As a self-described technology leader among community banks, the $4.4 billion VeraBank added to that reputation recently by introducing instant payment services for its customers. Based in Henderson, Texas, the institution implemented both FedNow, operated by the Federal Reserve, and the Real-Time Payments (RTP) Network, a private service run by The Clearing House and owned by the largest U.S. banks. VeraBank CEO Brad Tidwell says the transaction volume he’s seen since shows there is strong demand for it. “I think it was just the consistent realization that our customers want these types of new payment mechanisms,” he says. “They want the speed. They want the convenience.”
VeraBank is one of hundreds of financial institutions that have contributed to the rapid growth of both FedNow and RTP over the past few years. Established in 2017, RTP says it is the dominant player in this space — facilitating more than 98% of all instant payment transactions in the U.S. It has more than 1,100 financial institutions live on the network, up from 475 at the start of 2024. Launched in July 2023, FedNow already has more than 1,600 financial institutions online.
Bridget Hall, leader of real-time payments in the Americas for ACI Worldwide, a global fintech company that provides payments software and infrastructure to financial institutions, says many banks tend to start by only receiving payments on the networks. “But seeing that sender adoption coming onto the schemes, that’s going to be really interesting to watch,” Hall says.
Neither FedNow nor RTP publishes information on which financial institutions both receive and send instant payments on their networks. But while most or all let their customers receive instant payments, others seem reluctant to send. That’s because sending poses problems associated with the irrevocable nature of instant payments and higher costs for fraud prevention.
Fraud Concerns
The fraud risk associated with the irrevocability of instant payments is one that the CEO of Lamar National Bank knows all too well. Before $376 million Lamar National, based in Paris, Texas, underwent a weekend core conversion in July 2024, a banker friend gave CEO Greg Wilson some advice. “‘Be sure and turn off P2P [peer-to-peer payments] while you’re going through your core conversion,’” Wilson recalls his friend saying. “We wrote it down in our notes and then absolutely forgot to do it.”
That forgetfulness allowed fraudsters to steal $60,000 from Lamar National, a subsidiary of Lamar Bancorp, through a push payment scheme that started with texts sent to bank customers. “[The text] said, ‘You have an $804 charge at Costco. If you did not make this charge, click here,’” Wilson says. “And when you clicked, it was the [fake] login for our brand-new online mobile banking.” Many customers put in their username and password, and even answered a security question. All of that information went right into the hands of the fraudsters, who used it to steal the customers’ money through the bank’s new P2P payments network.
While Lamar National Bank will soon start receiving payments on FedNow, that experience made Wilson wary of using its send function. “And what it really put a spotlight on for us is that P2P is instantaneous and there’s no way to grab it back,” Wilson says. “What happens when you’re talking about hundreds of thousands of dollars?”
A 2025 report from the Association for Financial Professionals found only 2% of FedNow and RTP transactions facilitated in 2024 were fraudulent. Erin Fonte, a partner at the law firm of Hunton Andrews Kurth LLP, who specializes in financial institutional payments, says she isn’t surprised fraud concerns are top of mind despite those findings. “I think what banks are [looking at] is when this thing scales and people start moving a lot more dollar volume of payments over it,” Fonte says. “And that’s why they’re hesitant to jump in because they’re trying to price it, and they’re not yet sure what form the fraud is going to take.”
Fonte says that while the Trump administration has repealed many interpretive rules, advisory opinions and guidance documents previously implemented by the Consumer Financial Protection Bureau, the latest guidelines for Regulation E (Reg E), which is set up to protect consumers from electronic funds transfer (EFT) fraud, seem to place even more of the fraud burden on financial institutions. “It used to be in a Reg E investigation, if a consumer said, ‘Yeah, I turned my account credentials over to someone,’ that was kind of the end of the investigation from the bank’s perspective,” Fonte says. “And now that’s changed, and I think that came out a lot in the conversations around Zelle fraud.”
Preparing To Send
But concerns like that have not stopped Bank of Lincoln County, a subsidiary of the $220 million BOLC Corp., based in Fayetteville, Tennessee, from sending on FedNow. BOLC CEO Gay Dempsey says the bank has strong fraud protection systems and pre-check processes in place. “That’s where you’ve just got to put, to the best of our ability, multifactor [authentication] in place, different things in place so that it’s not just one and done [verification],” she says. “You have to go through several steps before you complete it.”
Fonte says one of those steps is carrying out real-time anti-money laundering checks. While banks and credit unions can schedule once-a-day AML batch screenings to check large volumes of customer or transaction data against global sanction lists for ACH and wire transfers, each instant payment requires real-time screening that checks payment details against those sanctions lists.
VeraBank employs multilayered, 24/7 fraud protections, and Tidwell says his team will be ready to meet the new security demands when the bank turns the send function on for both RTP and FedNow in the second half of 2026. But for smaller financial institutions that don’t have such protections in place, like Lamar National Bank, there are real cost considerations to adding them. “I would say for a bank our size, if it was more than $50,000 we’d probably tap out. We’d probably be receive only,” Wilson says.
While fraud prevention is crucial, Hall says there are other considerations financial institutions should take into account before turning on send. That includes studying your customer base to determine if most sending will occur on the business or consumer side, and developing a plan for liquidity management. “If I’m allowing my customer base to send, do I want them sending immediately, 24/7, as much money as they want?,” she asks. “Maybe if you’re a first time sender, we start with a smaller limit or maybe just weekends and not every single day.”
Several bankers quoted for this story also expressed concerns that some core providers make FedNow or RTP integrations easier than others. But Hall says that is something that also can be addressed in the planning stage. “Thinking about what kind of timeline a bank would want to look at if it is connecting to both rails right away — if it’s receive and send at the same time, if there’s more of a phased approach — a lot of those questions will then highlight areas where they need to think about their operational and core readiness,” Hall says.
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