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RTP reported in July that 250,000 includes digital wallets, payroll and earned wage access,
ecommerce, bill payments, real estate transactions and on-
businesses and over 5 million line marketplaces.
consumers were originating payments Rusiru Gunasena, senior vice president at TCH, offered
through the network. a similar assessment regarding RTP. Common use cases,
he said, include disbursements, account-to-account trans-
actions, earned wage access, and person-to-person pay-
ments initiated through Zelle.
of those countries moved to instant payments in response
to government mandates, said Keith Riddle, senior vice Gould said FedNow has the potential to replace low-value
president of business development at the digital banking wire transfers, some ACH payments, and "even some cash
platform Tyfone. transactions may move to instant payments over time."

Heman Daswani, principal consultant at the software Riddle agreed, stating that FedNow and RTP have the po-
company Temenos, said the seemingly slow pace of FIs mi- tential to siphon transactions from the ACH, wire trans-
grating to instant payments is not a technology issue. "A fers and even card networks. "All these payment streams
lot of financial institutions are not seeing this as a neces- will coexist," he said.
sary step," Daswani said. "With [availability of] same-day
ACH they don't seem to feel there is a need to offer a better Fraud deterrence front and center
solution to customers."
Although the Fed has not made pricing publicly available,
By the numbers experts have said FedNow is a low-cost option. "The low
cost of FedNow empowers small organizations to offer
Riddle suggested the FI participation numbers for Fed- real-time payment capabilities to their members," Tyfone
Now and RTP, considered by themselves, can be mislead- wrote in a recent white paper.
ing. "There is broad participation at the large FI level," he
said. At least four of the largest FIs in the country operate "Moreover," Tyfone added, "FedNow is flexible and serves
on both networks: JPMorgan, Wells Fargo, US Bank and as a utility real-time payment rail," which means FIs can
BNY Mellon. And a fifth, Capital One, already on RTP, re- integrate FedNow instant payments into existing payment
vealed plans to integrate to FedNow as well, Riddle noted. use cases like account-to-account external transfers.

TCH reported that 68 percent of FI accounts in the Unit- Of course, it's a safe bet fraudsters have set their sights on
ed States have access to instant payments over RTP, and these new networks. That means FIs must be especially
better than 90 percent of RTP participants are smaller FIs vigilant since payments that clear and settle in a matter of
(those with assets under $10 billion). Over 20 bank tech- seconds are impossible to reverse. "We need to collaborate
nology providers (for example, Jack Henry & Associates, as an industry to address fraud," Gunasena said.
FIS and Fiserv) are the conduits for the smaller FIs. But
according to Herman, many of those smaller FIs can only Solution providers are on the case. According to Riddle,
receive payments via RTP; they are not set up to send pay- Tyfone's FedNow solution was built with heightened at-
ments through the network. tention to fraud detection and prevention. For example,
when a funds transfer request is received, the sending de-
RTP reported in July that 250,000 businesses and over 5 vice is validated, and the system evaluates the activity pat-
million consumers were originating payments through terns of the sender. "We employ a waterfall of risk tools,"
the network. he said.

Many credit unions that use Tyfone's digital banking plat- Riddle pointed to the experiences of Silicon Valley-based
form connect to both FedNow and RTP—about 370, Riddle Star One, a $10 billion asset credit union, to illustrate the
noted. "Financial institutions want their service providers success of this strategy. Despite experiencing exponential
to embed instant payments into their digital banking plat- growth in A2A transactions sent over FedNow, fraud loss-
forms," Riddle said. es are 60 percent lower than those experienced using the
ACH for A2A payments, he said.
In a Q&A posted by the Federal Reserve, Mark Gould,
chief payments executive for Federal Reserve Financial Ser- Some of the fraud prevention measures used are value re-
vices, said the Fed's "goal is nothing short of making in- strictions on payments to new recipients; a negative list of
stant payments ubiquitously available and widely used in bad actors; real-time inquiries against the U.S. Treasury
the United States. Department's Office of Foreign Assets Control, or OFAC;
and daily, weekly and monthly transaction limits for new
"We're seeing a variety of use cases where instant pay- and existing members based on the member's tenure.
ments can solve pain points and offer efficiencies." This

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