks did take up that challenge, and they built what’s called the Real-Time Payments Network, from the largest banks in the U.S.”
The smaller banks were worried about relying on a network run by the largest banks, he added.
“And so they wanted another network. Now, my response typically would be, well, then you go build one. But when you’re sitting there with, say, 8,900 banks who now have to coordinate and somehow figure out how to build their own fast payment network, it’s a massive coordination problem. And they all looked at us and said ‘We’re already connected to you for payments. why don’t you just build it for the rest of us?’ So I often view creating FedNow as a solution to a large market failure in the sense that we could not get 8,900 banks to coordinate and build their own system.”
Others might view it as a regulatory or legislative failure.
Elisa A. Tavilla, director for debit payments at Javelin Strategy & Research, said that isn’t part of the Federal Reserve’s role.
“In other countries, there are government mandates for real-time payment adoption as part of a central bank’s effort to modernize and digitize their economy,” she said. “The Federal Reserve cannot mandate adoption of FedNow or RTP, and it would require an act of Congress to change the Federal Reserve’s jurisdiction.”
In practical terms, all banks have access to RTP at the same cost, 4.5 cents per payment. The cost is the same for every participating bank and there are no access fees or discounts for high volume users. The users’ price for a real-time payment is set by their participating banks.
RTP can reach 71% of all demand deposit accounts, with an incremental “technical reach” to financial institutions that hold close to 90% of DDAs, explains the TCH on its website.
Although it is privately owned, RTP is federally regulated, as explained on its website, “The Clearing House is highly-regulated, falling under the Federal Financial Institutions Examination Council (FFIEC) which examines it each year with a multi-agency team. As the operator of CHIPS, TCH is subject to continuous supervision by full-time, dedicated Federal Reserve examiners… As all TCH payment services utilize a common infrastructure and fall under a common governance, TCH’s Title VIII supervision and standards benefit all TCH services.”
Nonetheless, regional and community banks wanted a real-time payment platform that wasn’t operated by the country’s largest banks.
“To provide new services for instant payments for their customers, banks and credit unions throughout the country needed new infrastructure. The FedNow Service is this infrastructure. To bring the broad benefits of instant payments to the public, the Federal Reserve invested $545 million to implement the FedNow Service.”
Because only 1,400 banks have signed up for FedNow, which doesn’t connect to RTP, FedNow users have limited reach with their real-time payments. Bank assets are highly concentrated – the top 15 banks hold 76% of deposits, according to the FDIC. The network effect will improve for FedNow as more banks sign up, but banks operating just FedNow for real-time payments will be at a disadvantage unless the two platforms develop an operating link. Some banks will implement both RTP and FedNow so they can send and receive payments from more banks, and therefore more people.