What FedNow Instant Payments Can Do for Your Business

Key takeaways:

• Adoption keeps climbing. More than 1,400 institutions were live on FedNow by mid-2025, with average daily settled value above $3.3B and continued quarterly growth.
• Multi-rail is the new normal. 58% of financial institutions who have implemented instant payments operate on both FedNow and RTP to maximize reach and resilience.
• Instant payments improve cash flow and liquidity. Businesses can hold funds longer, process payroll just-in-time and reduce costs tied to paper and card fees.
• Security and fraud prevention are critical. Real-time monitoring, encryption and allow lists help mitigate risks in irrevocable transactions.

FedNow adoption and impact

Instant payments took a major leap forward with the launch of the Federal Reserve’s FedNow service in July 2023, an instant payment system that allows for people and businesses across many industries to move money immediately, any time of day, every day of the year.

Before FedNow’s launch, instant fund transfers were possible through services offered by The Clearing House consortium of banks that operates RTP, a real-time payments network. The Clearing House’s RTP payments network continues to play a key role today and enables account holders to transfer funds in real time between a network of participating banks, giving recipients immediate access to payments.

Heading into 2026, adoption of FedNow services and transaction values have accelerated, supported by new safeguards that make instant payments safer and more configurable for businesses. As of Q3 2025, the Fed reported 2.5 million settled payments in the quarter, an average of 27,239 payments per day and more than $3.3B in average daily value.

Participation is also growing, with more than 1,400 institutions onboard and an expanding list of use cases across industries. Because FedNow will supplement rather than replace existing payment service offerings, it has the potential to ignite innovation across the sector.

"It’s an additive in the sense that FedNow will be a second option for banking customers," said Jessika Wood, SVP, Head of Commercial Payment Products at Fifth Third Bank. "As these two networks compete against one another, they may challenge one another to deliver success and bring more value to the market."

How does FedNow work?

RTP and FedNow Service are interbank payment systems, meaning that payments are routed and settled within a shared network of participating banks. Both instant payment services allow bank customers to send and receive money instantly and can be accessed 24/7 and 365 days a year, so businesses can process transactions and move funds in the evening and on weekends and holidays, allowing for greater flexibility and more efficient liquidity management.

Fifth Third Bank was an early adopter of instant payment services, becoming an RTP participant bank in 2017. The bank was also an early adopter of request for payments (RFP) services that allow banking customers to send requests asking their clients for payments.

As these networks become more widely used, their impact on payment practices is becoming increasingly clear.

Why instant payments matter and FedNow's impact

The 2025 Faster Payments Barometer found 84% of financial institutions and 67% of businesses view faster payments as a must-have. Consumer expectations are similar. Surveys show most users prefer instant disbursements and report higher satisfaction when instant options are available.

FedNow strengthens the instant payments ecosystem by operating alongside RTP, creating a dual-rail system that delivers greater reach, resiliency and continuous availability. FedNow is available to all banks connected to the Federal Reserve, while RTP serves institutions on its network.

Together, these rails expand accessibility and flexibility, enabling a broader range of transactions and ensuring more businesses and consumers can benefit from instant payments. Meeting these expectations isn’t just about speed. It also unlocks significant advantages for businesses.

FedNow benefits

Instant payments deliver tangible business benefits. For business owners, one core advantage of around-the-clock, immediate clearing of payments is the financial flexibility to manage cash flow more efficiently.

Greater control over the timing of transactions enables CFOs to manage costs by holding payments until their due date, optimizing cash balances across accounts and increasing efficiency by automating vendor payments. Instant payments also help reduce the costs tied to paper transactions and credit card processing fees, making operations leaner and more predictable.

Stronger liquidity management

This operational efficiency is just one piece of the puzzle. Improvements in liquidity management are crucial to give businesses the flexibility to power real-time money movement that matches the speed of their business at scale.

For example, most companies that use ACH for payroll must make the funds available two days ahead of payment. With instant payments, businesses can process the payments just five minutes before they are due, holding the money longer and being able to make better decisions about liquidity. This advantage is equally critical for making emergency payments or just-in-time payments, where speed can prevent disruptions and maintain business continuity.

Enhanced customer experience

The ability to process payments instantly can also boost customer satisfaction by allowing service representatives to validate payments during a sales call or chat session.

For example, instant payments can be a competitive differentiator in the gaming industry. "When a player has a big win, the ability to unload money from a digital wallet is important to them," said Wood. Employees and gig workers who can be speedily reimbursed for expenses and paid for their services also benefit.

Leveling the playing field for merchants

Beyond customers, instant payments also help small and medium-sized merchants who are often at a competitive disadvantage to larger stores that get paid seven days a week. With instant payments, businesses can reduce settlement time from three days to zero and get access to money sooner. Merchants can cash out their receipts for the day and receive the money in their account a few minutes later.

Fraud mitigation

Fraud mitigation is another potential advantage FedNow brings business owners. Real-time payment monitoring allows CFOs to swiftly detect and respond to suspicious activity, helping them combat unauthorized transactions. Fifth Third’s proprietary fraud prevention system adds an extra layer of protection of real-time fraud monitoring.

Because instant payments are irrevocable transactions (meaning that once moved, the money is gone), businesses need to have precautions in place to reduce risk. Fifth Third uses real-time monitoring and screening processes that exceed industry security standards in its payment systems.

How to prepare for FedNow

There are many considerations to weigh when deciding whether to introduce instant payment services. Businesses should start by identifying areas of opportunity, such as ways that instant payments can improve efficiency, provide cost savings, improve customer experience or offer other benefits.

Steps such as checking with suppliers and business trading partners on their plans to adopt instant payment capabilities can help position companies to streamline the transition.

"What works for your business really depends on your business processes, and different systems may make sense for different use cases," said Wood, who added that Fifth Third will continue to offer other payment methods after rolling out FedNow. "Speed isn’t always paramount. There may be times when ACH is the perfect option for cost reasons, and other times, switching to instant payments makes sense. When you approach it that way, there’s room for all the various payment methods."

Fifth Third’s treasury management experts can help your business develop the right instant payment strategy and work with your IT department for a smooth implementation.

To explore instant payments for businesses, contact your Fifth Third relationship manager or find a banker to learn more.