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Capital One Joins FedNow, Cornering Bank of America as Final Holdout
Capital One joins the Federal Reserve's FedNow network, leaving Bank of America as the last major U.S. bank not participating in the real-time payments system.
Key Points
- Capital One joins the Federal Reserve's FedNow network, leaving Bank of America as the last major U.S. bank not participating in the real-time payments system.
- The participation of the largest U.S. banks is critical for FedNow's success, as the top 50 institutions account for over 90% of all payment volume.
- To accelerate adoption, the Federal Reserve has streamlined the onboarding process and increased the transaction limit to $10 million to attract high-value corporate payments.
Capital One has officially plugged into the Federal Reserve's FedNow network, as first reported by Payments Dive. The move makes Bank of America the last major U.S. bank standing on the sidelines of the real-time payments system.
Chasing the whales: While more than 1,500 of the nation's 9,000 financial institutions are now connected, getting the largest players on board is make-or-break for the network, as the 50 biggest U.S. banks drive more than 90% of all payment volume.
Greasing the wheels: To speed up adoption, the Fed has been lowering the barrier to entry, with officials highlighting a record onboarding time of just seven days. The central bank also recently boosted the transaction limit to $10 million to attract higher-value corporate payments.
Feeling the heat: The move puts a fresh spotlight on the network's remaining holdouts, shrinking the list of non-participating top-eight U.S. retail banks to just Bank of America and Truist.
With instant payments now considered table stakes, the question is no longer if the final players will join, but how long they can afford to wait. The push for instant payments doesn't come cheap, with the FedNow system alone costing nearly $250 million a year to operate. To further explain how these banking networks differ from apps like Venmo, Capital One offers a handy explainer on the tech behind it all.
