Instant payments may look free to the person tapping “send,” but somebody must pay to keep the money moving around the clock.
News surrounding India’s instant payments framework shows some of the economics underpinning faster funds. Beginning Oct. 15, a 0.4% merchant discount rate (MDR) will apply to specified Unified Payments Interface (UPI) merchant payments above 2,000 rupees (about $20). Person-to-person payments remain free, as do merchant-to-merchant transactions of 2,000 rupees or less and payments received by qualifying small merchants, according to a Sept. 15 press release.
India’s government estimates that about 96% of person-to-merchant transactions will remain unaffected, the release said. The change follows years in which India used zero-MDR rules and government incentives to help build UPI into a payment system with scale. Official statistics from the National Payments Corporation of India (NPCI) put the totals at 24 billion transactions for September.
The new MDR isn’t a tax and won’t be paid by consumers, according to the release. It will be distributed among banks, payment service providers and UPI app providers to support the system’s operation and expansion.
Different Rails, Different Economics
Other instant payment systems have carved out different paths toward funding operations.
In the United States, the Federal Reserve charges participating institutions to send payments over the FedNow® Service. Its official 2026 fee schedule sets the price of an originated customer credit transfer at 4.5 cents and a request for payment at 1 cent. The $25 monthly participation fee is discounted to zero during 2026, while the Fed provides a 4.5-cent discount on the first 2,500 qualifying customer credit transfers each month.
Those incentives are changing. The Fed’s 2027 discount program will use statement credits to encourage institutions to enable receiving and sending. Send-side credits depend partly on institutions reaching transaction volume requirements.
The Clearing House uses its own transaction pricing on the RTP® network. Its official RTP fee schedule charges participating institutions 4.5 cents to send an inter-participant credit transfer and 1 cent to send a request for payment or remittance advice. Financial institutions pay no network fee to receive an RTP transaction. Direct participants can also incur connectivity costs.
RTP network pricing is uniform across participants. The Clearing House said there are no volume discounts, volume commitments, monthly fees or monthly minimums.
Network pricing is only one part of the cost of offering instant payments.
The PYMNTS Intelligence report “From Adoption to Execution: How FIs Are Turning Real-Time Payments Into Competitive Advantage” found in August that 76% of financial institutions surveyed already provide RTP network access and 40% have enabled FedNow. The research also found 52% citing legacy technology among their biggest modernization obstacles, as institutions deal with integration, liquidity and round-the-clock operational requirements.
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A bank paying pennies to the network can spend much more making the service work. Core integration, payment hubs, fraud detection, liquidity management, compliance, staffing and customer-facing applications all sit around the rail.
Brazil offers another model.
Under Banco Central do Brasil’s Pix rules, individuals generally can’t be charged for sending Pix transfers or making purchases, although specified exceptions apply. Businesses can be charged by their financial institutions for sending and receiving funds and related services.
Pix isn’t costless at the infrastructure level. Banco Central said charges to participants are designed to recover the costs of operating the SPI settlement system and DICT directory on a full-cost-recovery, not-for-profit basis. Payment service providers on opposite sides of a Pix transaction also can’t charge each other.
The structure has supported adoption. Pix had more than 150 million users as of July, representing roughly 70% of Brazil’s population, and was processing more transactions than Visa and Mastercard combined, PYMNTS reported July 30.
The examples spanning the globe indicate that government can subsidize adoption. A network can charge financial institutions. Banks and PSPs can charge businesses. Merchants can pay acceptance fees. Providers can try to recover their investment through services built around the payment.
When Consumers Will Pay
Consumers are another possible source of revenue, although PYMNTS Intelligence research showed that willingness to pay depends on why they need the money immediately.
PYMNTS Intelligence’s “Fee Sensitivity and the Opt-In Economics of Instant Payouts” found in February that 49% of consumers who received instant payouts typically paid a fee for their most-used instant method. Among people relying on instant disbursements for core income, 72% typically paid a fee.
Urgency changes the economics. The report revealed that 61% of Generation Z recipients said they would pay for instant access when they needed their funds within 30 minutes. Only 29% said they would pay when they could wait. Meanwhile, 65% of recipients said they would be more likely to do business with a sender offering instant payouts for free.
The findings concern instant disbursements, not merchant acceptance or every type of instant payment. They do show why a universal consumer fee might face headwinds. Customers can see enough value in immediate access to pay for it when waiting carries its own cost. When urgency disappears, so does much of the willingness to pay.
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