Get on Board with Payment Platforms - ACH, RTP and Beyond!

The payments transformation express train took off on March 25, 2025, when the White House issued an Executive Order mandating a significant shift in how the federal government handles its financial transactions. Essentially, it requires government agencies to stop using paper checks by September 30, 2025 (with certain limited exceptions.) Make sure you have a digital ticket as paper is no longer going to be issued.

If you have been on the sidelines in the payment technology revolution, now is the time to get on board! Let's help you navigate the various payment platforms available for your financial institution and explore the pros and cons of Real-Time Payment systems, including the federal government's FedNow® platform, as well as our old friend, ACH (Automated Clearing House) payments with its latest update to Same-Day ACH.

Paper Checks

We can start down the road with a review of the March 25th Executive Order entitled "Modernizing Payments To and From America's Bank Account." Starting this fall, government agencies must make and receive all payments electronically. Instead of U.S. Treasury issuing a check, either as a tax refund check, or a check to a vendor, the agencies must transition to electronic funds transfer (EFT) methods such as direct deposit to a bank account, prepaid cards, digital wallets or instant payments via the FedNow® Service. This includes making payments made to the government, such as to the Internal Revenue Service (IRS).

Some limited exceptions will apply, such as for people who are unbanked. (Note: Many banks work with the Bank On program, run by the nonprofit Cities for Financial Empowerment Fund, to offer low-fee bank accounts to help unbanked and underbanked households. If your bank is interested in helping your community increase accessibility to safe, affordable bank accounts, go to Bank On to learn more about standards and certification.)

The Executive Order is intended to enhance operational efficiency, reduce delays, mitigate risks of fraud, lost payments and theft, and is expected to save the government a lot of money.

"Maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American Taxpayer over $657 million in Fiscal Year 2024 alone."

These are all admirable goals - and it has industry support from the American Bankers Association (ABA). ABA's President and CEO Rob Nichols praised the move:

"The bottom line: Electronic payments are a much faster, cheaper and safer choice for consumers and the federal government."

Nichols referred to the "Practice Safe Checks" consumer campaign launched by the ABA in October 2024 during National Cybersecurity Awareness Month, to help the banking industry educate consumers that "an unprotected check is a goldmine for fraudsters." The campaign teaches consumers how to protect themselves from check fraud, while encouraging them to use their bank's digital banking options to send money whenever possible. (It is offered in English and Spanish.)

The website also provides awareness of the growing fraud concern:

"While the use of checks has declined 25%, reports of check fraud have nearly doubled since 2021."

(For more information on the persistent threat of check fraud, check out Navigating the Next-Generation Wave of Check Fraud on BankersOnline.)

While it's true that many Americans have already moved towards digital and contactless payment methods, access to technology and limitations of skillset based on age, disability or language still exists for many Americans. Also, many businesses still rely on checks, as the paper trail can be easily tracked and audited. This modernization effort is expected to fast-track Americans onto alternative payment tracks.

ACH Payments

A lot of the switch from paper checks will move onto the ACH payments rails. An ACH transaction is an electronic money transfer made between banks and credit unions across a network called the Automated Clearing House (ACH).

ACH is used for all kinds of money transfers, including direct deposit of paychecks and debits for routine payments. Businesses often allow customers to pay bills via ACH by providing an account number and bank routing number. Some online payment services also conduct transactions via ACH, including online bill payment services through banks and credit unions. (Source)

In general, ACH transactions are easier, cheaper and more secure than payments by card, check or wire transfer. The ACH Network was introduced in the 1970s, so it has been around for almost 50 years, and is regulated by NACHA (National Automated Clearing House Association.) There are a lot of rules and guidelines to be aware of - ask any Compliance professional - but the clearinghouses that enforce these strict regulations make it possible to return payments if needed. Finally, the money is transferred directly between two U.S. bank accounts, which keeps account numbers confidential.

However, in an age where there is a need for immediate results, ACH transactions are slow, taking up to three business days to be processed. (They are processed in batches at set times throughout the business day.) Additionally, there are limits on how much money can be transferred via an ACH payment, which might be set daily, weekly, monthly or per transaction. While Same Day ACH has helped to relieve many of these issues, Same Day ACH payments remain limited to business hours and business days and may take hours to process.

Overall, ACH payment rails remain strong. The ACH Network payment volume rose 6.7% from 2023 to 2024, to 33.6 billion payments in 2024. The value of those payments was $86.2 trillion, an increase of 7.6%.

Same Day ACH is also available at some financial institutions, however usually at a higher cost and with other limitations, such as cut off times and dollar limits. Same Day ACH is also showing continuing strength. In 2024, Same Day ACH payment volume topped the one billion mark, with more than 1.2 billion payments for the year. The value of those payments was $3.2 trillion. From 2023 to 2024, Same Day ACH volume soared 45.3%, more than double the growth rate from 2022 to 2023. (Source)

Real-Time Payments (RTP)

The Clearing House Real Time Payment network (RTP) started processing payments in 2017. The beauty of RTP payments is that they are processed individually (not in batches) and almost instantly (i.e., "real time") 24/7, 365 days a year.

"With mobile technology and digital commerce driving the need for safer and faster payments in the U.S., financial institutions of all sizes are taking advantage of the RTP network's capabilities to create or enhance digital services for their corporate and retail customers." (Source)

The benefit of having payments made to the customer means that money is available for the customer to use immediately, which helps with liquidity. Ironically, some businesses and consumers may enjoy the "float" that comes with longer settlement periods when paying bills, so would need to adjust their cash flow to the quicker settlement. (Although one could argue that the immediacy and control provides an even higher level of cash management beyond unpredictability of "float".) And because the transaction happens so fast, there is no margin for error, so extra vigilance is prudent. RTP also uses a robust standardized messaging that it provides along with the payment, which is superior to checks, wires and ACH payments. (Source)

(For more information on RTP, check out The Need for Speed: RTP is Transforming Banking in the Blink of an Eye on BankersOnline.)

FedNow

Launched in 2023, the Federal Reserve's FedNow® Service is linked to a bank's master account at the Federal Reserve.

"The service is a flexible, neutral platform that supports a broad variety of instant payments. At the most fundamental level, the service provides interbank clearing and settlement that enables funds to be transferred from the account of a sender to the account of a receiver in near real-time and at any time, any day of the year. Depository institutions and their service providers can build on this fundamental capability to offer value-added services to their customers." (Source)

FedNow is a game-changer for the U.S. payment system, offering financial institutions the ability to send and receive payments instantly-24/7/365. As the newest payment channel in the U.S., the FedNow service has seen rapid adoption and onboarded over 1300 financial institutions since its launch in July 2023. (Source)

FedNow operates in real time, allowing funds to be transferred and settled within seconds. This speed enhances cash flow for businesses, supports faster bill payments for consumers, and allows for immediate access to wages and government disbursements.

Importantly, FedNow is operated by the Federal Reserve, offering a trusted, publicly governed infrastructure with broad accessibility across financial institutions of all sizes. Its design supports inclusivity, innovation, and resilience in the payments ecosystem. By enabling instant payments, FedNow reduces reliance on paper checks, lessens the risk of fraud, and increases transparency between senders and recipients. Ultimately, FedNow is setting a new standard for modern banking, bridging the gap between traditional rails and the growing demand for digital speed.

Conclusion

The Executive Order has stoked the engine for electronic payments and is leaving a trail of paper checks in the dust. Now that you have this view of the payments landscape, don't be afraid to jump on board, as this train is moving fast!

ACH Webinar Coming Soon!

To learn more about ACH, join the Payments Professor Kevin Olsen in a Compliance Resource webinar on May 13, 2025: Mastering Payments Rules and Regulations for the ACH Network.

About the Author

Kevin Olsen is the Payments Professor bringing enthusiasm and motivation to presentations. Kevin is also a certified business coach helping lead organizations to innovate and communicate in the ever-changing world of payments, including building of payment strategies with a focus on product development and use cases for faster payments (RTP & FedNow). You can find the Payments Professor on YouTube, Instagram, through the Payments Podium podcast and usually speaking at an event near you.

Among his many certifications Kevin is an Accredited ACH Professional (AAP), an Accredited Payments Risk Professional (APRP), an NCP (National Check Payments Certification) and a Certified High-Performance Coach (CHPC) and holds a master's degree in industrial organizational psychology from Liberty University.