Positive Impact of Increased Transaction Limit in Real-Time Payments

Since The Clearing House increased its real-time payments transaction limit from $1 million to $10 million in February, results have been favorable. Bank of America reports that transactions exceeding $1 million now represent more than half the total value of U.S. real-time payments it processes for corporate clients.

The RTP network’s previous limit was set at $1 million since April 2022, after it had been increased from $100,000. Competitor FedNow intends to raise its transaction limit from $500,000 to $1 million later this summer.

BofA was among the first financial institutions to facilitate corporate clients sending payments up to the network’s maximum limit. The growth in these transactions has been driven by the
discovery of new use cases, especially in business-to-business (B2B) payments.

Potential for Expansion in B2B Payments

As of July 2024, businesses accounted for
about 80% of RTP transactions.
However, over 95% of these payments were received by consumers, indicating significant potential for growth in higher-value payments directed to other businesses.

“Businesses can instantly pay suppliers, contractors, and other vendors upon receipt of goods and services,” stated Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “This improves inventory management, cash flow, supply chain operations, and payment efficiency. Use cases for payroll and real estate transactions also benefit from the increased RTP transaction limit.”

Advantage for the Industry

BofA’s announcement should further enhance the use of U.S. real-time payments.

“These announcements are highly beneficial for the industry as a whole,” explained Hugh Thomas, Lead Analyst of Commercial and Enterprise Payments at Javelin. “It’s important to openly discuss new uses you’ve discovered for emerging solutions such as real-time payments and virtual cards. By educating the broader ecosystem, you also encourage similar use cases and increase overall demand for the product.”

This news supports the idea that RTP payments can be a reliable alternative to traditional wire transfers.

“Leading financial institutions like Bank of America embracing RTP for high-value transactions suggests they have successfully addressed security concerns,” Thomas commented. “The immediate and significant rise in use when the limit increased to $1 million indicates there is substantial demand for using RTP as a substitute for wires.”