Episode Details

Customers no longer measure service in days or even hours—they measure it in seconds. Whether they’re paying employees, closing on a home, moving money between accounts, or covering an unexpected expense, they expect funds to be available immediately. That demand for speed is fueling the rapid growth of real-time payments, particularly those enabled by the Federal Reserve’s FedNow Service.

In a PaymentsJournal Podcast, Bernadette Ksepka, SVP, Deputy Head of Product Management for the FedNow Service; Shankar Jayaraman, Director of NOW Network at Fiserv; and Ben Danner, Senior Analyst of Debit at Javelin Strategy and Research, discussed the use cases driving the service’s momentum and how financial institutions that have yet to join the network can position themselves to meet evolving customer expectations.

Breaking Records Every Day

As more use cases for FedNow go live and more institutions participate, adoption continues to accelerate. Every week, the FedNow Service is breaking its own records.

It recently surpassed 1,776 financial institutions on board, which according to Ksepka is an appropriate number for a U.S. payment system to celebrate. Fifty service providers support FedNow connectivity, and new banks are joining the network almost daily. The service now reaches all 50 states and includes seven of the top U.S. banks.

“And 95% of our participants are community banks and credit unions,” said Ksepka. “They’re offering instant payments alongside some of the nation’s largest institutions. This isn’t just large banks chasing new technology. A credit union in rural Montana wants the same real-time tools that a major bank in New York City wants.”

Finding New Avenues for Growth

FedNow’s growth is being fueled by a combination of expanding participation and an increasing number of real-world use cases.

One of the fastest-growing areas is earned wage access and off-cycle payroll. Workers no longer want to wait two weeks for a paycheck, and employers are using the FedNow Service to provide access to earned wages or pay employees at the end of a shift. For many families, that can mean the difference between paying rent on time and falling behind.

The service is also reshaping major life events. Homebuyers can send escrow payments instantly, while car buyers can complete financing and drive off the lot immediately—even on weekends. Digital wallet funding and defunding has emerged as another significant use case, enabling money to move seamlessly in and out of brokerage accounts, payment apps and other digital platforms.

Businesses are finding value in real-time payments as well. Major fintechs are partnering with FedNow to deliver new capabilities to their customers, while small businesses are using the service to pay suppliers faster, improve cash flow, and reduce reliance on checks.

For financial institutions, account-to-account transfers remain a significant opportunity. Many consumers maintain multiple accounts and increasingly expect to move money instantly between them, whether within the same institution or across different banks.

Behind this growth are several structural advantages. The expanding number o