FedNow sees US instant payments growth
The US Federal Reserve has updated its latest figures for FedNow, the US’s federal instant payments system that it launched in July 2023. Having previously explored the cross-border potential of the system, we consider how recently released figures for FedNow stack up against the US’s privately owned, incumbent RTP system.
The FedNow system settled 915,263 transactions in Q4 2024, a YoY rise of over 2,000% and up 172% from the previous quarter. This may seem like a big jump, but it’s still a drop in the ocean: the Clearing House’s ACH network for payments was clearing 75 million transactions as of March 2024.
In 2024, the total number of transactions for FedNow was 1.5 million. However, it was in the total value of payments where FedNow saw a significant surge, from $13m in Q4 2023 to just over $20bn in Q4 2024. Having said this, the value of payments rose by 15% on a quarter-on-quarter basis in Q4 2024, versus more than 3,500% growth in the previous quarter – an inevitable change as it moves from an initial surge in adoption to growing from a point of greater scale.
The rise in payments value shows the impact of more providers joining the FedNow system. As of January 2025, the number of financial institutions who are live on FedNow has grown to over 1,200. This is more than the 670+ participating in RTP system, although both represent a fraction of the 4,500+ banks registered in the US.
By comparison, the RTP system, which was introduced back in 2017 and is therefore more established, saw YoY growth of 32% to 98 million transactions in Q4 2024 and a 94% rise in total value for the year to $246bn. This means that FedNow is still far behind RTP on the number of transactions and the average number settled per financial institution, but has caught up much more swiftly in terms of value of payments being sent.
Currently, FedNow supports only domestic transactions, but last year we explored its impact on cross-border transactions more widely, as well as its potential to link up with other instant payments systems globally. This is something we have seen with some networks in Southeast Asia, several of which are participating in the BIS’ Project Nexus, which ultimately aims to create a global interconnection between domestic instant payment systems.
Given the amount of domestic transaction share it still has to take, FedNow will likely need to see a great deal more adoption before it participates in its own cross-border project, but we will be continuing to watch as the US brings its network up to speed with other countries worldwide.
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