As FedNow approaches its second year in operation, the Federal Reserve has introduced new technical features aimed at refining how financial institutions manage instant payments across customer segments.
The US Federal Reserve’s instant payments platform, the FedNow Service, has launched two new features: an increase in the transaction limit from $500,000 to $1 million, and new account activity threshold tools aimed at improving risk mitigation.
The announcement, made on June 24, comes as the service nears its second anniversary.
The new features are described as value-added tools for financial institutions seeking greater control over real-time payment activity, particularly as more participants begin enabling “send” capabilities.
“These new value-added features offer FedNow participants more options to customise their instant payments profile, adding to the suite of available tools that allow financial institutions to tailor activity according to risk management needs and customer activity,” said Mark Gould, chief payments executive for Federal Reserve Financial Services.
FedNow’s current position in the market
FedNow launched in July 2023 with the aim of improving access to real-time payments across the US banking system, particularly among smaller financial institutions.
According to the Federal Reserve, approximately 1,400 banks and credit unions are now connected to the network across all 50 states. More than 95% of current participants are community banks and credit unions.
The addition of new controls and a higher value limit reflects a broader intention to support business-related use cases and to offer a greater degree of configurability for institutions with varied customer segments. This may help improve confidence among banks that have yet to fully activate the platform’s functionality.
“With these controls, our customer base of community banks will have more confidence in expanding their instant payment capabilities, especially when it comes to ‘send’ functionality, which will ultimately help all financial institutions remain competitive in the marketplace,” said Brooke Tiedt, senior vice president, payments and cash management at Bankers’ Bank.
Functionality update focuses on risk and segmentation
The new account activity threshold feature allows banks to define transaction limits and frequency parameters based on customer type or risk profile. This could include, for example, stricter limits for new personal accounts and more flexible parameters for established business clients.
These settings are intended to offer institutions greater oversight of outbound transactions and help manage exposure as participation in FedNow expands. The update is framed as a response to feedback from the network’s existing participants.
“Feedback from the industry has been invaluable, and we intend to remain agile and responsive to new and changing customer needs as instant payments grow and mature,” said Gould.
Evaluation of impact and market response
The transaction limit increase to $1 million brings FedNow in line with The Clearing House’s RTP® network, which already supports high-value business transactions. However, the impact of the change will likely depend on whether larger banks and corporate users consider the FedNow infrastructure mature enough to handle more complex use cases.
To date, uptake of “send” capabilities has been limited relative to network participation, and the Federal Reserve has not published data on transaction volumes. While the network’s reach has expanded, its role in the broader instant payments ecosystem remains developing.
Additionally, no update has been provided on interoperability or integration with other domestic or international systems, a factor that could influence longer-term relevance for larger institutions and cross-border use cases.
