The Clearing House on The Race for Real Time Payments in the US

The article that was published on (1) triggers an array of thoughts on how, when and where this exciting journey in the payments space will take us to.

HOW: …Is it a sprint or a marathon?

Let us first summarize where we are. The Clearing House Real-Time Payments (RTPs) capability went live in 2017.

Few points to note:

  • Pick-up across the US has been slow
  • Participants range from a handful of Money Center Banks
  • Ten large Regionals and two large Foreign Banks incorporated in the US
  • Zelle is the other provider of RTPs to customers of its associated member banks

As Russ points out in the article, there are several reasons for the slow pick-up across the US…

In my opinion, the main factors are payments not being viewed as a core/strategic business amongst the community banks coupled by the investment spend to update/implement systems. Ultimately, there needs to be a business case for the banks to buy-in to real-time payments which would lead to revenue opportunity, new client acquisition and customer retention.

In the Primetime for Real-Time Report ACI (2) and Global Data PLC forecast, real-time payment transaction volume would balloon from 734m in 2019 to 4.2bn by 2024 . The Fed predicts that electronic payments will account for 81.7% of all payments by 2024 and immediate payments will have a 1.6% market share up from 74% and 0.3% respectively in 2019.

WHEN: …In terms of the race to get there …I do not believe it will be a sprint or marathon but rather somewhere in the middle – like a 5k-10k race.

Let’s consider the needs to be considered and undertaken:

  • The Clearing House RTP – continue marketing efforts/take-up to build the foundation, work closely with the third-party technology providers
  • FEDNOW – design for interoperability with the Clearing House RTP
  • Money Center/Regional Banks – provide correspondent banking/outsource arrangements to banks that do not want to undertake the investment spend
  • Cross Border Capability – understand the nature of global payments and client demand for real-time cross border payments; ISO20022 should be the universal message format

WHERE: …As financial services players consider their options for real-time payments, reachability will be key.

There is a need to keep pace with the competition and that includes the realities of real-time payments and the new real-time experiences that ride on the real-time rails. Those who can, will cross the finish line and be winners! Those who can’t, will finish a distance second.

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