Real-time payments in the US: growth, opportunities, and challenges

David Mattei, Strategic Advisor at Datos Insights, explores US real-time payments: growth trends, opportunities, challenges, and how they’re shaping the future of payments.

After exploring real-time payments fraud and the related liabilities and incentives, today we shift focus to the US in our Real-Time Payments Fraud Series.

The payments landscape in the US is transforming as real-time payment (RTP) systems such as Zelle report substantial year-over-year growth. In the first half of 2024, Zelle processed 1.7 billion transactions totalling USD 481 billion—a 28% increase from the previous year. The increasing consumer demand for instant, frictionless payment experiences has driven this expansion, particularly among younger consumers who expect immediate access to funds and seamless digital experiences.

The benefits of RTPs extend across the entire financial ecosystem. Consumers can transfer funds instantly to friends, family, and businesses, eliminating the traditional delays associated with checks or ACH transfers. Businesses benefit from improved cash flow management and reduced payment processing costs while also gaining the ability to pay employees or contractors instantly. Financial institutions (FIs) can offer innovative services that generate new revenue streams while strengthening customer relationships through enhanced digital capabilities.

The US real-time payments ecosystem has evolved to include several sophisticated platforms, each serving distinct market needs. Zelle, operated by Early Warning Services and owned by major US banks—including Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo—has emerged as a leading platform for consumer and small-business payments. Initially focused on person-to-person transfers, it has expanded to include business-to-consumer transactions.

The Federal Reserve's FedNow service, launched in July 2023, represents a significant government initiative to modernise the US payment infrastructure. Starting with 35 FIs, FedNow has rapidly expanded to include more than 1,000 participating institutions. This platform particularly appeals to smaller FIs that may have hesitated to join private-sector networks.

RTP, operated by The Clearing House and owned by 22 of the world's largest commercial banks, provides another crucial platform in the ecosystem. In Q3 2024, the RTP network processed 87 million transactions valued at USD 69 billion, demonstrating consistent growth averaging 17% per quarter since early 2020.

The growth in RTPs has unfortunately been accompanied by sophisticated fraud schemes, with research showing fraud attacks increasing significantly. According to Datos Insights research, 45% of FIs report authorised push payment (APP) scams using real-time payments increased by 25% or more in 2023 compared to 2022, while 42% of FIs report consumer account takeover attacks using real-time payment rails increased by 25% or more in the same timeframe.

The complexity and variety of fraud schemes have evolved considerably:

• APP scams: These scams have become particularly concerning as fraudsters manipulate victims into willingly transferring funds. They often exploit social engineering tactics and psychological manipulation, making them difficult to detect through traditional fraud prevention measures. APP fraud is especially challenging for FIs to detect and prevent since legitimate customers initiate the transactions.

• Money mule activity: Research indicates that mule activity using real-time payment rails has shown the highest growth rate among all fraud types, with 45% of FIs reporting increases of 25% or more. Money mules serve as intermediaries in fraud schemes, making the tracking and recovery of stolen funds particularly challenging.

• Romance scams: Fraudsters build emotional relationships to exploit victims financially, often grooming victims over extended periods to gain trust before requesting funds. These scams frequently target vulnerable individuals and can result in substantial financial losses.

• Investment scams: These schemes often involve cryptocurrency and false promises of high returns. Fraudsters may create sophisticated fake websites and use social media to lure victims into making immediate payments through real-time payment channels.

• Business email compromise (BEC): These sophisticated attacks target corporate payment systems, often involving careful research of company structures and impersonation of executives or vendors. BEC scams can result in significant losses, particularly for small and midsize businesses.

FIs face the complex challenge of maintaining robust security while delivering the seamless experience customers expect. Research shows that fraud executives across markets acknowledge the importance of balancing security measures with user experience, recognising that excessive friction can drive customers away. In contrast, insufficient security leaves them vulnerable to fraud. US FIs are actively deploying scam mitigation solutions to proactively demonstrate efforts to protect consumers in advance of (or to prevent) a potential regulatory mandate from the Consumer Protection Financial Bureau on liability sharing of scam fraud losses by the sending and receiving institutions.

FIs are adopting sophisticated strategies to protect RTPs while preserving the user experience. Advanced analytics and artificial intelligence play a crucial role in real-time fraud detection, allowing banks to identify suspicious patterns without significantly impacting transaction speed. Behavioural analytics help identify unusual customer actions that might indicate fraud, while consortium-based data sharing improves the industry's collective ability to detect and prevent fraudulent activities.

Many institutions are deploying multi-layered fraud prevention strategies that combine transaction monitoring, behavioural analysis, and customer education. These approaches often include real-time intervention capabilities that can stop suspicious transactions before funds leave the account while also providing clear communication to customers about potential risks.

As real-time payments continue to grow in the US, FIs must remain vigilant in adapting their fraud prevention strategies. Success will depend largely on vendors bringing innovative solutions to the market and the ability of FIs to deploy sophisticated fraud detection technologies while maintaining customer trust. The industry must also prepare for evolving regulatory requirements and new fraud patterns that emerge as technology advances.

The future of real-time payments in the US shows promising growth but requires continued innovation in security measures and customer protection strategies. As the ecosystem matures, collaboration between FIs, solution providers, and regulators will become increasingly important to ensure the safe and efficient operation of real-time payment systems.

Stay tuned for our next video interview on the real-time payments fraud landscape in Europe, featuring the one and only Neira Jones!

About David Mattei

David Mattei is a strategic advisor at Datos Insights. He has over 20 years of payments industry experience working with merchants and FIs on fraud and disputes, giving him a unique industry perspective. Prior to joining Datos Insights, David was VP of Product Management for Worldpay, leading a team responsible for fraud and chargeback solutions for 1,400 FIs and one million merchants.

About Datos Insights

Datos Insights delivers comprehensive and industry-specific data and advice to the companies trusted to protect and grow the world’s assets, and to the technology and service providers who support them. Staffed by experienced industry executives, researchers, and consultants, we support the world’s most progressive banks, insurers, investment firms, and technology companies through a mix of insights and advisory subscriptions, data services, custom projects and consulting, conferences, and executive councils.