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As newer payment systems, the FedNow^® Service and RTP^® have the following hurdles in place that could limit their competitive growth in the short term: 

1. Lower limits. The FedNow^® Service has a $500,000 daily limit per transaction and RTP^® is currently at $1 million.  While Same Day ACH is also capped at $1 million, individuals or businesses may use wire transfers to send higher dollar payments.
2. Still waiting on international. The FedNow^® Service isn’t currently able to send international payments and RTP^® is still testing the capability to send to foreign institutions.
3. Business workweek. Having a 24/7/365 system may not allow for a typical 9-5 work schedule, which could spark some implementation resistance for financial institutions.

If the FedNow^® Service or RTP^® were able to increase their limits, open the international door for their payments and create more demand for their products with Business to Business (B2B) payments, the systems could quickly gain volume from other payment rails. That said, RTP^® and the FedNow^® Service have distinct advantages in their favor that could assist in long-term growth of their payment systems:

1. Complaints about fees. Wire fees, in particular. From my experience, account holders were inquiring about receiving ACH payments or seeing if a financial institution was using RTP^® to avoid higher outgoing wire fees to originate and incoming fees to receive.
2. Availability. ACH and wire transfers can only be transmitted during specified banking hours/days, while RTP^® and the FedNow^® Service are payment services that can be sent and settled 24/7/365.
3. Changing workplace and retail. Workplaces have been changing for years and the COVID-19 really ramped up remote possibilities.  More goods are being bought online with more demands on instant shipping as well.  Workplaces and how we obtain goods & services are rapidly changing.
4. ISO 20022. Both RTP^® and the FedNow^® Service originally used ISO 20022 payment format. This is an advantage because once the services are able to send international payments, they will be compatible with much of the world already using this format to send faster payments.  Wire transfers are mostly using the Fedwire format while ACH has its own unique Nacha file format, making it challenging to convert between the United States and other countries at times for transactions. We’ll see what happens with wire transfers when they convert to ISO 20022 through 2025.

All of this to say, don’t panic if you’re a big fan of ACH, wire transfers or debit cards. It’s going to take time for RTP^® and the FedNow^® Service to gain significant market share, as both are still new, restrained by limits, unable to send internationally, need financial institutions to adopt their payment products and have an increased demand by businesses to create more B2B or B2C use cases for 24/7/365 instant payment systems.  Furthermore, the United States population has grown by about 6% in the past 10 years, but real personal consumption expenditures have grown around 29%.  With a growing population and increasing consumption levels, the economy will need many payment systems up and running to satisfy consumer and business needs. Plus, Nacha and card networks (VISA, Mastercard, AMEX, Discover, etc.) are looking for ways to evolve and compete with the new kids on the block. 

Overall, it’s important to note that ACH, wire transfers and debit cards have owned the digital space for the past 50 years and are established brands for payments. If these systems were ever to become the main payment rail(s) that would be a long time off, especially if legacy rails evolve to compete with the FedNow^® Service and RTP^®.