U.S. Real-time Payments: Full Speed Ahead After Year 1 of FedNow

The Federal Reserve’s highly anticipated instant payment system, FedNow, celebrated its first anniversary on July 20, 2024. Since its launch, FedNow has not only transformed but also accelerated the growth of faster and real-time payments in the United States. The transaction volume across other faster payment networks, such as RTP and Same Day ACH, has soared to record-breaking heights over the past year, a testament to the industry's rapid evolution. U.S. financial institutions of all sizes are now prioritizing real-time payments, marking a significant shift in the industry landscape. 

Today, consumers and businesses are not just using but also increasingly expecting faster and real-time payment options. According to recent Federal Reserve Financial Services surveys, a staggering 74% of consumers and an overwhelming 86% of companies indicated the use of faster or instant payments in 2023. This growing trend is further underscored by the fact that 79% of consumers and 74% of businesses reported looking to their financial institutions to provide these services. More than half (57%) of consumers now expect to use faster payment options more extensively, highlighting the urgent need for the industry to keep pace with these evolving demands. 

This impact note looks at the progress and impact FedNow has made on U.S. real-time payments over the past year, mainly growing adoption by financial institutions, businesses, and consumers, as well as prominent use cases and some key challenges.