Touted as the “first new core payments infrastructure in the U.S. in more than 40 years,” RTP, The Clearing House’s real-time payments system, launched this week. The system is the result of a collaborative effort between TCH and its 25 owner banks.
BNY Mellon and U.S. Bank initiated the very first real-time payment on the system on Monday. Citi, J.P. Morgan, PNC and SunTrust are also among the early adopters of RTP.
“At a time when our clients are asking for the ability to conduct their business with greater speed, efficiency and security, RTP will make everyday financial tasks such as paying bills, issuing invoices, making payroll or settling insurance claims faster, safer and more satisfying for businesses and consumers across the country,” said William S. Demchak, chairman, president and CEO of PNC and chairman of The Clearing House’s Supervisory Board.
Now open to all U.S. depository institutions, TCH hopes RTP will reach ubiquity by 2020. TCH is working with a number of stakeholders, including community banks, credit unions, and financial institution service providers, to drive RTP adoption.
RTP has the capability to not only to transfer funds but also to request payments and provide information along with the payment, which could drive interest from corporate treasury professionals. RTP also provides immediate confirmation notices that payments have been sent, received and instantly settled. TCH noted that this will allow businesses to free up working capital by more precisely managing cash flow.
Magnus Carlsson, AFP’s manager of treasury and payments, called the first transaction on RTP a “milestone” for the payments industry. “It is particularly encouraging that it seems these payments will also be able to carry additional remittance information that facilitates reconciliation,” he said. “Since this system is available to all U.S. depository institutions, it can also help the current fragmented payments industry.”
Jim Aramanda, CEO of TCH, believes that RTP has the potential to “revolutionize” payments in the U.S. “Our RTP system was designed from the ground up to be fast, safe, and a platform for innovation that enables banks and credit unions to build products that are more responsive to their customers’ needs.”
Like NACHA’s Same Day ACH initiative, RTP will begin with a $25,000 limit on transactions. However, it is not expected to stay that way for long. James Colassano, senior vice president of product development for TCH, has said that the limit will likely be increased to $100,000 within a year of the launch.
But are corporate treasurers ready for real time? Carlsson noted that it’s still early to say what corporate adoption could look like, or how fast it might happen. “In many cases corporates will wait and see what banks and providers will offer them,” he said.
In a meeting Wednesday with AFP’s Treasury Advisory Group, Guy Berg, vice president of payments, standards and outreach group for the Federal Reserve, said that there is a general concern regarding corporates’ awareness and understanding of real-time and faster payments. “There’s a lot of interest from the banks, but you have to make sure that there’s good communication on both sides,” he said. “Are corporates aware of what it’s going to take to leverage it? What are the system updates that you need to make so that you can suddenly receive or send a real-time payment? Can your systems and processes handle that?”
It’s also a question of processes and people. The Fed has set a goal for achieving a level of ubiquity for faster payment capabilities by 2020. Will the people within organizations be ready to adapt to a real-time system by then? Carlsson noted that some attendees of the Payments Roundtable at AFP 2017 were concerned that the 2020 deadline is too ambitious.
But with RTP already live, perhaps ubiquitous access to faster payments is achievable by 2020. After all, no one is saying that all U.S. corporates to get onboard by 2020; the goal is that any end-users that do want access can get it. “It’s not necessarily that everybody leverages the faster payment capability, but if they want to, they can do it and do it at a reasonable price by 2020,” Berg said.