FedNow to raise transaction limit to $10 million

• Key Insight: Real-time payment limits are getting larger to support business transactions.
• Supporting Data: Forty three percent of banks are investing in real-time payments in 2025, according to American Banker research.
• Forward Look: Expects say real-time networks still have to improve interoperability. 

The two largest real-time payment networks in the U.S. are loosening transaction size restrictions, which enables larger transfers but still leaves technology gaps that may hinder further growth. 
FedNow, which went live in 2023, will increase its transaction limit from $1 million to $10 million in November. The announcement comes three months after FedNow's limit was raised from $500,000 to $1 million and follows The Clearing House raising its limit to $10 million from $1 million in February.

The Federal Reserve attributed the increase to "commercial demand," and said a larger limit would open the network to more business payments. These moves have spurred growth in real-time payments in the U.S., but overall real-time payment penetration still lags other nations such as Brazil and India. 

What larger limits do

Real-time payments are growing quickly in the U.S. but are still a low percentage of all transactions. RTP volume during the second quarter was $481 billion, up 195% from the prior quarter. And FedNow processed about $240 billion, up more than 400% over the prior quarter. There was about $3.5 trillion in U.S. payments volume in the U.S. during the second quarter, according to the U.S. Treasury. FedNow's network includes more than 1,400 financial institutions, up from about 500 in the middle of 2024. RTP's network has more than 1,000 institutions, up from about 400 the prior year. 

Banks are also prioritizing real-time payments. Forty-three percent of banks are investing in real-time payments in 2025, according to American Banker research, making it the second highest payment priority after investments in digital wallets, which came in at 51%. 

Enabling larger payments brings more transaction types such as real estate and supply chain payments to real-time rails. Adding new use cases also helps banks explain the benefits of real-time payments to their clients. 

"There are two things that increase adoption: mandates and market demand. Since we don't have mandates in the U.S., there has to be market demand to move it forward," Erika Baumann, research director for commercial banking and payments at Datos, told American Banker. 

In order to increase market demand, it has to be clear how and when to use a real-time payment and it has to meet the basic needs of the payment, she said.

"The Clearing House's RTP network really proved out that increasing the dollar limit helps to increase the number of payments that fit into that second bucket," Baumann said, noting TCH's average payment size skyrocketed from just $842 in January to more than $4,000 by June, a 376% increase, following the boost in transaction limit to $10 million. 

Where gaps remain

Despite the recent growth, penetration of real-time payments in the U.S. lags other large markets. In the European Union, more than 60% of consumers reported using instant payments in 2024, according to Mordor Intelligence. And in Brazil and India, Mordor reports usage of the two countries' national payment rails is nearly ubiquitous. "Real-time payments are already mainstream in most other countries (outside of the U.S.)," Gareth Lodge, a senior analyst at Celent, told American Banker. 

The main difference between these markets and the U.S. is governments mandate usage of real-time networks in Brazil and India. In Brazil, for example, employers are required to use the national PIX payment network for payroll, making the national rail a central part of most people's lives. And in the EU, regulations require instant payments to be offered at the same cost as standard payments. Without a mandate, it's up to banks to provide advocacy. 

"To continue increasing adoption, banks need to continue to educate their customers on when to use real-time payments and make it easy to do so. We are lagging in this, so an increase in education needs to be part of the plan as well," Baurmann said. 

Real-time payment networks are also locally focused, which has hindered their growth. Most projects to support international real-time payments are early stage, and the major networks in the U.S. aren't interoperable. 

Celent is completing a survey of U.S. banks, and most banks have said, "Why do I need to have two sets of rails?" Lodge said. 

"There's no challenge in convincing people to get money faster, immediately is best for everyone," Jessica Pinkston, a senior director at Cornerstone Advisors, told American Banker, noting that most real-time payment networks and P2P transfer apps have subtle processing differences that keep them from working together. For example, PayPal and Venmo, which are corporate siblings, only became interoperable in July. "Interoperability remains a challenge," Pinkston said. 

"To support interoperability, we have generally aligned our operating procedures and ISO 20022 messages with RTP," FedNow said in an email, adding this provides financial institutions the flexibility to route payments based not only on available recipients, but other criteria such as price or other features. "Moving forward, we will continue to listen and work with the industry to minimize complexity when it comes to routing instant payments over both services."  

And most parties are more interested in receiving payments instantly rather than sending funds, which has also hindered growth. About half of banks do not support sending real-time payments, a gap that is primarily a result of the complicated technology work required to send funds. 

"Managing operational processes and fraud concerns remain an obstacle for a lot of institutions on the sending side," Pinkston said. "Until we get a lot of institutions set up to send, we won't see a lot of traffic going through these networks, and that will inhibit volume."

In an email, Greg MacSweeney, a TCH spokesperson, told American Banker, "The RTP network is definitely on the road to mainstream status, but building a network organically takes time. ACH took more than ten years to scale, and it really only took off when payroll moved to ACH."

MacSweeney also noted Brazil and India have government mandates that have driven adoption in those countries. "The U.S. is unique, as it has (about 10,000) banks and credit unions. Most other countries that have instant payment systems have far fewer institutions to connect to the faster payment rails," he said.