There’s a growing rivalry between banks and non-bank entities as consumers look for quicker, more accessible ways to transfer money. Banks recognize that FedNow services provide an edge in a market that prioritizes speed and dependability.
According to executives interviewed by PYMNTS, the surge in FedNow adoption is notable. “We began with just 35 institutions, and now we’ve surpassed 1,500,” Nick Stanescu shared. He emphasized that the demand for quick and convenient payments is propelling this growth.
Consumers prefer speed, non-banks adjust
Stanescu pointed out that a recent Fed survey illustrates how swiftly expectations are shifting. “78% of consumers prefer faster payments,” he noted, mentioning that half of them also hold accounts with non-bank services. This trend indicates that instant payments are enabling banks and credit unions to effectively compete with non-banks, which offer convenience and speed.
Additionally, rising expectations are evident in the data, with 6 in 10 consumers emphasizing the importance of their financial institution providing instant payment options. Among Gen Z, that figure jumps to 78%. This reflects a 14-point increase from the previous year. “Immediate payments are not losing their significance; if anything, they’re becoming even more crucial,” Stanescu remarked.
Businesses mirror this trend; 66% of companies said they’d likely use instant payment options offered by a major financial institution, and those who do report a 10% increase in satisfaction. “These figures are very telling,” Stanescu commented.
Competition and customer engagement
Stanescu explained that the growing adoption of instant payments is driven by rising customer expectations and competition among banks. “Customers are expecting these experiences, bringing banks into the conversation,” he stated. “Competitive pressures are genuine.” He mentioned that a large regional bank sped up its FedNow service launch by a year due to customer demands for faster payments and competitor momentum. “Competition sparks progress,” he added.
Always accessible and always on
Stanescu described how instant payments will bring a fundamental change, with transactions occurring continuously. “This is a game changer,” he asserted. “Imagine being able to finalize a car loan on a weekend and drive off with your vehicle. That’s the always-on nature of instant payments.”
He also highlighted the U.S. Treasury’s use of instant payments for federal spending, particularly in emergencies. “The speed of funds is vital, especially when timing is crucial,” he stated.
Advantages beyond speed
According to Stanescu, the benefits of instant payments for treasurers and CFOs extend beyond speed. “The immediate availability of funds and the certainty of settlement are major advantages,” he explained. “Once the funds are in your account, they’re yours to use.”
This reliability helps businesses enhance cash flow management and foster better relationships with suppliers and clients. “Being able to instantly pay suppliers or invest funds can significantly impact operations,” he added.
Instant payments also allow for the transport of data within transactions, which enhances processing efficiency and expedites adjustments. “We’re seeing operational efficiency improve as a result,” Stanescu remarked.
Expanding FedNow’s reach
The FedNow platform’s growth continues at a rapid pace. “We are witnessing consecutive double-digit growth from the first to the third quarters of 2025,” Stanescu noted. Weekend transaction volumes remain robust, supporting continuous commerce.
To drive adoption, he indicated that financial institutions need to focus on sending capabilities as well as receiving payments. “Getting the receiving process down is a good step, but sending payments unlocks even more value for customers,” he said.
Small banks and credit unions getting involved
Regional banks and credit unions are also increasing their participation in the FedNow system. “This service is adaptable,” noted Stanescu. “You can initially accept payments to manage risk and then expand into sending functionalities.”
He pointed out that some smaller institutions prefer starting with a limited customer base to establish trust. “Some begin by restricting sending during certain hours,” he explained. “That works for a while, but eventually, they need to broaden their offerings.”
Creating a wider ecosystem
Stanescu emphasized that the FedNow service aims to foster a broader ecosystem beyond just financial institutions. As businesses become more familiar with instant payments, banks can collaborate with them to innovate new use cases.
He urged fintechs and third-party providers to act promptly. “Applications must integrate instant payment capabilities now, not later,” he advised. “If you’re developing software, include FedNow as one of your options immediately.”
This integration will facilitate a more seamless experience for sending and receiving money across various industries.
Observing change from the frontlines
Stanescu concluded that the pace of innovation in the payments sector is picking up. “This is an exciting time for payments,” he reflected, stating, “We’re in a prime position to drive and support this change.”
