SWIFT said Tuesday that it is providing an interface for managing the requirements of sending and receiving payments on The Clearing House (TCH)’s upcoming Real-Time Payments (RTP) system.
RTP will allow businesses and consumers to clear and settle payments from end-to-end within seconds. The system, which will run 24 hours a day, 365 days a year, is set to launch before the end of 2017.
Now, SWIFT has teamed up with TCH. Through the Alliance Messaging Hub (AMH), SWIFT will offer banks a gateway to the TCH RTP network, in addition to SWIFT high-value payments. It goes into effect early next year.
“We have an overall strategy on instant payments,” Ignacio Blanco, director of strategic relationships for SWIFT, explained in a call with AFP. “We’re looking at each market that is going through that process of a getting to a real-time payments system. The opportunity for SWIFT is really to provide our community with the most effective way to participate in these types of payments. That’s why we decided to be supportive of what is going on in the market.”
Of course, TCH isn’t the only player in the real-time payments game in the United States. However, for SWIFT’s client base, TCH’s RTP system stood out. “We think TCH is in a great spot to bring a solution to the market that can be leveraged by banks, so we’re working with them to provide our clients connectivity to the system,” he said.
AMH will essentially sit between banks’ backend systems and the outside world, allowing them to manage the requirements of the different networks that they connect to. “It’s an interface that they can use for SWIFT volume—so cross-border, high-value payments,” Blanco explained. “But through the multi-network capabilities of AMH, they can connect to other non-SWIFT networks, and RTP is one of them. So AMH really provides that view between what is in the outside world and what is in their backend system.”
What it means for corporates
Magnus Carlsson, AFP’s manager of treasury and payments, asked Blanco how this system will work for corporate treasurers that are already connected to SWIFT. “How will they go ahead and use this? Will these be the same message types and standards? Are they going to see many changes? If they’re using SWIFT now for international payments, how different will this look for domestic payments?” he asked.
Blanco responded that TCH only allows banks to sign up for its service; corporates have to use their banks to send real-time payments over the RTP system. So if a corporate wants to send a payment over the real-time rail, they would go to their bank, and the bank will use AMH to send messages.
To make the process run smoother, a bank could update the portal it uses to connect to its corporate client to provide the option of sending a payment in real-time, Blanco added. “That’s when the bank would know that this payment has to go to TCH, and that’s when AMH and the gateway come into play,” he said.
Should banks begin to update their portals to accommodate the real-time system, Carlsson sees some potential for corporates. “If you can choose how you want to do it from the portal, it could provide an interface into the real-time system,” he said. “That’s something SWIFT should really encourage banks to do.”
For more insights into upcoming real-time payment initiatives, don’t miss the Payments Breakfast at AFP 2017, featuring Sean Rodriguez, CCM, senior vice president and faster payments strategy leader of the Federal Reserve.