Since The Clearing House increased its real-time payments transaction limit from $1 million to $10 million in February, returns have been positive. Bank of America reports that transactions over $1 million now account for more than half the total value of U.S. real-time payments it processes for corporate clients.
The RTP network’s transaction limit had been $1 million since April 2022, when it was raised from $100,000. Rival FedNow plans to raise its own limit from $500,000 to $1 million later this summer.
BofA is one of the first financial institutions to enable corporate clients to send payments up to the network’s maximum limit. Its growth has been driven by the discovery of new use cases, particularly in business-to-business payments.
Room for Growth in B2B
As of July 2024, businesses accounted for roughly 80% of RTP transactions. However, 95% of these payments were received by consumers, highlighting significant room for growth in higher-dollar payments directed to other businesses.
“Businesses can pay suppliers, contractors, and other vendors instantly as soon as goods and services are received,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “This helps improve inventory management, cash flow, supply chain, and payment efficiency. Payroll and real estate transactions are other use cases that can benefit from the increased RTP transaction limit.”
Good for the Industry as a Whole
BofA’s announcement should further bolster the use of U.S. real-time payments.
“These announcements are enormously productive for the industry as a whole,” said Hugh Thomas, Lead Analyst of Commercial and Enterprise Payments at Javelin. “There can be a tendency to avoid talking about new uses you’ve found for emerging solutions like real-time payments and virtual cards, the notion being that revealing them risks helping one’s competitors. But by educating the broader ecosystem, you also flush out similar use cases and drive up overall demand for the product.”
The news also reinforces the notion that RTP payments can be a stable and reliable option for businesses that have traditionally preferred wire transfers.
“That scale players like Bank of America are embracing RTP for high value transactions like closing payments suggests they’ve cracked the code for making RTP as secure as wires,” Thomas said. “We saw an immediate and substantial jump for this measure when the limit moved up to $1 million, suggesting there is definite demand there to use RTP as a substitute for wires.”
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