A Look Back on 2023 and What’s on the Horizon for Instant Payments in 2024
By: Todd Koehn, Vice President, Faster Payments at Bankers’ Bank
At the start of 2023, it was hard to fathom that more than 400 financial institutions would be live on the Federal Reserve Bank’s new instant payment solution, FedNow by the then of the year. Or that RTP would grow participation to more than 450 financial institutions, with 90% of the participants on the RTP instant payments network being under $10 billion in assets and surpassing one million payment unique payment transactions on a day. The year delivered widespread adoption and continued participant growth in instant payments.
Bankers’ Bank spent 2023 planning and preparing for our first FedNow settlement clients, educating more than 85 banks on importance of instant payments and why they shouldn’t wait to get started. Bankers’ Bank had added 8 RTP settlement banks, was elected to the Board of Directors seat on US Faster Payments Council representing every Community Bank interest under $10b in assets. By the end of 2023, we had 18 customers live on RTP Settlement and 20 customers live on FedNow Receive settlement.
We continue to be on the forefront of the payments industry and provide a unique perspective through our involvement in the FRB Faster Payments task force, FedNow Pilot program where we represented our community bank partners whom we provide their settlement and liquidity services, and as the first Correspondent Bank offering RTP Settlement for community banks. Bankers’ Bank takes a proactive approach of educating our partner banks on Instant/Faster Payments, recommending providers who have figured out connectivity to your Core or Online Banking system.
The adoption of both instant payments network in 2023 as a community banker is exciting to see, the numbers do not lie.
- 2021 we settled 18.5k individual transactions (growth rate 671% over 2020)
- 2021 we settled $8.2m in dollars (growth of 668% over 2020)
- 2022 we settled 48.8k individual transactions (growth rate of 164% over 2021)
- 2022 we settled $18.5m in dollars (growth of 124% over 2021)
- 2023 we settled 98.3k individual transactions (growth rate of 101% over 2022)
- 2023 we settled $45.0m in dollars (growth of 143% over 2022)
What is in store in 2024 for community banks and Bankers’ Bank regarding RTP and FedNow?
1) Continued adoption of both networks
2) Implementation/monetization of Send capabilities by community banks
3) Increased transaction volume on the FedNow network
4) Growth of the maximum transaction limit on/for the RTP network
5) Continued requests from community banks for Instant Payments education sessions
Are you still wondering if Instant Payments is just passing fad for your community bank, like Reebok pump shoes in the 90’s or the Furby stuffed animal in the 2000’s? Instant payments are not slowing down any time soon and you do not want to miss the opportunity this rail provides.