Instant payments have become the de facto expectation for consumers and businesses alike. Brands that cannot deliver on the promise of real-time, safe-to-spend funds will quickly find themselves losing ground to the competition.
Companies in the United States seeking this new standard have a growing number of payment options to choose from, including Same-Day ACH, push-to-card, the RTP® Network, and – now – FedNow. It can be confusing to know which is best suited to your needs and what advantages one holds over the others.
At Ingo Payments, we believe in the power of instant payments and recipient choice. We support a wide array of options, many of which enable real-time delivery of funds to accounts or cards.
To help make sense of which real-time payment options might be best suited for your business, we’re breaking down the key differences between the RTP Network, FedNow and push-to-card.
The RTP Network
Launched in 2017, the RTP Network is the latest payment network from The Clearing House (one of the key owners/operators of the ACH system). It delivers payments of up to $1,000,000 that settle in just seconds to bank accounts at participating institutions, 24x7x365. Consumers or businesses use the ABA/Routing number typically found at the bottom of a check or in their online banking experience as the alias for receiving money. Most of the big banks and the larger regional banks participate in the RTP network, but it is not yet ubiquitous.
Launched in July 2023, FedNow is the Federal Reserve’s new instant payment service. Like with the RTP Network, it promises ‘always-on’ instant settlement and uses the same ABA/Routing number for an alias. Transaction amounts are capped at $500,000 per transaction but it still has limited reach with only 274 (mainly small) banks connected so far. It holds promise to extend instant payments to more financial institutions – including smaller, community banks – but a survey by Cornerstone Advisors found that less than half of banks and credit unions plan to offer real time payments by the end of this year.
Push-to-card payments use the existing card networks’ payment rails, just in reverse. Funds can be sent directly to a bank account via an eligible cardholder’s debit card or prepaid card in near real-time. Push-to-card already has coverage for 98% or more of the accounts and cards in market today. Equally important, most consumers – especially younger ones – are comfortable using their card number as a payment alias. These are reliable payments that can reach any account on that card company’s network, making its reach to cardholders nearly universal. Like the RTP Network, the system is available 24x7x365, but with transaction amounts of up to $125,000.
Choosing an Instant Payment Option
The Ingo platform enables seamless orchestration of payments across all relevant instant rails, including both the RTP Network and push-to-card, to provide our clients with flexibility when choosing payment options. Ingo also supports additional payment options such as PayPal, Venmo, ACH, and paper checks.
In practice, much of this comes down to familiarity on behalf of the recipient. Consumers often don’t know the difference between the RTP Network, FedNow or push-to-card – they only know that they want their money in their account as fast as possible. Their preference is likely determined by whether it’s easier to enter a card number or a bank account number.
For companies, that means it’s important to provide coverage across multiple options to ensure you’re meeting customer demand and expectations. In the case of Ingo Payments, we solicit destination account information from recipients then process the transaction using the fastest available rail, according to their preference. If that’s a bank account, then it depends whether the receiving bank is on an instant payment network. If it’s a debit card number, then it settles instantly.
This is why neither the RTP Network nor FedNow serve as good standalone options for digital disbursements compared to push-to-card or traditional ACH today. Together, they only cover about 65% of available accounts, meaning that even combined they don’t provide the ubiquity needed for full adoption. They are better viewed as “plumbing” that can serve as accelerants to ACH because a payment can be diverted to an instant rail versus the ACH batch rail if it’s using the same alias.
The Future of Instant Payment Rails
Ultimately, we see both the RTP Network and FedNow as potential ACH killers because they can deliver instant funds without the recipient ever having to know about them or make an explicit choice of payment rail. There is also the potential for FedNow to complete the coverage begun by the RTP Network through its appeal and reach to smaller banks. If that happens, then all bank account transfers using the ABA/Routing number alias could convert to instant payments.
Over time, the RTP Network and FedNow may also prove advantageous for business customers versus push-to-card. Oftentimes, large businesses do not have a debit card option and must rely on ABA/Routing number aliases. In that case, these two rails are an obvious preference over push-to-card. Further, any use case that requires invoice data or other information to travel with the payment is better suited to the RTP Network and FedNow because push-to-card does not have that capability.
No matter your preference or which rail is best suited to your use case, the challenge is in integrating to them. There is no interoperability between the RTP Network and FedNow or between push-to-card and ABA/Routing number aliases. The burden is on the company to do multiple integrations and to build some form of routing and support capabilities.
This is further complicated by the reality that the technology, risk management, regulations and support requirements are different for each payment rail. And on top of that, each involve coordination with card networks, wallets, international wallets and more. The task can be daunting.
This is the heart of the Ingo Payments value proposition. We make the process seamless for clients by offering payment orchestration across all the relevant rails through a single API, to ultimately deliver on customers’ expectations for a modern payments experience.