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How can US banks win at instant payments?
Join Kellie Johnson, SVP Americas at RedCompass Labs, and a panel of industry experts as we explore how US banks can win at instant payments....
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Instant Payments: the next frontier for PSPs
Instant Payments will transform the future of US banking. According to a study by RedCompass Labs, almost all (99%) US banks are already experiencing some level of demand for Instant Payments. The market share is around 31% year-on-year expected to grow and reach over $58 trillion in transactions by 2028.
However, despite this staggering growth, Payment Service Providers (PSPs) have been slow to upgrade their systems compared to the rest of the world.
As of today, fewer than 30% of PSPs are signed up for either the RTP or FedNow networks, and only 1% are. This reluctance to act swiftly—whether due to underestimating the market potential or grappling with the perceived risks and committed costs—has created a substantial gap in the market.
Dynamic and forward-thinking PSPs now have a unique opportunity to seize the market space and capitalize on the escalating demand for Instant payments, positioning themselves as leaders in the future of US banking.
US Instant Payments
Fortune favors the brave
While consumer demand for Instant Payments trickles upwards, banks are found waiting for proof of the impending gold rush. But, as our CEO Tom Hewson argues, it may be up to banks to incite the consumer boom themselves.
“As branches close, banks consolidate, technology becomes more API-driven, and all types of customers become more mobile, you must signpost tomorrow’s services before the clients know they want them. Because once they do, they will want them immediately.”
Clear corporate demand
The opportunity is huge...
We surveyed 300 senior payments professionals at US banks to understand their motivations for adopting Instant Payments – and what’s holding them back.
We found that despite a strong appetite to implement the technology, uptake is likely to remain slow for the foreseeable future. However, those slow to adopt will be leaving a considerable portion of value on the table.
63%
Nearly two-thirds (63%) of corporates show either "overwhelming" or "significant" demand.
98%
Nearly all US bankers surveyed (98%) plan to monetize their real-time payments service. Most (87%) plan to pass the costs on to their corporate clients.
48%
Nearly half (47%) of US banks see Instant Payments as a gateway towards improved corporate customer experience.
Strained legacy systems
...but so is the challenge
So, what’s holding banks back from implementing Instant Payment schemes right now? As our research revealed, the scale of the opportunity may be outweighed by the scale of the challenge.
Banks are wrestling with legacy systems, 24/7 availability, competing card revenues and fintechs, and the choice between RTP and FedNow.
34%
While most banks (96%) plan to build Instant Payment capabilities, over a third are concerned about updating legacy systems.
32%
Almost a third of banks believe that Instant Payments could cannibalize other revenue streams, such as credit cards.
34%
One of the biggest concerns among banks is their capacity to deliver 24/7 availability through Instant Payments.
Research report
Time to leave legacy behind?
Creating a robust Instant Payments scheme will be dependent on balancing the opportunity with the potential pitfalls. The extent of consumer and corporate demand for Instant Payments may not be fully realized until one stand-out example materializes on the US market.
For more information, be sure to read Time to Leave Legacy Behind? Instant Payments in the US, in which we survey 300 senior banking leaders in the US to uncover the scale of the opportunity.
Head to head: FedNow and RTP
When choosing a scheme to integrate, it is also important to consider these things:
| Feature | FedNow | RTP |
|---|---|---|
| First launched | 2023 | 2017 |
| Facilitator | Federal Reserve Bank | The Clearing House |
| Fee per originated transaction | 4.5 cents | 4.5 cents |
| Use cases | B2B, B2C, P2P | B2B, B2C, P2P |
| Transaction limit | $500,000 | $1 million |
| Current PSP adoptees | 800+ | 650+ |
| Immediate Cross-Border Payments (IXB)? | No | Yes |
| Intelligent liquidity management? | Yes | No |
How RedCompass Labs can help
Global payments experts
Why choose RedCompass Labs?
We’ve helped some of the biggest banks on the planet embrace the future of payments.
22+
years in payments modernisation
24
countries
200+
years of banking experience
500+
successful projects
Get ready for Instant Payments with RedCompass Labs
From updating legacy systems to building the business case, we can help