Real-Time Payments (RTP) network managed by The Clearing House has seen its transaction volume double over the last 18 months, reaching one billion transactions this year. A major factor behind this growth is an increase in the transaction limit, which now supports payments of up to $10 million each since February.

In light of this, The Federal Reserve’s instant payment service, FedNow, plans to enhance its own transaction limits to remain competitive with RTP. Effective from July, a new $1 million cap will be introduced for higher-value credit transfers, such as business-to-business payments, real estate transactions, and payroll funding. The default limit will still stand at $100,000.

Banks Favor Higher Limits

Higher transaction limits have significantly boosted the attractiveness of instant payment services among U.S. banks according to a study from Red Compass Labs. Over 80% of senior payments professionals believe that increasing RTP’s limit to $10 million has improved its appeal. Among smaller banks with 500 to 2,000 employees, this figure rises to 88%. Similarly, 84% of respondents anticipate that raising FedNow’s transaction cap will increase their interest in using the service.

The Clearing House has identified several use cases where the increased limit could be beneficial. These include commercial and high-value residential real estate payments, merchant settlements, supply chain payments, and cash consolidation. RTP’s first $10 million payment was processed for Computershare, a global transfer agent, on behalf of another company.

Consumer Demand Increasing

The demand for instant payments is rising rapidly. A study by Red Compass indicates that nearly half of the surveyed banks are currently experiencing overwhelming demand from corporate clients, up threefold from last year’s figures. Mid-sized banks with 2,000 to 10,000 employees are under the most pressure.

Surprisingly, retail consumers are also driving increased demand for instant payment services. While only 11% of respondents in last year’s survey reported overwhelming demand from retail customers, this figure has grown to 43%. For this segment, the largest banks with more than 50,000 employees are facing significant pressure.

Competition from fintechs, neobanks, and services like Zelle is also prompting many banks to reconsider their instant payment strategies. Nearly two-thirds of the largest banks note that competitive pressures heavily influence their decision-making processes.