How to break through adoption barriers
At M&T Bank, many of our clients have been asking about new and emerging forms of payment. They want to know which solutions are viable and when it makes sense to embrace recent options like instant payment methods. We share our thoughts on the adoption of instant payments and three possible barriers facing businesses...
Common questions about instant payments
- Is now the right time to start using instant payments? If not, when?
- What are the benefits compared to what we have today?
- How can we get ready to adopt instant payment options?
- Do I need to know about the difference between Real-Time Payments (RTP(r) offered by The Clearing House) and FedNow (offered by the Federal Reserve)?
Where we are: adoption by the numbers
Instant Payment methods, although being heavily discussed, is still in it’s infancy as a viable option for payment.
In the first quarter of 2025, The RTP network broke records: $163 billion and 100 million transactions. The RTP network doubled volume in just 18 months, surpassing one billion payments. FedNow is still in its earliest days after launching in July 2023, and has been showing solid quarterly growth is items and dollars processed, and bank adoption has been robust.With over 1300 financial institutions utilizing the service, FedNow has grown quickly especially with small and midsize financial institutions who make up more than 95% of the participants.
While these numbers are impressive, they only represent a minuscule percentage of the 8.5 billion payments in the first quarter on the ACH Network, partly driven by increasing usage of Same Day ACH
For most businesses, now is the right time to begin testing the addition of faster payments into your current payment strategy—alongside more traditional options, including standard ACH and wire transfers. By doing so, it supports a broader strategy to accelerate the move away from check payments, thereby increasing cash flow and mitigating the potential for fraud.
Instant Payments must break through three barriers in order to be a viable payment option for businesses.
That said, we do not believe that instant payments will fully replace the older alternatives. Instead, payment options will coexist and become a part of the payments mix for businesses as another arrow in the quiver.
Is now the right time to start using instant payments? Yes. Both methods are taking off in the U.S. Now is an opportune moment for most businesses to begin.
Education: Understanding the Benefits
The main differences between payment options are funds availability, information availability, and processing windows. While ACH and Wire have higher item limits, RTP recently raised transaction entry limits to $10 Million and FedNow to $1 Million which will close the gap further on use cases.
Instant payment options offer two unique benefits compared to the alternatives—the speed and type of information availability and the always-on processing window.
Efficiency and speed help corporates achieve realtime cash flow management. Immediate availability of information confirming the successful receipt of the payment significantly reduces reconciliation time and errors.
Instant payments can also enhance liquidity management and optimize working capital by ensuring funds are immediately available.
Finally, they can streamline customer support issues from late or non-payment by allowing customers to settle bills and resume services immediately, as in utilities or telecoms.
| Real-Time Payment | Same-Day ACH | Wire | |
|---|---|---|---|
| Typical Funds Availability | Immediate | During Transaction Day | Immediate or Near Immediate |
| Information Availability | Immediate | Varies, But Often End of Day | Varies, But Often End of Day |
| Processing | 24x7x365 | During Business Hours | During Business Hours |
Beyond Education: Making Payments “Conversational”
Instant payment confirmation and advanced messaging capabilities could also transform instant payments into a more “conversational” process—offering additional information beyond basic payment status. Businesses will soon be able to use value-added information such as Request for Payment (RFP) to send detailed invoices directly within the payment system, ensuring accurate and immediate billing information. Request for Information (RFI) is a parallel feature that allows participants to ask about specific payment details, enhancing communication and providing clarity on transactions.
These kinds of rich exchanges have the potential to make payments more interactive, efficient, and trustworthy through enhanced transparency and responsiveness.
See it in action
A biller that says yes to an RFP can send an electronic payment request to your banking system where you can choose to pay or not- Speeding up the process by saving back-and-forth on invoicing, decreasing any input errors and optimizing cash flow.
What are the benefits compared to what we have today? Instant payments can turn payments into a tool for strengthening relationships between you and your stakeholders.
Account Reach: Uptake of Instant Payments by Banks
It is important to realize that not all banks with instant payment offerings have implemented RFP and RFI. While some regional banks like M&T have been on the instant payment rails for over 5 years, many are not. Two-thirds of banks have not yet signed up for RTP or FedNow, according to research by RedCompass Labs from May 2024.
In many ways, the delay is understandable. For banks, adopting instant payments requires infrastructure upgrades, integration with other core banking systems, addressing security and fraud concerns, operational readiness, staff training, and change management. Fragmentation between RTP and FedNow is also giving some banks pause. Strengthening your relationships with institutions who do have instant payment rails, however, can help optimize cash flow by offering additional paths for moving money domestically very quickly.
Better News for Businesses
Business and commercial customers of banks face fewer challenges when making the decision to add instant payments to their payment strategy. They can expect their banks to provide support, input from assessing demand and absorbing overall implementation barriers.
Partnering with a bank that has established Instant Payment rails can ease your integration into the Instant Payment network by creating tailored partnerships for your business’ unique needs.
Adding access to the Instant Payment network could be a key component to your business’ payment strategy. Use these 12 questions to start a discussion with your bank and other strategic partners.
Guided Decision Making and Planning Process for Adoption
- How can we overcome scalability challenges to ensure our payment systems can handle future growth?
- What strategies should we implement to handle increased transaction volumes effectively?
- What infrastructure upgrades are necessary for adopting instant payments in our organization?
- How can we ensure consistent performance during peak transaction times?
- What security concerns should we address when implementing instant payments?
- What are the potential risks and fraud scenarios associated with instant payments?
- What strategies can we adopt to mitigate security and fraud threats in real-time payment systems?
- How important are robust cybersecurity measures for instant payments, and how can we ensure they are in place?
- How can we achieve standardization and interoperability with our other payment systems and internal platforms?
- How can we work towards having uniform standards across different payment systems?
- What challenges might we face in achieving seamless integration with core business systems, such as ERPs?
- What efforts are banks and industry bodies making to progress instant payments, and how can we align with these efforts?
How can we get ready to adopt instant payment options? Start the conversation with your bank, beneficiaries/receivers, trade partners, and counterparties. Use what you learn to develop an action plan.
Prioritization: Accelerating from Neutral
The final barrier to adoption is more organizational than technical. The technology for instant payments is ready for widespread use. However, customers must take care to choose banking partners with more than just instant payment availability—they must offer value-add features, simple onboarding processes, customizable options and scalability. Instant payments cannot succeed if they remain in the margins.
Getting your business there is easier, faster, and more important than you might think.
Integration
Modern payment platforms are designed to be compatible with your current treasury management systems, ensuring a seamless transition. By following clear, step-by-step guides, your accounts payable and receivable can quickly adopt instant payments. Choose a banking partner that offers extensive resources and support to help you navigate the integration process, allowing for a smooth and efficient experience.
Onboarding
Banks that prioritize instant payments have designed the onboarding process to be fast and user-friendly for customers who wish to add instant payments to their payment strategy. Critical considerations for a smooth transition include training staff, updating policies, and testing the system. Many companies enjoy a streamlined experience thanks to the robust support provided by banks like M&T, ensuring that clients can start benefiting from instant payments without significant delays.
Strategic Advantage
Companies that have embraced instant payments often see improved cash flow, reduced need for short-term borrowing and increased financial agility. Improving these factors may help businesses respond quicker to changing market opportunities and challenges. Businesses who have already integrated instant payments report strengthened business relationships, for example, by providing faster payments to vendors and immediate payroll for employees.
Simply put, the time to get started is now. Companies can gain a competitive edge and prepare for the evolving financial landscape.
Author: Tom Lopes
Tom is currently the Head of Commercial Payment Products with M&T Bank. His team manages payment products leveraging ACH, Wire and Instant Payments for business and commercial clients of M&T Bank. In addition to his role with M&T Bank, Tom currently is a member of the Nacha board of directors . He has had a lengthy career in the payment space at Peoples United Bank, Chemical Bank and Citibank. During his career, Tom has held roles in Service, Operations, Product Management and New Product Development, managing large and small teams. In his current role at M&T, he is responsible for the Commercial Bank strategy around faster ACH and Real Time Payments and has been directly involved in all major industry changes for the past 15 years through collaboration with The Clearing House, Nacha, NEACH, The Federal Reserve Bank, as well as numerous FinTech providers. He has spoken on a wide range of topics such as Risk and Fraud, Business Email Compromise, Real Time Payments, Client UX, ACH Rules and Same Day ACH.
To see if Instant Payments are right for you, call:
- Your relationship team today or
- M&T Bank’s Commercial Service Team at 1-800-724-2240
Monday-Friday, 8am-6pm ET
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