FedNow and RTP Compete in U.S. Real-Time Payment Systems
The Federal Reserve’s real-time payment system, FedNow, has grown to connect with more banks than The Clearing House's RTP network but still lags behind in transaction volume. A report from the Richmond Fed highlights that while FedNow connects to over 1,700 financial institutions and is newer (launched July 2023), RTP processes significantly higher volumes—over 140 million transactions compared to just five million for FedNow during Q2 of this year. The report also notes differences in the systems' liquidity models. RTP requires pre-funded accounts at the Fed, while FedNow uses central bank money and offers intraday liquidity tools that are more favorable for smaller institutions. Despite these advantages, The Clearing House claims its system dominates 97% of U.S. instant payment volume. Both platforms support real-time transactions with similar fee structures but serve different market segments due to their distinct settlement mechanisms.
Topics: Federal Reserve FedNow RTP (Real-Time Payments) The Clearing House