When an institution chooses to go live with either FedNow or RTP, its decision may depend on its attitudes about network ownership, the benefits of network scale, transaction size needs, desired settlement mechanism, and cost to operate. It isn’t an either-or decision, but institutions may choose to prioritize one based on their preferences and customers’ needs. In broad strokes, RTP is the private-sector solution with higher transaction limits and has been most suitable for institutions that handle large corporate instant payments. FedNow is the public alternative that caters to all US institutions.

Here’s how FedNow and RTP compare:

Ownership and access

• FedNow is operated by the Federal Reserve and accessible to all US depository institutions that are Fed member banks.
• RTP is operated by The Clearing House, which is owned by about two dozen of the largest US banks. Participation is limited to institutions that are members of TCH.
  
  

Network size and composition

• FedNow has been adopted by more financial institutions but is lower in volume. It launched in July 2023 and has since been adopted by over 1,300 institutions. 1.51 million payments were processed in 2024, totaling $38 billion.
• RTP has been adopted by fewer financial institutions but is much higher in volume. It launched in 2017 and now has nearly 900 participating institutions. 343 million payments were processed in 2024, totaling $246 billion.
  
  

Payment purpose

• FedNow’s limit per transaction recently rose to $1 million (upon FedNow’s launch, the limit was much lower). That is not a small number, but it means FedNow is not as well-suited for the largest B2B payments. (Average transaction value of $25,000 in 2024, however, was higher than for RTP).
• RTP’s limit per transaction is $10 million, giving participants ample headroom to serve large commercial and corporate customers’ payment processing needs. However, an average transaction value of $717 in 2024 suggests more frequent, smaller transactions in practice.
  
  

Operations

• FedNow transactions settle to participants’ or their correspondent banks’ Fed master account, rather than an account indirectly managed by large banks, via TCH.
• RTP transactions settle within a joint account held at the New York Fed that’s owned by participating banks and managed by TCH. Participants must fund the account and maintain balances with TCH such that it meets liquidity requirements to settle payments instantly.
  
  

Cost

• There isn’t a big difference in usage fees between FedNow and RTP: Both networks charge $0.045 for a credit transaction (the Fed also charges a $25 participation fee per routing number). The cost, rather, is relative to other rails. FedACH, for example, costs $0.0035 for a credit transfer before volume discounts or a small same-day surcharge.
  
  

What to look for in a real-time payments network

The networks’ features and day-to-day functions are similar, and as FedNow matures, obvious factors like network-mandated transaction size limits are becoming less of a differentiator. A network’s attractiveness and features to enable will ultimately depend on business needs and other participants’ characteristics:

• Scale of the network: The number of counterparties whose customers are likely to originate real-time payments to an institution or demand that an institution send real-time payments to.
  
  
• Types of participants: The mix of community financial institutions and large banks on a network which customers are using to originate and receive real-time payments, and how that affects perceived peer-group competition.
  
  
• Counterparties’ capabilities: Real-time payments features live or on the roadmap that allow a network to functionally replace ACH.
  
  
• Predominant payment type: Whether the payment mix on a network best reflects an institution’s customer base and its needs, e.g., large commercial payments vs. small-dollar consumer payments.
  
  
• Ownership structure: An institution’s comfort with a public versus private real-time payments network and paying into a network that ultimately directs revenue to large competitors.