RTP - New Milestones Along the Way with Guest Rusiru Gunasena
Wrestling Payments Podcast: Season 2 - Episode 16
Episode Summary
In this episode of Wrestling Payments, host Joe Casali from NEACH sits down with Rusiru Gunasena, the head of the RTP network at The Clearing House, to dive into the evolution and current state of real-time payments in the U.S. Rusiru highlights the journey of RTP since its launch in 2017, emphasizing its growth and the increasing adoption among financial institutions. He shares insights on the network’s milestones, including handling billion-dollar days and expanding its reach to over 650 institutions, primarily community banks and credit unions.
Rusiru also discusses the various use cases that are driving RTP's success, such as B2B transactions, account-to-account transfers, and instant wage access for gig economy workers. He explains how RTP's real-time settlement and 24/7 availability offer significant advantages over traditional payment methods, making it an essential tool for modern financial transactions.
The conversation touches on the importance of interoperability with other networks, including the newly launched FedNow, and the ongoing collaboration with the Federal Reserve. Rusiru concludes by encouraging financial institutions not yet on board with RTP to start with a receive-only approach to experience the benefits of real-time payments.
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Guest-at-a-Glance
💡 Guest: Rusiru Gunasena
💡 What he does: Vice President, RTP Product Management & Strategy
💡Company: The Clearing House RTP
💡Noteworthy: Rusiru Gunasena: Leader in real-time payments, overseeing the RTP network at The Clearing House, with extensive experience in payments and fintech.
💡Where to find Rusiru: LinkedIn
Key Insights
Real-Time Payments Transforming Financial Transactions
Real-time payments (RTP) are revolutionizing how businesses and consumers handle transactions. With its 24/7/365 availability, RTP allows for instant settlement, eliminating the delays and uncertainties associated with traditional payment methods like checks or ACH. This immediacy benefits both businesses and consumers, ensuring that funds are transferred and accessible in real time. The RTP network’s ability to support high-value transactions, now up to $1 million, opens up new possibilities for various sectors, including B2B transactions, insurance payouts, and instant wage access for gig economy workers.
The Growing Importance of Interoperability in Payment Networks
As new payment networks like FedNow enter the scene, the need for interoperability between these systems and established networks like RTP becomes crucial. Interoperability ensures that institutions and customers can transact seamlessly across different platforms, enhancing the efficiency and reach of real-time payments. While RTP was the first to market, ongoing collaboration with the Federal Reserve and other stakeholders is vital for aligning features and ensuring that the benefits of real-time payments are universally accessible, regardless of the network.
Request for Payment: A Game Changer for Bill Payments
The introduction of the Request for Payment (RFP) feature within the RTP network is set to transform bill payments. Unlike traditional methods where payments might be delayed or susceptible to fraud, RFPs allow consumers to receive and authorize bill payments securely through their bank’s channels. This feature not only enhances security but also gives consumers greater control over their payments, allowing them to authorize transactions only when they are ready. As this feature evolves, it is expected to bring significant improvements to the way businesses and consumers handle recurring payments, further driving the adoption of real-time payments.
Episode Highlights
Introduction to the RTP Network and Its Evolution
Timestamp: [00:03:42]
The episode opens with Joe Casali introducing Rusiru Gunasena, who provides an overview of his role at The Clearing House and the inception of the RTP network. Rusiru highlights the significance of the RTP network as the first real-time payment network in the U.S., launched in 2017. He discusses the challenges faced in building the network, including the need to develop a two-sided network and onboard early adopters. This section sets the stage for understanding the evolution and current state of RTP.
“Starting in 2017, it's the seventh year in existence [...] it takes time to build a two-sided network, harden the infrastructure, and get early adopters onboard.”
Impact of RTP on Small Financial Institutions
Timestamp: [00:04:27]
Rusiru discusses the significant impact of RTP on smaller financial institutions, particularly community banks and credit unions. He explains that 90% of the institutions on the RTP network are community banks and credit unions, highlighting how RTP offers them an opportunity to compete with larger banks by providing real-time payment capabilities. This section emphasizes the inclusivity of the RTP network and its role in leveling the playing field for smaller institutions.
“We have now over 650 institutions, both banks and credit unions, and about 90 percent are community banks and credit unions on the network.”
Challenges of Implementing Real-Time Payments
Timestamp: [00:15:29]
The conversation shifts to the challenges faced by institutions in implementing real-time payments. Rusiru talks about the technical hurdles and the need for a robust infrastructure to support RTP. He also addresses the confusion in the market when the Fed announced its own real-time payment network, FedNow, and how it led some institutions to adopt a "wait and see" approach. This section provides insight into the complexities and competitive dynamics of the real-time payments industry.
“What I saw when the Fed announced, there was a lot of confusion [...] a lot of institutions went into a wait and see mode [...] Do I join RTP now or wait for the Fed?”
The Role of RTP in the Digital Wallet Ecosystem
Timestamp: [00:13:16]
Rusiru discusses the role of RTP in addressing the challenges posed by digital wallets. He explains how RTP allows funds held in digital wallets to be instantly transferred back into bank accounts, helping financial institutions reclaim deposits that had been displaced by digital wallets. This section is crucial for understanding the strategic importance of RTP in the broader financial ecosystem, particularly in maintaining customer relationships and ensuring liquidity.
“With RTP [...] you have the capability to do the drawdown in real time [...] customers and businesses can see these wallet funds immediately moving into the institution.”
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