The Creeping Payments Crisis: Why 70% of Large Banks Are Falling Behind in Payments
The growth of instant payments in the United States has reached a tipping point. As 2025 unfolds, credit unions face a critical decision: embrace the instant payments revolution or risk being left behind.
A recent webinar hosted by the Faster Payments Council featuring experts from Finzly and advisory firm SRM revealed critical insights about the state of instant payments adoption among credit unions and what it means for their future.
The current state of instant payments adoption
By late 2024, approximately 1,400 financial institutions had connected to instant payment rails like RTP or FedNow. Transaction volume soared past $100 billion in Q4 2024 alone. The Clearing House increased dollar limits from $1 million to $10 million in early 2025, driving record volumes.
However, our webinar poll shows credit union participation is a divided landscape:
- Approximately 35% operate in receive-only mode
- About 30% have implemented both send and receive capabilities
- The remaining third have not implemented instant payments or have no current plans to do so
This means the majority of the 4,500+ credit unions in the United States likely aren't yet fully participating in instant payments, creating competitive disadvantages as member expectations evolve.
Why the hesitation?
Our webinar polling revealed several key barriers preventing credit unions from fully embracing instant payments:
Fraud Risk Concerns (64%):
The misconception that "faster payments equal faster fraud" remains prevalent, though modern instant payment platforms can offer robust security controls and pre-transaction monitoring.
Competing Priorities with Higher ROI (36%):
Many credit unions, especially those under $100 million in assets, face difficult resource allocation decisions.
Technology Ecosystem Limitations (36%):
Legacy systems and operational constraints create technical barriers for many institutions.
24/7 Operational Requirements:
The always-on nature of instant payments requires adjustments to operational models designed for batch processing.
Interoperability Concerns:
Although becoming less of a concern, the dual network environment (RTP and FedNow) still creates perceived complexity.
Four strategic drivers for credit unions
Despite these challenges, the strategic importance of instant payments cannot be overstated. As Jamie Dimon of JPMorgan Chase recently noted, "I can't see anything more important than us being number one in money movement over the next five years."
Several factors make instant payments critical for credit unions:
Payments are the lifeblood of financial relationships.
They represent the most frequent touchpoint between members and their credit unions.
Consumer expectations are evolving.
The demand for real-time experiences continues to grow, particularly among younger demographics.
Risk of disintermediation.
Fintech providers increasingly position themselves between members and their credit unions, with many expanding beyond payments into savings, investments, and other financial services.
Revenue opportunities.
Contrary to the perception that instant payments lack strong ROI, credit unions can monetize these services through pricing strategies that members find valuable.
Top use cases driving adoption
The instant payments ecosystem has matured beyond the initial P2P use cases, with several emerging areas showing significant growth:
Gaming/Sports Betting Payouts:
A major driver of early instant payment transactions
Gig Economy and On-Demand Payroll:
Workers increasingly value immediate access to earnings
Account-to-Account Transfers:
Both within and across financial institutions
Digital Wallet Funding/Defunding
Supporting the growth of digital payment methods
Pay-by-Bank Transactions:
Exemplified by the Walmart-Fiserv partnership
Pricing strategy considerations
One noteworthy insight from the webinar was the potential for revenue generation through instant payments. One executive shared a story of someone who had to pay a $2.99 fee to receive her first teaching paycheck instantly rather than waiting for ACH processing. This willingness to pay for immediacy represents an opportunity for credit unions to develop pricing strategies that balance value and accessibility.
Some financial institutions are even beginning to explore charging receivers (who may value immediacy more than senders) rather than just implementing sender fees.
The path forward for Credit Unions
For credit unions considering their instant payments strategy, three key resources are available:
Take advantage of available resources:
The Faster Payments Council offers extensive help, research, and networking opportunities to help navigate the instant payments landscape.
Speak to expert consultants:
Organizations like SRM provide strategic guidance from the boardroom to the back office.
Find the right technology provider:
Finzly's cloud and ISO 20022-native platform offers implementation timeframes as short as 8-12 weeks and is built to evolve with changing needs and expectations of credit union members.
Conclusion
The shift to instant payments represents more than just a technology upgrade. It's a strategic imperative for credit unions wanting to remain at the center of their members' financial lives. While challenges exist, particularly for smaller credit unions, the risks of inaction continue to grow as member expectations evolve and competing providers expand their capabilities.
Market projections estimate 80% of institutions receiving and 40% sending instant payments in the next 3-5 years. Given that, credit unions should plan when and how to implement instant payments to maximize value.
Ready to accelerate your credit union's instant payments journey? Contact Finzly today to learn how our platform can have you up and running in as little as 8-12 weeks, while laying the foundation for your broader payment modernization strategy.
