Instant Payments: Why 8,000 Banks Are Still Holding Back

Jessica Albright · 2026-09-09

Instant payments have quickly shifted from an emerging capability to a competitive expectation. Yet many financial institutions still struggle to justify the investment required to support them. With implementation costs, operational changes, and fraud concerns to address, it’s fair to ask: Are instant payments simply a customer convenience, or can they deliver meaningful business value? In a PaymentsJournal Podcast, Shankar Jayaraman, Director of Product Management, Real-Time Payments at Fiserv, Rusiru Gunasena, Head of Business Development for Service Providers at The Clearing House, and Ben Danner, Senior Analyst of Debit at Javelin Strategy & Research, explored why that question may already have an answer. As consumers and commercial use cases continue to expand, the decision facing financial institutions is becoming less about whether to offer instant payments and more about how soon they can. ### Clearing the Concerns Despite the fact that more than 1,500 financial institutions now offer instant payments through either The Clearing House’s RTP network or the Federal Reserve’s FedNow Service, more than 8,000 still do not. For many of these organizations, the barriers to adoption remain significant. One key factor is the challenge of making a bank’s payments and processes available 24/7. In addition to meeting customer expectations for around-the-clock service, financial institutions must establish prefunding requirements and ensure the proper risk controls are in place. Since instant payments are generally irrevocable, fraud prevention is a critical concern that must be fully addressed before transactions begin. For legacy banks, older, multi-tier technology stacks may not be capable of supporting instant payments. Overhauling these systems can be daunting, especially when the same payment processes have been in place for decades. Fortunately, financial institutions don’t have to navigate the transition alone. Experienced third-party service providers can handle operations such as transaction monitoring, error handling, risk mitigation, and fraud prevention, serving as a critical first line of defense. “If you are the financial institution, you're not the first one,” said Jayaraman. “There is already someone who has cracked the problem. And there are many solution providers out there who are there to help you solve the problem.” ### Benefits of Joining the Network Whatever the concerns about adopting instant payments, the benefits often outweigh the risks. Most financial institutions that implement instant payments find that the customer experience improves immediately. “When a financial institution goes live on RTP, their customers discover that they can go and pull their funds sitting in a digital wallet into the institution account immediately,” said Gunasena. “They were even willing to pay to get those funds, because now they have liquid funds in their financial institution.” Instant payments also help strengthen the customer relationship by bringing it back to the financial institution. In addition, they provide rich, structured data that supports analytics and more informed decision-making. Both sending and receiving financial institutions can gain better visibility into payment activity and can make more accurate risk assessments. Some banks have even identified new revenue opportunities by offering instant payment services. “U.S. Bank launched an enhanced payment service for small businesses,” said Danner. “They're charging to send those instant payments at a reduced rate through a subscription model to their small business service. As an issuer, this is a value add and a potential transaction revenue stream as well.” The commercial banking sector stands to benefit as well. Corporate treasuries can receive guaranteed, liquid funds immediately, improving cash flow and financial flexibility. ### Key Use Cases Emerge New use cases continue to emerge, driven by both consumer demand and business needs. Here are a few examples: - **Account-to-account transfers:** Consumers can move money between their own accounts at different institutions instantly, avoiding the delays of traditional ACH transfers. - **Business-to-business payments:** Companies can pay suppliers and contractors in real time, improving cash flow and reducing reliance on checks. - **Gig economy payouts:** Platforms can pay gig workers instantly after a job is completed, increasing satisfaction and loyalty. - **Insurance claims:** Insurers can disburse claim payments immediately, helping policyholders recover faster. - **Government disbursements:** Agencies can deliver benefits and tax refunds in real time, reducing reliance on paper checks. These use cases not only enhance customer experience but also open new revenue streams for financial institutions. For example, offering instant payment services as a premium feature can generate fee income. ### The Road Ahead The momentum behind instant payments is undeniable. As more financial institutions adopt RTP and FedNow, the network effect will grow, making instant payments the norm rather than the exception. The question is no longer if, but when. For institutions still on the fence, the message is clear: the technology is proven, the use cases are expanding, and the customers are waiting. With the right partners and a strategic approach, the transition can be smooth and rewarding. So, are instant payments just a convenience? Far from it. They're a competitive advantage waiting to be seized.