FedNow® vs. RTP®: Understanding the Key Differences

FedNow® is a government-backed instant payment network developed by the Federal Reserve, designed to offer real-time payments to all U.S. banks and credit unions. It competes directly with RTP® (Real-Time Payments), a private-sector payment network operated by The Clearing House (TCH).

Key Differences Between FedNow® and RTP®

Key Takeaway:

FedNow® is designed for universal accessibility, while RTP® is limited to financial institutions that are part of The Clearing House network.

Why FedNow® May Be the Better Choice for Businesses & Consumers

1. Broader Bank Accessibility

✅ FedNow® is open to all U.S. banks and credit unions, allowing smaller financial institutions to offer real-time payments to businesses and individuals.
❌ RTP® is restricted to financial institutions within The Clearing House network, limiting its reach.

If your bank isn’t part of The Clearing House, FedNow® may be your only real-time payment option.

2. Faster, Irrevocable Transactions

Both FedNow® and RTP® process payments instantly, meaning funds are settled immediately and cannot be reversed.
Unlike ACH or credit card payments, there’s no waiting period for money to clear, reducing fraud risks and chargebacks.

3. 24/7/365 Real-Time Payments – No Banking Delays

Unlike ACH transfers, which operate only during business hours, FedNow® and RTP® allow payments at any time, including weekends and holidays.

4. Lower Costs Compared to Credit Card & Wire Transfers

Credit card transactions come with high processing fees (2-4%), while wire transfers can cost $15-$50 per transaction.
FedNow® and RTP® offer cost-effective bank-to-bank payments, helping businesses save money.

5. Instant Payments for Small & Large Transactions

FedNow® allows banks to set their own transaction limits, providing flexibility.
RTP® has a $10 million transaction cap, making it ideal for large corporate payments but potentially limiting for smaller transactions.

Use Cases: When to Use FedNow® vs. RTP®

When to Use FedNow®:

✔ For businesses that need instant invoicing & payroll payments
✔ For banks and credit unions looking to provide real-time payments
✔ For government payments, emergency disbursements, and social benefits
✔ For individuals making fast, secure peer-to-peer payments

⚠ When to Use RTP®:

✔ For corporations making high-value transactions (up to $10 million per transfer)
✔ For large financial institutions already within The Clearing House network
✔ For businesses with high-volume B2B payments

How to Start Using FedNow® or RTP®

Getting Started with FedNow®:

✅ Step 1: Check if your bank or credit union supports FedNow®.
✅ Step 2: Set up FedNow® as a payment method for your business or personal banking.
✅ Step 3: Begin sending and receiving instant payments 24/7.

Getting Started with RTP®:

✅ Step 1: Ensure your bank is part of The Clearing House network.
✅ Step 2: Activate RTP® services through your financial institution.
✅ Step 3: Start processing real-time payments within the RTP® network.

Choose the Right Real-Time Payment System Today!

Still relying on slow ACH transfers, expensive wire payments, and delayed credit card transactions? It’s time to switch to real-time payments!

Business Owners & Entrepreneurs: Get paid instantly, improve cash flow, and save on fees with FedNow® or RTP®.
Banks & Financial Institutions: Offer state-of-the-art real-time payment services to attract and retain customers.
Freelancers & Gig Workers: Say goodbye to delayed payments—receive your earnings instantly!

Not sure whether FedNow® or RTP® is right for you?
✔ If you need universal access and broad banking participation, go with FedNow®.
✔ If your bank is part of The Clearing House and you handle large transactions, RTP® may be a good fit.

The future of payments is instant. The question is: are you ready to make the switch?

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