Since The Clearing House increased its real-time payments transaction limit from $1 million to $10 million in February, positive returns have been observed. 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 was $1 million since April 2022, when it was increased from $100,000. Competitor FedNow intends to raise its own limit from $500,000 to $1 million later this summer.
Bank of America is among the first financial institutions to enable corporate clients to send payments up to the network’s maximum limit, growth driven by the discovery of new use cases, especially in business-to-business transactions.
Room for Growth in B2B
As of July 2024, businesses accounted for roughly 80% of RTP transactions. However, only about 5% of these payments were received by other businesses, indicating significant potential for higher-dollar payments directed to other companies.
“Businesses can pay suppliers, contractors, and other vendors instantly upon receipt of goods and services,” stated Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “This helps improve inventory management, cash flow, supply chain operations, and payment efficiency. Use cases such as payroll and real estate transactions can also benefit from the increased RTP transaction limit.”
Good for the Industry as a Whole
BofA’s announcement is expected to further enhance the use of U.S. real-time payments.
“These announcements are highly beneficial for the industry as a whole,” remarked Hugh Thomas, Lead Analyst of Commercial and Enterprise Payments at Javelin Strategy & Research. “There can be a tendency to avoid disclosing new uses for emerging solutions like real-time payments and virtual cards out of concern that this might aid competitors. However, by educating the broader ecosystem, we also stimulate similar use cases and drive up overall demand for these products.”
The news strengthens the perception that RTP payments can serve as a stable and reliable alternative to traditional wire transfers for businesses.
“Scale players such as Bank of America embracing RTP for high-value transactions like closing payments indicates they have successfully addressed security concerns,” Thomas said. “We observed an immediate and significant increase in demand for this measure when the limit was raised to $1 million, suggesting a clear market appetite for using RTP instead of wires.”