Dive Brief:

• In a Federal Reserve Bank of Boston’s podcast, Brian Clarke, payments analyst and deputy director for the regional and community outreach department at the bank, encouraged financial institutions to develop instant payment services to help consumers avoid service fees.
• Clarke cited an upcoming Fed survey, which found that nine in ten respondents would use a bank account more often if their bank offered instant payments. The Fed research also found that 55% of respondents had been charged an overdraft fee over the past year, he said. The survey data referenced in the podcast is part of a research project soon to be published, a spokesperson for the Boston Fed said.
• While some financial institutions have expressed concerns about instant payments facilitating fraud, the Fed has staffers focused on fighting and reversing fraud in the financial system, Clarke added.

Dive Insight:

The expansion of instant payments would pay dividends for unbanked and underbanked people who turn to alternative financial services like short-term credit products, payday loans and pawn shop loans, Clarke said on the podcast. Such services are more expensive, but they fulfill the need for faster payments, he added. 

Clarke noted that, “financial institutions offering instant payments have a really compelling case to this particular group of people — that if you brought them inside, fully inside the banking system, you could deliver to them a direct benefit in the form of lower cost for transacting.”

The Boston Fed is seeking to promote the benefits of instant payments as the central bank tries to attract more financial institutions to its instant payments system, FedNow. Last year, the instant payments provider surpassed 1,500 financial institutions. Among the institutions that joined the platform in 2025 were PNC Bank and Capital One Financial, but Bank of America is among those financial institutions that have yet to do so.

The Fed has been expanding access to FedNow’s instant payment services in new use cases.

In September, the Fed said it would increase the transaction limit for instant payments via FedNow from $1 million to $10 million and enable financial institutions to customize transaction sizes. The following month, the Fed said it had begun disbursing instant disaster relief payments through FedNow’s participating financial firms.