Fed lifts FedNow limit to $10M

Core Insights - The Federal Reserve will increase the FedNow instant payments transaction limit from $1 million to $10 million in November, allowing financial institutions to customize transaction sizes based on their internal risk and business needs [9] - The demand for instant payments is rising, with the number of financial institutions using FedNow growing by approximately 8% since April, reaching about 1,400 banks and credit unions [6][9] - FedNow processed $245.8 billion in transactions during the second quarter, while its competitor, The Clearing House's RTP network, handled $481 billion, indicating strong competition in the instant payments market [7] Demand and Growth - The Fed's decision to raise the transaction limit was driven by increasing demand from financial institutions and businesses [3] - FedNow settled roughly 1.3 million transactions in the first quarter, a 43% increase compared to the previous quarter, and facilitated 2.1 million transactions in the second quarter, marking a 63% surge [6] Competitive Landscape - FedNow faces significant competition from The Clearing House's RTP network, which processed nearly triple the amount of payments compared to FedNow in the first quarter [7] - The introduction of new FedNow risk mitigation tools earlier this year aims to enhance the service's appeal to financial institutions by allowing them to tailor their instant payment capabilities [3][5]