Finance term
Real-Time Payments (RTP) / FedNow
Also known as: RTP, FedNow, TCH RTP, Federal Reserve FedNow, real-time payment network
Definition
Real-Time Payments (RTP) is The Clearing House's instant payment network (launched 2017); FedNow is the Federal Reserve's instant payment service (launched July 2023). Together, they form the U.S. instant payment infrastructure — enabling sub-15-second, 24/7/365, irrevocable fund settlement for businesses and consumers.
Detailed explanation
RTP and FedNow are the two instant payment rails available to U.S. financial institutions. Both operate on ISO 20022 messaging standards and settle in real time with immediate irrevocable finality.
## TCH Real-Time Payments (RTP) Owned by The Clearing House (which is itself owned by large U.S. commercial banks), RTP launched in November 2017. Coverage: 65%+ of U.S. DDA accounts. Transaction limit: $1M per payment. Use cases: business-to-business payments, gig economy disbursements, insurance payouts, loan disbursements. Per-transaction fees typically $0.045–$0.05 for credits. Send and receive functionality for connected institutions.
## Federal Reserve FedNow Launched July 2023, FedNow extends instant payment reach to community banks and credit unions that weren't early RTP adopters. The [Federal Reserve's FedNow page](https://www.federalreserve.gov/paymentsystems/fednow_about.htm) provides technical specifications, participant lists, and guidance. FedNow's transaction limit is set by each institution (up to the network max). The Fed's involvement is expected to drive broader adoption among the 10,000+ smaller U.S. financial institutions.
## Request for Payment (RfP) Both networks support Request for Payment (RfP) — a B2B feature where a payee sends a payment request to a payer's bank, who can approve and instantly fund. This enables real-time electronic invoicing and payment in a single workflow, eliminating the check-to-ACH gap in B2B trade.
## Business Impact For SMBs, instant payment rails mean: faster revenue access (instant card-to-bank or B2B settlement), payroll flexibility (on-demand or off-cycle payroll at no extra cost), and faster loan disbursements. The Federal Reserve's [Strategies for Improving the U.S. Payment System](https://www.federalreserve.gov/newsevents/pressreleases/other20150122a.htm) outlines the long-term vision for ubiquitous instant payment access.
◈ Worked example
- SMB B2B payment: plumbing contractor sends $22,000 invoice for completed work. Client's AP team approves the RfP in their bank portal. $22,000 arrives instantly via RTP. Contractor's same-day cash flow — no net-30 wait.
- FedNow community bank: regional credit union joins FedNow in Q4 2024. Members can now receive instant payroll credits from large-bank employers on RTP/FedNow. Member experience: paycheck available at midnight Friday instead of Monday morning.
- Loan disbursement: online SBA lender funds a $200K loan via FedNow at 3:30 PM on a Friday. Borrower has funds for payroll before the close of business. Previously required same-day wire at $25–$50 fee.
Common questions
The most-asked questions about Real-Time Payments (RTP) / FedNow — answered straightforwardly.
What is the difference between RTP and FedNow? +
RTP is privately owned by The Clearing House (owned by large commercial banks) and has been live since 2017 with $1M transaction limits. FedNow is operated by the Federal Reserve, launched in 2023, and designed to extend reach to smaller community banks and credit unions. Both use ISO 20022 messaging and settle instantly. A payment between two RTP participants uses RTP; a payment between two FedNow participants uses FedNow; cross-network interoperability is developing. For businesses, what matters is whether your specific bank and your payee's bank are on the same network.
Are instant payments safe for business use? +
Yes, with appropriate controls. Instant payments themselves are secure — they use bank-level authentication and encryption. The risk is fraud: because payments are irrevocable within seconds, business email compromise (BEC) scams target the payment initiation moment. Mitigations: call-back verification for new payees, dual approval for large transfers, out-of-band confirmation of account numbers. The Fed and Nacha publish fraud prevention frameworks for instant payments.
When will all U.S. banks offer instant payments? +
There is no mandatory participation date. The Federal Reserve hopes FedNow will achieve ubiquitous coverage through voluntary adoption. As of mid-2025, approximately 900+ institutions participate in FedNow and 600+ in RTP. Many smaller community banks and credit unions are still onboarding. Full U.S. coverage — where any account can send and receive instant payments — is an industry goal without a hard regulatory deadline.
Further reading
This glossary entry is educational content. ClearValue Lending is a business & personal financing platform — not a lender, broker, or financial advisor. Specific product terms vary by lender; verify with the lender or issuer before applying. See privacy policy.
https://clearvaluelending.com/glossary/real-time-payments-fednow