Walk into a community bank boardroom today and you’ll hear a familiar refrain: deposits are harder to hold, small-business clients want their money faster, and fraud feels like it’s evolving by the week. None of those pressures is new. What is new is that the United States finally has two always-on instant rails, The Clearing House’s RTP network and the Federal Reserve’s FedNow Service, at national scale. Together, they’re changing how hometown institutions fund, price, and deliver payments. What looked like “big-bank tech” a few years ago is now an everyday lever for community banks to win relationships, improve liquidity, and lower operating risk.
The numbers alone justify paying attention. The RTP network said in May that it had 950+ participating institutions, reaching ~71% of U.S. DDAs and processing 107 million transactions valued at $481 billion in a single quarter with average daily throughput over 1.18 million payments and $5 billion in value (all figures as of Q2 2025). That’s not a pilot; it’s a utility. FedNow, meanwhile, marked its two-year milestone in July with 1,400+ participants (up from 900 at the one-year mark) and continued volume growth; just in Q1 2025, FedNow settled 1.3 million transactions, a 43% jump from the prior quarter. The momentum is real, and importantly for community banks, both rails are open to every insured depository institution on equal terms; no association membership required for RTP, and an on-ramp designed for smaller banks on FedNow.
Liquidity you can plan around
Community bankers are conservative about liquidity for good reason. Batch settlement (ACH) and card funding introduce timing gaps that push you to hold extra cushion. Instant rails flip that equation. On RTP and FedNow, payments clear and settle in real time with finality – no returns, no reversals, so banks know exactly when funds are in the account and available. The practical benefit isn’t just speed; it’s precision. You can fund loans or release wires against receipts you’ve truly received, not ones you expect to receive.
The Fed designed FedNow with that in mind. Beyond the core credit-push payment, the service includes Liquidity Management Transfers (LMTs) so institutions can move balances across correspondents or joint accounts at the Fed specifically to support instant payments. That means a community bank can stay “receive-ready” overnight and on weekends without over-parking cash everywhere “just in case.” The Fed’s guide to LMTs and related FAQs walk through how those transfers post to a master account and how receive-only participation works while you ramp up. RTP offers the same settlement certainty, and because it also runs 24x7x365 with irrevocable payments, your operations team can finally stop worrying about the Friday-night batch that won’t clear until Monday.
Deposits and working capital, in real life
If you strip away the jargon, “instant” is a deposit story. When your business client gets paid instantly and keeps that flow with you, you’re capturing operating balances that might otherwise sit with a larger bank or a fintech wallet. That capture is not theoretical. Surveys the Fed has published show two-thirds of U.S. businesses are likely to use instant payments if their primary bank offers them, and large majorities say use cases like instant payroll are a priority 72% of “very large” and 44% of “very small” businesses say they want that option. Independent research in 2025 found 73% of businesses already use RTP or FedNow, up sharply from the year before, as treasury teams prioritize faster cash conversion cycles.
Community banks have an edge when they can connect instant receivables to immediate action. A contractor scanning an invoice QR and paying over RTP doesn’t just settle the receivable; it reduces the owner’s need to revolve on a credit line over the weekend. A small franchise taking FedNow payments in its app can sweep those funds to payroll the same day. The work is in orchestration, not necessarily in massive software rewrites. Both RTP and FedNow support ISO 20022 messaging, including Request for Payment (RfP), which lets the payee initiate a request that the payer approves in their bank app. For community banks, RfP is how you turn receivables from “wait and reconcile” into “send and settle.” The Clearing House’s RfP biller playbook lays out how to operationalize it for billing-heavy clients.
Risk: less credit, different fraud
Instant settlement reduces one of the oldest bank risks: credit risk from delayed settlement which is exactly the tradeoff the Federal Reserve discussed in Community Banking Connections: instant payments lower traditional settlement credit risk while raising different risks, chiefly authorized push payment (APP) scams, misdirected payments, and operational lapses from 24/7 availability. You don’t manage those the way you manage card chargebacks because instant rails are credit-push and irrevocable by design.
The controls are there, but they sit in different places. FedNow’s first release included fraud prevention tools, the option to start as receive-only, and RfP, all of which let a community bank stage its rollout responsibly. RTP’s rulebook (public summaries in its Document Library) outlines fraud controls, including authentication before the push, transaction-level limits, and strong customer alerts. Meanwhile, the policy climate is moving toward tighter oversight of nonbank wallets and P2P platforms. The CFPB finalized a rule in late 2024 to supervise the largest nonbank payment apps, and litigation over Zelle fraud has kept APP scams in the headlines. For community banks, the lesson isn’t to avoid instant payments; it’s to pair instant rails with upstream authentication, customer education, and well-tested exception playbooks.
Pricing and the “check migration” moment
When a bank adopts instant payments, they don’t turn off ACH tomorrow, nor should they. ACH is growing, and Same Day ACH keeps expanding its limits and volume (1.2 billion payments in 2024 and $3.2 trillion in value; 9.2% volume growth through the first three quarters of 2025). But instant rails are now the premium option many payers will happily choose for certainty, posting, and confirmation. That makes pricing straightforward: you can keep ACH as the default rail for low-urgency items and price instant as value, not as a commodity. For treasury clients, certainty at 10pm Saturday is worth a few basis points. For consumers, the difference between funding a wallet now vs. “it’ll show up Monday” is visible at checkout and RTP has become the quiet backbone for use cases like brokerage funding, digital wallet defunding, earned wage access, loan funding, and merchant disbursements, all now common on the rail.
What a phased rollout looks like
A pragmatic community bank doesn’t jump to “send and receive everything” on day one. The healthier path starts where risk and value are both easy to control. A typical transition might be as follows:
Phase 1: Receive-only and internal transfers. Use FedNow’s receive-only option to turn on 24/7 credits with minimal exposure. Make the first customer “you”: instant inter-account transfers for retail customers (A2A) and internal corporate sweeps. Tie this to alerts and posting policies so operations gets comfortable with overnight and weekend activity.
Phase 2: RfP for B2B and billing. Pick five billing-heavy clients—a municipality, a regional healthcare practice, a utility co-op, a rental property manager, a trade contractor—and turn on Request for Payment so they can nudge their customers to pay now, with remittance data intact. The client’s receivables staff will see the difference immediately: fewer exceptions and faster cash.
Phase 3: Treasury features and SMB payroll. Add “instant on demand” for loan funding and insurance/claim payouts. For SMBs, pilot instant payroll for off-cycle runs and seasonal labor; demand is already there, as Fed research shows, then price the convenience.
Phase 4: Consumer outward instant. Once fraud tooling and limits are tuned, allow outward instant credits for retail customers starting with low limits, behavioral analytics, and step-up authentication for new payees. Educate customers about APP scams in the same breath you promote speed; the goal is delight and diligence.
The vendor and compliance conversations
Most community institutions will connect through a service provider (your core, a digital banking platform, a banker’s bank, or a payments gateway). The due-diligence checklist shouldn’t feel unfamiliar: SOC reports, availability SLAs, 24/7 monitoring, API and ISO 20022 mapping, and—crucially—liquidity alerting for after-hours spikes.
The Faster Payments Council’s 2025 adoption study (conducted with inputs from processors serving 90% of U.S. FIs) is a useful reality check: the enablers already have playbooks for community banks, and the most visible growth areas (earned wage access, loan payouts, wallet funding) map well to local markets. Regulators are paying attention too. In mid-2025, the prudential agencies solicited comment on actions to address payments fraud, explicitly asking how new or revised guidance could help small community banks mitigate instant-payment risks signal that supervisors expect adoption, not avoidance, paired with modern controls.
Why “instant” helps you be a community bank
The best argument for instant payments is not technology for technology’s sake. It’s that your brand promise: we know you and we move when you need us, maps naturally to a rail that moves at the speed of your customer’s day. When a farm co-op pays harvest crews on a Saturday night, when a contractor needs to release a lien because funds posted at 9:17 p.m., when a family has to fund a down-payment before a seller’s deadline, your ability to say “yes, now” is the relationship. Instant rails make that promise concrete.
There’s also a competitive dividend. As the National Retail Federation has reminded anyone who will listen, card “swipe fees” remain a massive cost center for merchants – $187.2 billion in 2024 – and businesses are actively hunting for cheaper, faster alternatives. If your bank can help a multi-location diner or a regional trades firm pull receivables in instantly via RfP and settle revenue 24/7, you are not just selling payments; you are solving cash-flow. That earns deposits, cross-sell, and loyalty.
Conclusion
Instant payments won’t fix the rate cycle, rewrite your deposit mix, or end fraud. But they do something smaller and more powerful: they give community banks a rail that matches the cadence of local life. RTP and FedNow make money move with certainty; Liquidity Management Transfers and receive-only options make adoption safe; ISO 20022 and Request for Payment make data travel with the dollars. In a market where 73% of businesses report using instant payments and many more say they want to, the question is no longer whether instant belongs in a community bank strategy. It’s where you’ll let it improve the relationships you’re already built to serve.