Unlock Your Potential: How Instant Payments Can Power Innovation

Instant payment services are a key feature for enterprises seeking to upgrade their payment operations. Supporting instant payment options helps to increase customer retention and satisfaction rates, reduce costs, improve cash flow and minimize payment disruptions. This can create a frictionless payment ecosystem for enterprises and customers.

In this guide, we'll show you how to unlock your competitive advantage with instant payments.

Alternative Payment Methods and the Evolving Payments Landscape: Why Innovation Matters

The financial services sector is experiencing unprecedented pressure to accelerate digital payment processing in response to evolving consumer and business expectations.

Conditioned by mobile commerce and digital experiences that deliver immediate results, today’s consumers are setting the standards. From instant messaging to same-day delivery, consumers expect transactions to happen in real time. Whether they're receiving wages, making purchases or transferring money to other accounts, consumers increasingly view multi-day payment processing as outdated and inconvenient.

Enterprise payment needs mirror consumer expectations but with additional complexity. While B2B transactions involve larger budgets, more stakeholders and longer decision-making processes, businesses are equally frustrated by payment delays that impact cash flow, supplier relationships, customer satisfaction and operational efficiency. 

In fact, slower payment methods, like checks, have been declining in recent years and are being replaced by faster alternatives like ACH payments. However, even traditional ACH processing—which can take 1-5 business days—is no longer meeting the speed requirements of modern business operations.

As both consumers and businesses seek alternatives to slow, expensive payment methods, account-to-account (A2A) payment technology has emerged as the solution. Companies that recognize and act on the demand for faster payments can differentiate themselves through superior payment experiences, improved cash flow management and enhanced customer satisfaction.

Instant payment technology sits at the center of this transformation, offering enterprises a direct pathway to meet the speed expectations of both their customers and their own operations—without the delays and limitations of traditional payment methods.

Unpacking Instant Payments: The Foundation of Modern Transactions

Instant payments represent a paradigm shift from traditional fund transfer methods. These systems enable money movement that typically completes within seconds rather than requiring the multi-day settlement periods associated with conventional approaches.

The United States utilizes two major instant payment infrastructures that power this transformation:

• The Clearing House operates the RTP^® network, which launched in 2017 and has established itself as a leader in real-time transactions. Recent performance data shows the network processed 98 million transactions valued at $80 billion in the last quarter of 2024, with participating financial institutions growing by 67%.
• Launched in July 2023, the Federal Reserve's FedNow^® Service represents the newest entrant to the instant payments market. The service has rapidly gained adoption, with more than 1,000 participating financial institutions and 37 payment providers processing 1.5 million transactions throughout 2024.

Both systems enable faster, more efficient transactions that benefit individuals and businesses alike by allowing them to send and receive funds within seconds, 24/7/365. This availability represents a significant advancement over standard ACH processing, which typically requires 1-5 business days to process payments.

Pay-by-bank transfers, powered by these instant payment rails, are gaining significant traction. Projections estimate real-time transactions will reach more than $575 billion globally by 2028 and account for more than 27% of all electronic payments. This growth demonstrates the mounting demand for secure, cost-effective alternatives to traditional payment methods.

APIs are the language that connects today's pay-by-bank payments. They reduce technical and operational costs, enabling business owners to focus on their core product or service. 

Juniper Research estimates global banking-as-a-service platform revenue will reach $94 billion by 2028, an increase of 158% from the $36.4 billion valuation in 2024. Payments APIs help to facilitate this growth, bridging gaps to provide businesses with payment processing options and efficiency they wouldn't have access to otherwise.

Through APIs, businesses can tap into RTP and FedNow to enable instant payments that provide more integrated customer experiences.

Payments APIs also help facilitate better overall payment performance, making business payment processing more efficient and flexible without each business building the infrastructure from scratch. As a result, businesses can reduce the time it takes to launch a product or service and realize revenue more quickly. Now that customers demand near-immediate gratification, payments APIs allow companies to adopt a fast and global approach.

In addition to market agility, payment APIs are future-proofing tools. Every business that wants to grow and continue transacting in the digital world needs to provide fast and secure payment processing. APIs help businesses stay current with the payment landscape as it changes and maximize the interoperability of the global financial system.

Understanding ISO 20022 

These use cases from multiple industries demonstrate the potential with digital payments.

• Buy Now Pay Later (BNPL): Enable instant disbursements to merchants at the point of purchase using real-time payment rails, providing immediate settlement instead of traditional multi-day ACH processing. BNPL providers can instantly transfer funds to retailers when customers make purchases, creating seamless checkout experiences with real-time payment confirmation. Instant payments also enable immediate repayment processing that automatically updates customer account balances and available credit limits when payments are received.

• Insurance: Accelerate claims processing with instant insurance payouts directly to policyholders' bank accounts. Eliminating the delays associated with paper checks also helps enhance customer satisfaction.
• Supply Chain: Revolutionize supplier payments with instant disbursements. By bypassing the check deposit process, businesses can optimize cash flow and strengthen supplier relationships.
• Real Estate: Streamline real estate transactions with instant fund transfers. From earnest money deposits to closing day disbursements, instant payments help create a seamless and efficient process.

• Healthcare: Modernize healthcare payments with instant claims reimbursement. Reduce administrative costs and improve patient experiences by eliminating the need for paper checks.

Across industries, instant payments play a vital role in an enterprise’s digital transformation journey.  

What Should My Business Consider Before Adopting Instant Payments?

Before implementing instant payments, enterprises must carefully evaluate several critical operational and strategic factors that significantly differ from traditional payment processing:

24/7/365 Operational Readiness

Instant payments operate continuously, including weekends, holidays and after traditional banking hours. This requires businesses to assess whether their payment operations, customer support teams and internal systems are prepared to handle payment activity around the clock. Consider whether your organization has the staffing, monitoring capabilities and operational procedures necessary to manage payments that can occur at any time.

Enhanced Fraud Protection for Continuous Operations

The irrevocable nature of instant payments, combined with their 24/7 availability, demands robust fraud prevention measures that can operate effectively at all times. Traditional fraud monitoring systems designed for business-hour operations may need significant upgrades to handle suspicious activity detection during off-hours when human oversight is limited. Investing in advanced automated fraud detection systems becomes essential for these payment types.

Dispute Management for Irrevocable Transactions

Unlike traditional payment methods that may allow for reversals or chargebacks, instant payments are final once processed. Businesses must establish clear procedures for handling customer disputes surrounding claims of unauthorized payments. This includes implementing strong customer authentication processes upfront, maintaining detailed transaction records and developing customer service protocols specifically designed for irrevocable payment disputes.

Network Connectivity Strategy

Enterprises must decide whether to connect to the RTP network, the FedNow Service or both systems. Since these networks aren't interoperable, businesses connecting to both should consider investing in intelligent routing capabilities to determine recipient bank eligibility and select the appropriate network for each transaction. This decision impacts your potential reach, as different financial institutions participate in different networks.

Build Versus Buy Decision

Organizations face a fundamental choice between developing instant payment connections internally or partnering with technology providers who already maintain network connectivity. Building direct connections requires significant technical resources, ongoing maintenance and expertise in payment system integration. Alternatively, working with experienced payment service providers can accelerate implementation while providing access to established infrastructure, compliance frameworks and ongoing support.

Each of these considerations requires careful planning and may significantly impact your implementation timeline, resource requirements and operational procedures. Successful instant payment adoption depends on comprehensively addressing these factors before launching the service.

The Engine of Speed: How Real-Time Payment Processing Works

Embracing Payment Orchestration Platforms

Intelligent payment routing technology addresses this complexity by automating rail selection for each transaction. Payment orchestration platforms analyze multiple factors—including recipient bank capabilities and business preferences—to determine the optimal processing path.

Dwolla's orchestration technology eliminates the burden of managing multiple payment rails manually. The platform performs real-time eligibility verification and automatically selects the most effective path for routing transactions. This happens transparently, presenting businesses with a unified payment interface while maximizing transaction success rates and network reach.

For enterprises ready to leverage the benefits of instant transfers, the implementation process doesn't need to be overwhelming. Partnering with an experienced payment service provider offers the most direct path to success.

A payment API serves as the bridge between your business operations and the broader financial system. There are multiple payment providers on the market, but the right provider will offer comprehensive documentation, developer resources and support throughout the integration process. This collaborative approach ensures your instant payment implementation aligns with your business objectives and technical requirements.

By partnering with Dwolla, enterprises have access to an orchestration solution capable of automatically determining the right instant payment rail for each transaction, maximizing reach and efficiency without requiring businesses to manage the underlying complexity. This enables enterprises to focus on their core operations while delivering a superior payment experience to their customers and partners.

Successful instant payment implementation requires careful attention to several critical factors:

Security First: The irreversible nature of instant transactions demands robust payment fraud prevention measures implemented at the transaction initiation point. Advanced security systems utilizing artificial intelligence and machine learning technologies can identify and prevent suspicious activity before funds are transferred. Early implementation of comprehensive fraud detection helps create a secure foundation for the entire payment landscape.

Reach and Coverage: Given the multi-rail structure of the U.S. instant payments market, enterprises benefit from partnering with providers that maintain connectivity to both major networks. This comprehensive access helps provide maximum payment coverage and the ability to reach the broadest possible range of customers and business partners.

Operational Efficiency: An instant payments integration should streamline rather than complicate existing business processes. Effective solutions provide automated capabilities for bank eligibility verification and payment routing between instant payment networks, reducing the need for manual intervention and oversight.

Customer Experience: Customers should encounter consistent, intuitive experiences regardless of which underlying payment infrastructure processes their transaction. Reliable status communications, real-time notifications and clear confirmation processes build user confidence and satisfaction.

Internal Controls & 24/7 Operations: Organizations must adapt their operational procedures and control frameworks to accommodate round-the-clock payment processing. This adaptation encompasses fraud monitoring capabilities, customer support availability, back-office reconciliation workflows and comprehensive operational preparedness for continuous transaction activity.