FedNow to raise transaction limit to $10 million

Federal Reserve Financial Services will raise its FedNow Service transaction limit to $10 million from $1 million in November, which the Fed sees as needed to meet increasing commercial demand for instant payments..Launched in July 2023, the FedNow Service includes more than 1,400 participating organizations, up 8 percent from April. The Federal Reserve said the transaction limit increase will accelerate adoption of instant payments and help modernize U.S. payment systems.The higher limit is also expected to support corporate treasury transfers and payroll funding to vendor payments and for high-value real estate deals. Financial institutions will still be able to set lower internal limits based on their own risk parameters.The transaction limit increase will be the second this year. The Federal Reserve Financial Services increased the FedNow Service transaction limit to $1 million earlier this year from $500,000, a move which took effect in late June. The number of FedNow settlements has risen substantially in recent months. After increasing 43 percent in the first quarter of this year to 1.3 million, the service facilitated 2.1 million transactions in the second quarter, up 63 percent. “The FedNow Service is shaping how we move money, and the service will continue to be flexible to meet evolving feedback and increasing demand,” said Chief Payments Executive Mark Gould.