Key Insights
- Demand for faster payments encourages community financial institutions to evaluate multiple rails to retain small business customers.
- Partnering with third parties can ease technical hurdles, though institutions retain ultimate responsibility for compliance and risk oversight.
- A thorough payments audit helps institutions pinpoint high-value use cases and develop a phased, controlled implementation roadmap.
The now-famous operatic ad promoting J.G. Wentworth, the financial services company that buys future settlements, repeats the line, “I need cash now!” The jingle has become a ubiquitous earworm, and its message is an apt metaphor for the rapid rise in demand for faster and faster payments.
Demand for faster payments is surging. ACH same-day payments were up 29% in Q2 to 436 million payments, with payment values up 28% to $1.3T, according to Nacha.
Everyone, it seems, wants to jump on the ACH same-day fast track: businesses, payrolls, B2B, tax payments, consumers, lenders.
While same day ACH is currently one of the fastest growing payment methods, it is far from the only one seeing broader acceptance. Indeed, the real shift is not simply the growth of same-day ACH but the proliferation of payment options available today. Banks need to assess their needs and capabilities to determine the right mix from the menu of options.
- Same day ACH. Usually settles the same business day. Domestic only. Governed by Nacha, same-day ACH currently has a $1MM cap on transactions. The limit jumps to $10MM in September 2027.
- Standard ACH. Settles in 1-3 business days. Domestic only. Nacha sets no cap on standard ACH. Cheaper than same day ACH, often free.
- Wire. Usually settles the same day for domestic transfers and 1-5 days for international transfers. Run by the Federal Reserve. Tends to be more costly than standard ACH. No system limits on amounts; banks set their own limits. More expensive.
- RTP. Usually settles in seconds. RTP is owned by a consortium of banks and run by the Clearing House. Has a $10MM limit and very low fees. Operates 24/7. Limited but expanding international capabilities.
- FedNow. Usually settles in seconds. Owned by the Federal Reserve. $10MM transaction limit. Very low fees. Operates 24/7. Domestic only.
- Push to card. Settles in seconds to minutes. Pushes funds to a recipient’s debit or credit card. Run by card companies. Charges a percentage of the transaction amount plus a fee. Works internationally. Operates 24/7.
Banks not only need to decide which payment rails they will offer, but also what limits they may place on transactions, what they are capable of handling, and what fees they will charge. When money moves this quickly, CFIs need to be mindful of complying with regulations, particularly BSA/AML.
A CFI needs to take into account what its customers, particularly business customers, need and want, as well as what these customers are willing to pay for faster payment services. Many SMBs want not just faster payments but often the fastest of the fast – instant payment. One survey found that 88% of SMBs would pay a premium to receive instant payments,
Banks that fail to provide what SMBs want can end up losing business. According to the survey, 61% of SMBs reported turning to FinTechs to meet their payment needs.
The cost and complexity of a bank running multiple rails in house can be daunting. Rather than trying to offer everything, a smaller bank may want to be selective about which rails will suffice to meet the needs of its customers.
Faster Payments - Build or Buy
The key question is not simply whether to manage payments in-house or outsource them. It's which capabilities the bank needs to own, which it can obtain through a partner, and which approach best supports priority customer use cases.
Before deciding, banks should should assess who would use faster payments and why — such as small-business disbursements, payroll, account-to-account transfers, or urgent vendor payments. They should weigh fraud and compliance controls, 24/7 operational coverage, liquidity management, core and digital-banking integration, partner capabilities, and overall economics.
A third party may reduce the technical and implementation burden, particularly when legacy cores require significant upgrades to support real-time processing. Core providers can help connect institutions to instant-payment networks and support real-time transaction processing. But outsourcing does not transfer accountability. The bank remains responsible for vendor oversight, risk management, compliance, service quality, and customer experience. Federal Reserve guidance notes that boards retain ultimate responsibility for third-party risk oversight.
For many CFIs, a phased partner-led approach may be the most practical starting point. The right choice should reflect the bank’s customer demand, strategic goals, risk capacity, technology environment, and ability to scale.
Start With an Audit
Before selecting a rail, vendor, or technology solution, banks should consider conducting a payments audit to understand current activity, customer needs, operational gaps, and readiness for faster payments.
The review could examine current rail usage; transaction volumes, values, timing, and exception rates; customer segments and unmet needs; cut-off times, fees, and service pain points; reconciliation processes; fraud and compliance controls; staffing and technology gaps; and the costs to process, support, reconcile, and investigate payments. Particular attention should be given to controls that can operate continuously, since instant payments can increase fraud, liquidity, compliance, and operational risk.
An audit can produce a prioritized roadmap, not just a list of gaps. It should identify the highest-value customer use cases, the payment capabilities needed to support them, required controls and investments, and whether each capability should be built, bought, or introduced in phases.
For example, a bank might begin by enabling receive-only instant payments or offering limited send capabilities to a defined small-business segment. Starting with a controlled use case can help the institution test demand, refine controls, build operational experience, and make future investment decisions based on actual results.
