Navy Federal Credit Union this week joined the RTP network, the instant payments system operated by The Clearing House, making it likely that more credit unions will follow suit.
Out of the nation's nearly 5,000 credit unions, only 111 are now on the RTP network, said Elena Whisler, chief client officer for The Clearing House. The organization's bank ownership could be a stumbling block, as it was years ago for
But the presence of the $168 billion-asset Navy Federal, the largest credit union in the world, will help grow the network's volume and reach, Whisler said.
"Navy Federal joining the network highlights the importance that instant payments are playing in digital banking strategies," she said. "And it may put it over the tipping point — if we haven't done so already — when it comes to (credit union) interest in instant payments."
This year the RTP network will onboard more than 200 credit unions and banks, more than double the 100 that joined in 2022, Whistler said.
The Vienna, Virginia-based
"This is an important step towards the future of banking and is meaningful to our membership as it provides another way for them to manage their finances in real-time," said Pete Amstutz, senior vice president of savings and membership for
Jeff Voss, managing partner for consultancy Artisan Advisors, said the RTP network will be a differentiator for Navy Federal, demonstrating its first-mover strategy in the digital space.
He said Navy Federal may have made the move now because
"Once the payments are captured, customers are less likely to move their business elsewhere," Voss said. "And of all the payment rails, this one poses the most opportunity to capture payments between accounts at banks and credit unions," Voss said.
Voss said banks and credit unions must decide on the magnitude of the need of their clients for such real-time activity, and the ability to control that risk effectively.
"And because of the limited nature of banks involved today in these networks, they must determine that by adding this service there really is a positive impact to its customers," he said.
Voss added that RTP has a larger network of banks than FedNow, but because of the Fed's sponsorship, it is likely the Fed will surpass the RTP system over time. He also said the transaction limit — RTP's $1 million and FedNow's $500,000 — could be a differentiator.
The biggest barrier to entry for credit unions is understanding the risk involved, and having the technology available to protect the bank against fraud, Voss added.
Matt Selke, CEO of $89 million-asset Pinnacle Credit Union in Atlanta, said sending and receiving any payments is "a major headache for small credit unions," in part because much of the payment software to receive or send from online accounts is expensive "and a lot of the credit unions eat the fee just to get loan payments," he said.
Navy's move to the RTP network could ultimately have the same effect that large credit unions dealing directly with the Fed for processing did years ago, Selke said.
"Credit unions at one time didn't have access to the Fed for any payment processing — that's why corporate credit unions became a thing — but the big credit unions started going directly to the Fed, and now we all do," Selke said.
Navy Federal earned $1.2 billion in the first three quarters of 2023, a 9% decrease compared with a year earlier, according to
Navy Federal serves all branches of the military, including the Navy, Army, Marine Corps, Air Force, Coast Guard and Space Force. It has 13 million members using more than 350 branches.
The Clearing House, which is owned by a group of the nation's largest banks, said the RTP network is currently seeing more than 64 million transactions each quarter and is poised to grow exponentially.
