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Practical Steps to Implementing Real-Time Payments

  • By John Hintze
  • Published: 1/7/2020
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Alongside considering faster payments’ impact, companies may want to start taking initial implementation steps. They will vary from one company to another, depending on its industry and current payment processes. Nevertheless, there are a number of steps that most companies will have in common.

Talk to your banker. An obvious early step is making sure a company’s bank (or banks) is connected to The Clearing House’s Real Time Payments (RTP) network. Since it may be some time before companies’ back-office systems can process payments in real-time and they will rely on bank interfaces, it will be important to understand what services are available now and will be in the foreseeable future. Some banks will be participating soon in a bill-pay pilot that will enable mobile-network operators, utilities and other providers of consumer services to send request-for-payment (RfP) messages through the bank channel, enabling customers to pay bills via their online bank accounts.

Begin limited testing. Getting the service set up with your banks will start the ball rolling and the cost is minimal. Thomas Spataro, treasurer at transfer-agency Computershare, recommended initially testing one-off payments, such as moving money between the company’s bank accounts and monitoring for where flubs occur downstream. “When we start doing RTP, we’re just doing the one-off transactions, because it is a lot easier to see what’s going to happen downstream in our systems and processes, and we won’t blow things up with just a handful of transactions,” he said. “As we increase our volumes with imports or other interfaces, the effects downstream will be worked out.” 

Explore the system. Mass processing of payments via RTP is still some time away with the exception of a few early adopters, but companies need to begin somewhere. It may be worth exploring RTP to optimize certain payments that are still relying on antiquated methods. For example, large telecom companies send rebate checks to customers who canceled their subscriptions because they moved. Often those checks are never cashed and must go through costly escheatment processes that vary from state to state. Those telecoms, however, typically hold customers’ cell numbers or email addresses, so sending the payment via Zelle—and via RTP should the platforms eventually leverage each other’s strengths—will significantly improve the payment hit ratio.

Determine internal readiness. Evaluating the readiness of a company’s multiple lines of business and functional areas—sales, operations, service—to implement RTP is critical, according to Alberto Casas, managing director and North American head of payments and receivables at Citi Treasury and Trade Solutions, also an early supporter of RTP. Each internal stakeholder, he added, must be engaged and have a voice in the process to optimize the program design, implementation and desired results. “They need to understand how they are going to make this available to suppliers from an outbound payment perspective, and what is required in terms of collecting payments from customers via RfP,” Casas said.

Map counterparty readiness. Companies must also start assessing how many suppliers or customers they can reach with RTP. Until the RTP network is ubiquitous, this step is critical to understand RTP’s value proposition, since many suppliers’ and customers’ banks, especially regional and smaller ones, are not yet connected and cannot receive RTP transactions. In addition, companies must understand what is required to functionally implement an RTP payment file process.

Review systems and architecture. A company must analyze its payment types to determine whether sending payment files or using a more real-time, API-based solution is appropriate in the foreseeable future. Then it can decide which payments options are more efficient and effective on both the send and receive sides, taking into account factors like account transaction limits, costs and settlement times.

For more insights, download Electronic and Real-Time Payments in Practice, underwritten by MUFG Union Bank, here.

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