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Real-Time Payments (RTP) and FedNow: What They Mean for Merchants and ISOs in 2025


RTP and FedNow in 2025

Introduction


The payments industry is undergoing one of its biggest shifts since the rise of card networks: the rapid adoption of real-time payments. With The Clearing House’s RTP network gaining momentum and the Federal Reserve’s FedNow service officially live nationwide, merchants now have access to instant settlement capabilities that were once reserved for niche use cases.


By 2025, real-time payments aren’t just for peer-to-peer apps like Venmo or Zelle. They’re entering the mainstream of B2B, bill pay, and ecommerce. For merchants and ISOs, understanding how RTP and FedNow fit into the payments ecosystem is crucial.


What Are Real-Time Payments?


Real-time payments allow funds to move from the payer’s bank account to the payee’s bank account instantly, 24/7/365.


Unlike ACH (which can take 1–3 days) or card transactions (which settle after batching and clearing), RTP transactions settle immediately and are irrevocable.


Key Characteristics:


  • Instant settlement – Funds clear in seconds.

  • Finality – No chargebacks; once settled, the payment cannot be reversed.

  • Always-on – Available nights, weekends, and holidays.

  • Data-rich – RTP transactions can carry detailed remittance information, improving reconciliation.


RTP vs. FedNow: The Two U.S. Rails


The Clearing House RTP Network


  • Launched in 2017, privately operated by The Clearing House.

  • Connected to major banks, primarily large institutions.

  • Strong adoption in B2B and bill payment sectors.


FedNow


  • Launched in July 2023 by the Federal Reserve.

  • Designed to expand real-time payment access to smaller banks and credit unions.

  • By 2025, over 500 financial institutions are live on FedNow, making it the broadest-reaching real-time rail in the U.S.


Together, these rails are creating a new national infrastructure for instant money movement.


Why Real-Time Payments Matter for Merchants


  1. Improved Cash Flow


    • Instead of waiting days for card settlement, merchants receive funds instantly.

    • This reduces reliance on short-term financing and improves liquidity.


  2. Lower Costs vs. Cards


    • RTP and FedNow transactions often carry lower fees than credit card interchange.

    • For large-ticket or recurring payments, this can represent significant savings.


  3. Reduced Chargeback Exposure


    • Because payments are irrevocable, merchants avoid costly disputes and chargeback fees.

    • This is especially valuable for industries vulnerable to friendly fraud.


  4. New Use Cases


    • Payouts to gig workers or suppliers in real time.

    • Billers offering instant pay-to-avoid late fees.

    • Ecommerce merchants offering RTP as a checkout option for debit-focused consumers.


Challenges and Risks


  1. No Chargebacks Cuts Both Ways


    • While merchants benefit from fewer disputes, customers may hesitate to use a method with no built-in protections.

    • Building trust will require clear refund policies.


  2. Consumer Awareness


    • Cardholders know Visa and Mastercard; few know FedNow or RTP.

    • Adoption will take education and incentives.


  3. Integration Complexity


    • Merchants need payment gateways and orchestration platforms that support RTP rails.

    • Banks may differ in how they expose APIs.


  4. Fraud Shifts


    • Fraudsters target irrevocable payment methods. Real-time fraud detection becomes mission-critical.


The Role of ISOs and Acquirers


For ISOs, real-time payments represent both a threat and an opportunity.


  • Threat: If merchants move large portions of volume off card rails, ISOs lose interchange-driven revenue.

  • Opportunity: ISOs that adopt RTP and FedNow early can position themselves as consultants and enablers, offering merchants faster settlement and lower-cost rails.


Forward-looking ISOs are already bundling multi-rail strategies — offering merchants the choice of routing transactions via cards, ACH, RTP, or wallets depending on cost, risk, and customer preference.


Real-World Examples in 2025


  • Gig Economy Payouts: Delivery apps use RTP to pay workers instantly after each shift.

  • Healthcare Billing: Clinics accept FedNow payments for faster patient co-pays, reducing billing cycles.

  • Ecommerce Checkout: A handful of U.S. merchants now offer “Pay with FedNow” at checkout, particularly for higher-ticket items where card fees are significant.


Cross-Border Considerations


While RTP and FedNow are U.S.-based, the global trend toward instant payments is accelerating:


  • India’s UPI processes billions of instant transactions monthly.

  • SEPA Instant is scaling in Europe.

  • PIX dominates in Brazil.


Merchants with global footprints will need orchestration platforms that bridge instant payment rails internationally.


Future Outlook


By late 2025 and into 2026, expect to see:


  • Increased merchant adoption as RTP rails integrate into mainstream gateways.

  • Wallet integrations where RTP is offered inside Apple Pay or Google Pay.

  • Corporate treasury adoption as enterprises use FedNow for supplier payments.

  • AI-powered fraud monitoring built specifically for instant settlement.


Over the next 3–5 years, real-time payments won’t replace cards — but they will become a core alternative rail, especially for high-ticket payments, B2B, and payouts.


Conclusion


Real-time payments are no longer just a buzzword — by 2025, they’re a live, growing channel that U.S. merchants cannot ignore. RTP and FedNow are transforming settlement times, reducing costs, and creating new opportunities for ecommerce, B2B, and gig economy businesses.


For merchants, the challenge is integration and consumer adoption. For ISOs and acquirers, the challenge is relevance — but also the opportunity to lead.


At Tailored Commerce Group, we help merchants and ISOs evaluate multi-rail strategies that combine cards, ACH, RTP, and FedNow for the best mix of cost efficiency, approval rates, and customer experience.





 
 
 
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