Ten years ago, the Federal Reserve sketched out a future for U.S. payments—one where money could move in real time, not days. What began as a roadmap has since reshaped the payments landscape, bringing that vision closer to reality.
The Federal Reserve’s “Strategies for Improving the U.S. Payment System,” helped set the industry on a path toward faster payments. Though not a formal mandate, it established real-time transactions as a clear objective for payments nationwide.
In the Instant, Faster and Same-Day Payments: Where Speed Is Grabbing Share report, Hugh Thomas, Lead Analyst of Commercial and Enterprise at Javelin Strategy & Research, looks at how that framework has taken shape over the past decade—and where faster payments may be headed next.
The Ten-Year Roadmap
A major impetus for the original paper was an acknowledgment of inefficiencies in payments, driven in large part by the more atomized nature of the U.S. banking system compared to other countries. Recognizing the growing need for certain types of payments to move faster, the Federal Reserve stepped in with a kind of manifesto—one that, while lacking legislative force, nevertheless outlined a route to instant payments.
“It was sort of a Kennedy-style ‘we choose to go to the moon by the end of the decade,’ kind of a thing, but it wasn’t prescriptive, and kept to broad guidelines,” said Thomas. “This was not going to be legislated the way the EU did it, it was more: ‘This is where we need to be to remain competitive, and we will trust wisdom of the market to get us there.’”
“This is not to say that providers saw this as optional,” he said. “Anytime a regulator speaks up on topics like this, there’s kind of an implied ‘or else’ in the background. The Fed described what they hoped to see in different solutions for different use cases, such as a need for consumer convenience on some things, and for real time funds movement, on the high-value stuff.”
Coming to Fruition
Ten years on, that ambition is being realized. The Clearing House’s RTP Network has been joined by the Fed’s FedNow instant payments service, and both have seen remarkable growth. RTP is now recording as many as 2 million transactions per day and recently set a new single-day value record of $8.36 billion.
While FedNow remains significantly smaller than RTP by transaction count, its early profile appears skewed toward higher-value payments rather than smaller-ticket flows. Average daily FedNow transactions reached nearly 30,000 in 2025, while total value rose to $853.4 billion from $38.2 billion the year before. Over the same period, average payment size increased from $25,376 to $101,435.
“Six or seven years ago, people at conferences would be asking: ‘How are we going to use this once it’s up and running?’” said Thomas. “The impression I got was that everyone was building out of a need to not be left behind, rather than any specific use case. When asked what real-time was for, I mostly heard ‘replacing some wire transfers, I suppose.’”
Banks are now more openly sharing where new use cases are emerging. There is a growing recognition that the market benefits from customer education, prompting institutions to actively evangelize new applications as they arise.
The Promise of ISO 20022
One key driver behind the expansion of these use cases is the ISO 20022 messaging standard and the richer data that accompanies each payment. This added information can reduce risk, support more rigorous controls, and provide the structured detail needed to automate downstream processes. In turn, payments can increasingly self-settle and self-allocate—automatically posting to the appropriate general ledger or budget lines.
“It’s not a chicken and the egg thing,” Thomas said. “One helped the other in many respects. You couldn’t have the level of instant payments that we’re looking at in the United States without a standardized language in place. It just wouldn’t work.”
Making Use of the Limits
Higher transaction limits on both FedNow and RTP have also contributed to growth. Last year, both networks raised their caps to $10 million, a move that appears to have unlocked a wave of new transaction types.
“That’s partly a function of ISO 20022, but it also reflects growing comfort among back-office processors and banks with the risks involved in moving large transactions with finality,” said Thomas. “It also has major liquidity implications. Banks need to help customers orchestrate funding in an environment where accounts can now be debited 24/7 for a growing set of payment types, rather than only during business hours.”
“And banks have to manage their own liquidity the same way, anticipating that funds can flow out at any hour,” he said. “In the past, when payments moved within a more limited business-day window, someone could manually shift funds between accounts to cover transactions as they were pulled. In a 24/7 environment, that kind of funding management increasingly has to be automated.”
Using All the Levers
Despite this progress, traditional ACH transfers are not being displaced so much as settling more firmly into their long-established role: high-volume, lower-value electronic payments where a one- to three-day settlement window is good enough.
ACH still accounts for the vast majority of B2B payment value. Its same-day variant is increasingly used for transactions where timing matters, but true real-time settlement isn’t necessary. Notably, average transaction sizes for Same Day ACH have been ticking up, while those for one- to three-day ACH have been ticking down.
“You’re seeing the slower stuff focused more on higher volume, lower value transactions,” said Thomas. “You’re going to want to pay the big bills absolutely last, and people are getting smarter now about which instruments best meet their liquidity goals.”
The primary lesson for commercial payments providers is to use all the levers at their disposal in concert with each other for maximum efficiency and performance. “That’s the big lesson,” Thomas said. “There are so many different options for payments now. Helping your customers with orchestration is the key.”
The post How the U.S. Built Its Faster Payments Ecosystem appeared first on PaymentsJournal.
