Real-Time Economy Reshapes Payment Strategies for Merchants and Banks

Real-time payments are no longer a future prospect or an experimental innovation; they are the present reality and a fundamental expectation.

As demand reaches unprecedented levels, financial institutions (FIs) across the spectrum are facing a critical juncture: embrace instant payments or risk being left behind.

The timeline for action is tightening rapidly, with aggressive adoption reshaping the competition by the end of 2026.

For institutions that hesitate, the cost may not just be a loss of competitive edge, but a fundamental threat to customer relationships and future relevance.

The Time to Act Is Now

This is the real-time rush, and FIs must act now to keep pace. The shift toward real-time payments has moved them from emerging technology to standard infrastructure.

Data indicates that a significant majority of FIs are already connected to major real-time networks like the RTP® network and the FedNow® Service, with 62% currently live on one or both.

This figure is projected to increase sharply, with 80% of nonadopters expecting to go live by 2028, many within the next six to 12 months, as detailed in the report “The Real-Time Rush: FIs’ Race to Keep Up With Instant Payments Innovation,” done in collaboration between PYMNTS Intelligence and The Clearing House.

This acceleration reflects a response not merely to keep up, but to meet soaring customer expectations for speed, control and transparency. Indeed, 80% of payment decision-makers view instant payments as a must-have capability.

Harvesting the Benefits

The strategic imperative extends far beyond simply offering faster transactions. FIs providing real-time payments gain crucial advantages, most notably enhanced customer loyalty.

Features such as instant bill pay and peer-to-peer (P2P) transfers are powerful tools, serving both to attract new users and deeply retain existing customers.

Real-time features prevent customer churn to third-party payment applications. Ninety-three percent of FIs report that instant payments improve customer retention.  Instant bill pay, specifically, is identified as a key acquisition tool, drawing users from legacy channels into the bank’s ecosystem.

Furthermore, nearly half of U.S. banks report that instant payments improve the overall customer experience, not just through speed but also via automated workflows that reduce friction and free up resources.

Some Challenges

While many large banks are already deeply engaged in this shift, smaller institutions often remain in planning mode. Barriers include security concerns, high integration costs, and unclear business models.

Some FIs hesitate due to fears surrounding fraud, particularly as real-time rails expand. However, recent data suggests these fears may be overstated, with only 3% of FIs experiencing significant fraud impacts from instant payments, indicating that existing controls are largely effective.

Beyond fraud, lack of planning and legacy technology pose significant obstacles.

Outdated core systems, the demanding requirement for 24/7 uptime, and even fear of revenue loss from cannibalized card transactions can stall rollout. High upfront implementation costs (cited by 57% of FIs) and readiness gaps in managing real-time risk are also major concerns. Overcoming these requires robust cross-functional strategies and organizational buy-in.

Critically, FIs must move beyond simply receiving real-time payments to enabling outbound, or send, capabilities.

Institutions that modernize now will position themselves to thrive, while hesitation carries significant risks.