The Real-Time Rush: FIs’ Race to Keep Up With Instant Payments Innovation

As 2025 progresses, faster payments are speeding toward an inflection point. Real-time payments have shifted from experimental to expected, and market participants are coming to a critical realization: The timeline for action is short. In response, financial institutions (FIs) of all sizes are honing their instant payment strategies. However, while most large banks are already fully engaged, smaller institutions remain sidelined by security fears, high integration costs and unclear business models. This hesitation carries significant risks. Recent studies suggest businesses and consumers increasingly demand instant payments — forcing institutions to adapt quickly or lose customers to more agile competitors.

The stakes have never been higher. New data reveals that nearly all FIs plan to adopt real-time payments within the next two years, with aggressive timelines reshaping the competitive landscape by 2026. FIs’ speed in overcoming adoption barriers will determine whether they thrive in the evolving payments landscape or struggle to catch up.

The Real-Time Payments Tipping Point

Small Banks, Big Barriers

Winning Customers With Instant Payments

How FIs Can Capture the Real-Time Advantage

[branded_divider]

The Real-Time Payments Tipping Point

Real-time payments are no longer an experimental innovation. With adoption timelines tightening, financial institutions must act now to keep pace.

Most FIs plan upgrades as real-time payments move mainstream.

For the vast majority of financial institutions, instant payments adoption is either already in place or in the pipeline for the near future. PYMNTS Intelligence data shows that 62% of FIs are currently connected to the RTP® network, the FedNow® Service, or both. This figure is set to spike further. Among non-adopters, 80% expect to go live by 2028 — many within the next six to 12 months.

62%

of FIs already connect to the RTP network, the FedNow Service or both.

Indeed, signs show that real-time payments have progressed from emerging tech to standard infrastructure, prompting institutions to move quickly or risk falling behind. FIs accelerating adoption are doing so not merely to keep up but also to meet rising customer expectations for speed, control and transparency. According to a new survey by the Faster Payments Council, 80% of payment decision-makers now see instant payments as a must-have capability, with more than 90% planning their implementations for completion within two years. This ambitious time frame could render the competitive landscape unrecognizable by the end of 2026.

RTP network adoption is accelerating as demand soars.

Usage of the RTP network surged in 2024, with volume climbing 38% to 343 million transactions and value increasing 94% to $246 billion. A 67% rise in participating banks and credit unions (CUs) indicates strong institutional momentum. This growth reflects mounting demand from businesses and consumers for always-on, high-speed payments. Many banks now pursue multi-rail strategies — adopting both the RTP network and the FedNow Service — to supplement coverage and reduce operational risk.

FIs are expanding from receiving to sending real-time payments.

FIs that have spent recent years in receive-only mode are preparing to enable outbound real-time payments this year. For example, Mercantile Bank of Michigan, which already receives payments through the RTP network and the FedNow Service, plans to initiate sending payments through both networks in early 2025, reflecting a broader shift. As demand for full-service capabilities grows, customers are expected to pressure institutions that lag behind competitors. Banks without send capabilities may soon face tough questions — and risk losing business to more responsive rivals.
[branded_divider]

Small Banks, Big Barriers

Many smaller financial institutions remain locked in planning mode. Unclear business models and security concerns hold up adoption as real-time payments become table stakes.

Fraud fears persist, but the impact remains limited.

30%

of FIs cite the lack of a pricing or business model as a key barrier to real-time payments adoption.

Some FIs hesitate to scale instant payments, citing fraud as a top concern — especially as real-time rails continue to expand. However, recent data from Volante Technologies suggests these fears may be overstated. Of the FIs experiencing fraud related to instant payments, only 3% reported significant fraud impacts, with the majority of cases categorized as slight or moderate. Many institutions report no impact at all, signaling that existing controls are proving effective.

Lack of planning and legacy tech stall real-time rollout.

For many small FIs, the biggest barrier to real-time payments isn’t fraud — it’s lack of planning. PYMNTS Intelligence finds that more than 30% of FIs not offering instant payments attribute their hesitation to the absence of a pricing or business model as a factor, with 12% citing this as the top obstacle. A study by RedCompass Labs also highlights deep structural challenges: outdated core systems, the burden of 24/7 uptime, and fear of revenue loss from cannibalized card transactions. Institutions waiting for instant payments to “reach scale” risk becoming the bottleneck that hinders growth. Ironically, slow adoption by smaller banks may delay the very scale they’re waiting for — slowing national real-time readiness in the process.

Infrastructure costs and integration risks top FI concerns.

FIs cite high upfront implementation costs (57%) and readiness gaps in handling real-time risk (approximately 38%) as major barriers. Many also point to interoperability challenges, 24/7 operational demands, and lack of organizational buy-in as key obstacles. These findings, from the 2025 Faster Payments Barometer, suggest that FIs need stronger cross-functional strategies to overcome internal friction and modernize payment systems. With most customers now expecting faster, more flexible options, FIs that fail to deliver may cede ground to competitors offering better real-time access.
[branded_divider]

Winning Customers With Instant Payments

FIs offering real-time payments gain more than speed — they gain loyalty. Features like instant bill pay and P2P transfers not only attract new users but also help retain existing customers.

Instant payments support both acquisition and retention goals.

A recent study found that 83% of small businesses using FinTech tools for faster payments would rather get those services from their primary bank — if the bank offered them. Real-time payment features like peer-to-peer (P2P) transfers and instant bill pay support both offensive strategies aimed at pulling users from competitors and defensive moves of keeping existing ones engaged. PYMNTS Intelligence reports that 60% of FIs cite customers’ ability to receive P2P payments as a key driver of interest in instant payments innovation, while 49% cite customers’ ability to send P2P payments as an important factor. These features help prevent customer churn to third-party P2P payment apps, with 93% of FIs reporting that instant payments improve customer retention. Meanwhile, instant bill pay is a key acquisition tool, drawing users from legacy channels into bank ecosystems.

93%

of FIs say instant payments improve customer retention across institution sizes and channels.

Better customer experience fuels real-time payments value.

Nearly half of United States banks (48%) say instant payments improve customer experience. This benefit extends beyond speed: Automated workflows reduce friction and free up resources for higher-value work. By easing operational burdens and delivering faster service, instant payments help institutions boost satisfaction, strengthen retention and drive long-term competitiveness. Banks also report strong demand for corporate instant payments, citing enhanced workflows and improved customer satisfaction as top business benefits.

Send capabilities are essential to driving customer adoption.

As instant payments infrastructure matures, customer adoption will hinge on how well FIs enable outbound use cases. In a recent Faster Payments Council webinar, officials from the FedNow Service and The Clearing House, which operates the RTP network, stressed that real-time networks alone aren’t enough. FIs must develop intuitive, send-enabled experiences that drive engagement. A survey conducted during the webinar revealed that 81% of respondents are not yet using real-time rails to send payments, highlighting a significant opportunity to create seamless ways for consumers and businesses to move money on demand.
[branded_divider]

How FIs Can Capture the Real-Time Advantage

As 2025 advances, financial institutions now face a clear choice: Modernize their payment systems or risk falling behind. Real-time payments have evolved from an unconventional concept to a core expectation, with the competitive landscape expected to undergo a vast transformation in just the next year. Although barriers like implementation costs, legacy systems and unclear pricing models remain, these hurdles are surmountable with a focused strategy and cross-functional support.

To compete in this fast-moving environment, FIs must prioritize execution over hesitation. PYMNTS Intelligence offers the following actionable roadmap for FIs regarding their instant payments strategies:

Develop business models early. Thirty percent of FIs cite this as a barrier — planning now prevents costly delays later.

Prioritize outbound functionality. Customer demand is shifting from passive receipt to active use of instant payment tools. To capitalize on this shift, FIs must move beyond receive-only capabilities and fully embrace the potential of outbound, send-enabled solutions.

Modernize infrastructure. Core systems must be ready in real time, interoperable, resilient and available 24/7.

Embrace multi-rail adoption. Supporting both RTP and FedNow networks builds operational flexibility and long-term resilience.

Combat fraud with facts. Serious fraud is rare — just 3% of FIs report high impact. Existing controls are working.

Lean into use cases. Bill pay and P2P transfers drive acquisition and retention — proven value that justifies investment.

FIs must treat real-time payments as foundational — not optional. Adoption is no longer just a differentiator: It’s a baseline expectation. Institutions that move now will define the next phase of customer loyalty and competitive strength.

We’re seeing a steep rise in interest across every banking and business sector for real-time payments. Where banks once asked which customers wanted it, now customers expect it and ask why it’s not available. This shift is driving banks to invest not just in receiving instant payments but also in letting customers originate them, opening new opportunities.”

Jim Colassano
Senior Vice President, RTP Business Product Management
The Clearing House