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Industry NewsLatest

Fed's real-time payments system FedNow to raise transaction limit

Published

Mar 4, 2025

TopicLatest
Credit: FedNow

TL;DR

  • The Federal Reserve plans to double the FedNow real-time payments system's transaction limit to $1 million this summer to attract more business users.
  • Launched in July 2023, FedNow aims to eliminate payment delays, with around 900 financial institutions already using the system by late 2024.

Author

Paddle News Desk

The Federal Reserve is set to enhance its FedNow real-time payments system by increasing the transaction limit to $1 million this summer, doubling the current cap of $500,000. It's hoped the move will broaden the system's appeal to businesses by accommodating larger transactions such as corporate supplier payments, real estate transactions, and payroll funding.​

Built for speed: Launched in July 2023, FedNow facilitates instantaneous payments, addressing the traditional delays of the U.S. banking system. As of late 2024, approximately 900 financial institutions had adopted the system, with projections suggesting this number could surpass 1,150 by mid-2025.

Some orgs remain wary: Despite this growth, the adoption rate remains modest compared to the nation's roughly 9,000 financial institutions. Many banks and credit unions have opted for 'receive-only' functionality, citing concerns about potential fraud associated with faster transaction capabilities.​

Allaying those fears: To address these concerns, the Fed plans to introduce a new feature alongside the increased transaction limit: the ability for participating institutions to customize transaction parameters, enabling them to set specific value and velocity thresholds tailored to different customer segments.

The sales pitch: "We're opening up opportunities for our customers to meet market needs, while also maintaining strong risk mitigation controls," Federal Reserve Financial Services chief payments executive Mark Gould said in a statement. "The combination of account activity threshold functionality with the increased transaction limit gives participants powerful tools to customize risk parameters across customer segments, from established businesses to retail clients."

Big spender: In enabling financial institutions to offer instant payment services to their customers, the FedNow Service operates alongside the private sector's Real-Time Payments (RTP) network, managed by The Clearing House. The RTP network recently raised its transaction limit to $10 million, reflecting a broader industry trend toward accommodating larger real-time transactions. ​