Reed Luhtanen, Executive Director, FPC
July 20 marked the first anniversary of the launch of FedNow® and offered an important milestone that invites us to reflect on the faster payments developments over the past 12 months including adoption, volume, and industry engagement.
Adoption grows: At launch, FedNow had 35 financial institution participants. By the end of 2023, that number had grown to 331. And today, FedNow has more than 900 financial institutions participating as senders or receivers on the Network. That’s significant growth in such a short amount of time.
Volume soars: According to FedNow participant and FPC Member Jack Henry, FedNow volume is growing. In the first week of April 2024, Jack Henry had as much in transaction volume on FedNow as it did for the entire fourth quarter of 2023. Other participants, like Visa, continue to see increases month over month as well. Couple this with the fact that the RTP® network had record-breaking volume and a $1 billion day in late June, and it’s clear that faster payments use continues to climb.
Engagement increases: The best way to ensure continued growth is to increase the number of institutions that can not only receive payments, but also send. There are only about 15 percent of financial institutions on the FedNow network that support sending of transactions, but that number will grow as service providers expand their readiness to enable send functionality and FIs of all sizes familiarize themselves with receive-only functionality. And, as more institutions send instant payments, new products will emerge for consumers and businesses, and we will see use cases and volume increase. (Note: If you’re interested in helping to accelerate the adoption of instant payments by business, be sure to check out our newest Work Group, Business Benefits of B2B Instant Payments.)
New products and services will drive instant payments volume, but to ensure long-term use, FIs will need to build and maintain the trust of customers/members. Every instant payment experience needs to be consistent and safe for customers/members. To that end, FedNow will be rolling out new risk management tools to support financial institutions this year and next. These include tools that will aid in fraud detection and prevention, support liquidity management, and reduce credit exposure. Tools like these and others offered by industry providers will help FIs mitigate risk and, at the same time, instill customer/member faith in instant payments.
One thing’s for certain: The faster payments industry is continually advancing and evolving, building and growing – at a rapid pace. It’s amazing to witness the growth we’ve had over the past 12 months and to anticipate the advancements that still await, given all the opportunity and potential.
To that point, we want your input on what’s to come. The FPC just launched the 2024 Faster Payments Barometer Survey with Volante. This annual survey allows us the opportunity to gauge where we are and where we are going as an industry. The questions will help us better determine the current state of play with faster payments and mark the path toward the industry’s next steps. The survey closes in early September, and we look forward to your input, and ultimately, sharing the results with you.
Because while the faster payments landscape has grown a lot already, we’re just getting started. With the hard work and dedication of FPC members and the broader industry, much more will be accomplished, and we can’t wait to see just how far we’ve come this time next year.