Real-Time Payments: Adoption Grows, Challenges Remain

According to a recent survey by the U.S. Faster Payments Council, the number of banks receiving real-time payments is expected to outnumber those sending payments until at least 2028, reports PaymentsDive. “There’s definitely work to be done on the sending side,” said Reed Luhtanen, the council’s executive director, in a recent interview. “For customers at a financial institution to fully benefit from the network, the ability to send transactions is crucial. The focus is now shifting towards not only connecting financial institutions to receive payments, but also expanding capabilities to send payments.”

The latest report from the U.S. Faster Payments Council examines bank adoption rates and potential use cases for instant payments in the near future. “With the recent rise in institutions adopting faster and instant payments, and the need to make these services widely available, it’s important to establish a quantitative baseline for adoption, key drivers, obstacles, and future priorities,” the report’s introduction states.

Potential use cases for government agencies include emergency payments and benefit or loan disbursements, while consumers could use instant payments for personal transactions, online gaming, and digital subscriptions. Businesses may apply instant payments for earned wage access and payroll funding. The report is based on a survey conducted between late June and mid-August this year, with 25 payments processors and core banking technology providers participating. However, challenges remain for widespread instant payments adoption, according to previous research by the U.S. Faster Payments Council. Issues like rolling out instant payment technology, managing it within legacy systems, and preventing fraud are significant hurdles.

Meanwhile, the U.S. government continues to expand its instant payment infrastructure through the FedNow system. A year after its launch, FedNow has enrolled approximately 1,000 financial institutions, surpassing its private competitor, The Clearing House’s RTP network. As it brings more banks and credit unions into its network, the Federal Reserve is also working to address potential fraud concerns. Despite introducing value limits and negative list features, the central bank announced in August that it plans to roll out additional fraud prevention tools for FedNow.