Capital One Financial joined the Federal Reserve’s instant payments system FedNow this week, leaving Bank of America as one of the only major financial institutions that isn’t part of that real-time ecosystem.
Capital One started its FedNow participation Tuesday, a spokesperson for the financial institution said by email.
“Financial Institutions of all sizes are rapidly enabling instant payments for their accountholders,” U.S. Faster Payments Council CEO Reed Luhtanen said by email, when asked for comment on how the system is developing. “The ability to offer instant money movement is becoming table stakes in our 21st century economy, and financial institutions that don’t have a faster payments strategy need to develop one, and fast.”
A spokesperson for Bank of America didn’t immediately respond to a request for comment. A spokesperson confirmed late last month that the bank had not yet joined FedNow.
FedNow has attracted all but one of the five biggest U.S. banks, according to a list of participants on the Federal Reserve’s FedNow website. The new service allows for the transfer of payments between banks in seconds or minutes, as opposed to some alternatives that take days.
While about 1,550 U.S. financial institutions have joined the FedNow system since it launched in July 2023, there are thousands that have not, despite the central bank’s efforts to attract smaller banks as well. In all, there are about 9,000 U.S. financial institutions, including large banks, smaller regional and community banks, and credit unions. (Only U.S. financial institutions are allowed to connect to the FedNow system.)
Nonetheless, the large banks are the most active in the payments sphere. The 50 biggest banks operating in the U.S. account for more than 90% of payment originations on the major clearing systems operated by The Clearing House and Nacha, based on those organizations’ statistics.
To smooth the way to joining the system, the Fed is trying to make it as easy as possible. Currently, the “record” time period for onboarding a bank — from signing a contract with the central bank to offering services — is seven days, FedNow Chief Executive Nick Stanescu said in a video post on FedNow’s website Tuesday. He noted there are also 41 certified service providers that aid in bringing bank clients to the system.
To boost transaction volume, FedNow has been gradually increasing the maximum amount that can be sent over the system. This month the Fed raised the transaction limit from $1 million to $10 million.
