Pivotal Moment: Banks’ Real-Time Payments Opportunity in 2025

While the United States has lagged historically in its development of real-time payments, the adoption of emerging U.S. rails is unquestionably on the rise. Both The Clearing House’s RTP® network and the Federal Reserve’s FedNow® Service have recorded significant achievements in the past year, with combined daily volumes routinely topping 1 million transactions.

Amid this rapid evolution, time is of the essence for banks. Consumers increasingly expect their financial institutions (FIs) to offer real-time payments and are willing to switch banks to access these services. FIs that adopt instant rails early could gain significant market share, while procrastinators could be at a competitive disadvantage in meeting customer demands for faster payments. These pressures are creating a sense of urgency for banks to adopt real-time payments swiftly to capitalize on new business opportunities in the quickly changing financial landscape.

• Real-Time Payments Gain Primacy
• Real-Time ROI: Customer Satisfaction and Retention
• The Many Roads to Real-Time Rails
• Seizing the Moment: Why Banks Should Adopt Instant Payments in 2025

 

Real-Time Payments Gain Primacy

As adoption of emerging rails accelerates, real-time payments are rising to the top of banks’ innovation agendas.

U.S. real-time rails are scaling new heights.

Despite a cooler initial reception, both major U.S. payment rails have seen dramatic recent growth in bank participation and transactions. The number of FI participants in the RTP network grew 67% in 2024. The rail logged a record 98 million transactions valued at $80 billion in Q4 2024, representing 12% volume growth and a 16% increase in value from Q3. To give a sense of its exponential rise, when the network launched in 2017, the original payment limit was $25,000, but this was increased to $1 million in 2022. In December 2024, the rail increased the maximum transaction limit to $10 million due to high demand.

75%

of mid-tier banks plan to implement both the FedNow Service and the RTP network.

Jim Colassano, senior vice president of RTP Product Development at The Clearing House, recently told PYMNTS Intelligence that this limit increase has resulted in a surge of banks and businesses adopting the system. It has been especially popular for real estate and supply chain payments, which frequently feature transaction sums between $1 million and $5 million.

“We’re starting to see the ‘turn’ in the hockey stick,” Colassano noted.

This surge is not expected to subside. Globally, 16% of the payments mix will be composed of instant payments by 2027, according to projections, and this is on track to jump to 22% the following year. Between 70% and 80% of all FIs are expected to be able to receive instant payments by 2028.

The pressure is on for banks to adopt instant payments technology.

Not coincidentally with this growth spurt, pressures are mounting for U.S. banks to adopt real-time payments. More than two-thirds (68%) of U.S. companies see themselves joining either the RTP network or the FedNow Service in the next two years. A recent survey found that 75% of mid-tier banks plan to adopt both major U.S. real-time rails, with 31% saying their clients need both, while 44% simply feel it is expected of them to do so. Nearly all banks — 99% — report pressure to adopt instant payments coming from both corporate and consumer clients, with 53% describing that demand as significant or overwhelming.

Real-Time ROI: Customer Satisfaction and Retention

Real-time payments confer a distinct advantage on banks with both consumer and corporate clients. Banks that lack this functionality, therefore, risk losing customers to their competitors.

Corporate clients see real-time rails as increasingly nonnegotiable.

93%

of FIs that enable instant payments see a positive impact on customer retention.

Among the 99% of banks that said they felt pressure to adopt instant payments, most of it came from corporate clients, with 64% of commercial banks reporting this pressure, as opposed to 52% of retail banks. Larger banks also felt more pressure than their smaller counterparts. It comes as no surprise that business clients are demanding real-time transactions from their FIs. These payments streamline operations, reduce processing times and mitigate delayed payment risks — all essential priorities for corporates to ensure a steady cash flow so they can make payments of their own.

In addition, real-time payments open doors to new revenue streams through products such as instant payroll, just-in-time supplier payments and advanced cash management tools for businesses. Not offering real-time payments to corporate clients gives them a powerful incentive to switch to banking competitors that do.

Consumers are demanding real-time payments as well.

Real-time payments’ use cases are broad-based, however, and in no way limited to corporate clients. A recent survey reports that 52% of payment executives view consumer-facing instant payment use cases to be a top priority for 2025, followed by corporate and embedded business-to-business (B2B) usage at 31% and 18%, respectively. The demand side of the equation is even more compelling. The 2024 Consumer Banking Report from EPAM found that 78% of consumers consider instant payments to be the most important digital feature for banks to offer in the next three years, surpassing all others. In addition, the report revealed that nearly one-quarter (24%) of consumers would switch banks for more relevant products and services such as these. PYMNTS Intelligence research confirms that instant payments make consumers 11% more satisfied than non-instant methods and nearly double their likelihood of remaining clients. Moreover, 93% of FIs that enable instant payments see a positive impact on customer retention. For banks, instant payments’ return on investment (ROI) is indisputable.

The Many Roads to Real-Time Rails

Banks are increasingly recognizing the urgency of real-time payments adoption and are taking steps to make these ambitions a reality. Fortunately, a multitude of effective implementation options are available.

Banks recognize the growing need to prioritize real-time payments.

According to research by RedCompass Labs, 83% of U.S. banks view ubiquitous, real-time account-to-account payments as important to their institutions, with 24% calling them a top priority. More than half (52%) of banks plan to build instant options within their existing vendor payments engines, while 44% plan to build them outside of these systems. Moreover, PYMNTS Intelligence data shows that 55% of senders of ad hoc payments — those separate from regular payroll and B2B — plan to integrate either new or additional third-party solutions that would enable them to offer multiple instant payment options in the next three years.

50%

of banks are leveraging payments as a service (PaaS) to implement real-time transactions.

PaaS is proving the most effective option for banks in instant payments deployment.

The increased focus on real-time payments has prompted interest in payments hubs, with some FIs planning investments in this area. While 14% of banks and credit unions intended to select a new or replacement payments hub in 2024, the actual selection rate has been consistently lower. In the last three years, only 4% of these institutions have actually chosen a new or replacement payments hub, highlighting a gap between intention and action.

For banks needing to reduce costs and simplify compliance in implementing instant payments, payments as a service (PaaS) has changed the game. A recent survey found that partnering with PaaS providers was the most popular strategy for banks’ instant payment deployments, with 50% of surveyed banks taking this approach. Other primary strategies included utilizing a service bureau or shared infrastructure, such as RTP or FedNow (21%), and collaborating with FinTechs (21%). Only 9% of banks are upgrading their existing payments hubs, and less than 1% are building their own instant payments platforms.

Red River Bank recently implemented real-time payments via a partnership with Allied Payment Network.

This collaboration is a perfect example of a successful instant payments implementation. It integrates Allied’s real-time payment solutions within Red River Bank’s existing Q2 Digital Banking Platform, aligning with the bank’s commitment to expand its digital money movement offerings while maintaining high service standards. The implementation includes several product features that could potentially help with customer retention, including efficient payment tracking and streamlined automated clearing house (ACH) vendor addition processes.

Seizing the Moment: Why Banks Should Adopt Instant Payments in 2025

As U.S. real-time rails pick up steam, FIs should look to accelerate their integration of instant payments to remain competitive in the growing faster-payments landscape. With more than 9 in 10 FIs reporting a positive impact of instant payments on customer retention, real-time payments investment is a strategic imperative. Banks that fail to adopt this technology risk losing customers to more innovative competitors, including both FinTechs and traditional banks that prioritize this transformation.

Instant payments also present substantial revenue opportunities for banks. By offering value-added services built around real-time payment capabilities, FIs can develop new income streams. For instance, banks can leverage real-time data for personalized offerings or combine instant payments with features like loyalty rewards to increase customer engagement and transaction values. With the instant payments market projected to nearly triple by 2028, banks that act fast to establish a strong presence in this space will be better positioned to seize this opportunity and secure a larger share of the expanding market.

As real-time payments gain momentum, banks face a defining moment in 2025. Those that swiftly adopt instant payment capabilities will secure a competitive edge to meet rising consumer and corporate demands. At Galileo, we’re empowering financial institutions to seize this opportunity, enabling them to enhance customer satisfaction, boost retention and unlock new revenue streams.”

David Feuer
Chief Product Officer

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