The Send Side of Instant Payments: How RTP is Transforming Business with Guest Jim Colassano
Wrestling Payments Podcast: Season 3 - Episode 21
In this episode of Wrestling Payments, Jim Colassano, Senior Vice President at The Clearing House, joins host Joe Casali to discuss the transformative impact of the Real-Time Payments (RTP) network. He explains how RTP is revolutionizing how businesses manage payments, particularly on the send side. Jim highlights the shift from traditional batch processing to instant payments, emphasizing the network's ability to handle various transactions, from payroll and refunds to emergency funds and cash flow management.
Jim details how RTP's speed, finality, and 24/7 availability are key advantages over older systems. He addresses common misconceptions and objections, assuring listeners that RTP offers solutions for businesses of all sizes. Jim also dispels the myth of a single "killer app," demonstrating how RTP's versatility allows for diverse applications tailored to individual needs.
Finally, Jim discusses the network's growth and the increasing demand for real-time payment capabilities. He encourages businesses to explore the RTP network and its potential to solve their payment challenges. Jim emphasizes the importance of embracing new technologies to improve efficiency and customer experience.
Dowload Episode Transcript
Guest-at-a-Glance
💡 Name: Jim Colassano
💡 What he does: SVP, Product Development and Strategy
💡 Company: The Clearing House
💡 Noteworthy: Payments expert with experience spanning from lockboxes to real-time innovations.
💡 Where to find him: LinkedIn
Key Insights
The Power of Real-Time Payments Extends Beyond Speed
While speed is a significant advantage of RTP, the benefits extend to transparency, finality, and 24/7 availability. These features address long-standing challenges with traditional payment systems, like clearing delays and revoked funds. This creates a more efficient and reliable payment experience for businesses, allowing for better cash flow management and improved customer satisfaction. The always-on nature of RTP also enables businesses to handle time-sensitive transactions and emergencies effectively, regardless of traditional banking hours. This shift towards real-time information and settlement creates a more robust and responsive payment ecosystem.
Moving Beyond the "Killer App" Mentality
The RTP network isn't about finding one perfect use case; it's about solving a multitude of payment problems. Its flexibility allows for customization across diverse industries and business sizes. This adaptability eliminates the need for a one-size-fits-all approach, allowing businesses to tailor solutions to their specific needs. Whether it's streamlining payroll, expediting refunds, or managing large-dollar transactions, RTP offers a versatile platform to address various pain points within the payment process. This approach focuses on solving practical problems rather than searching for a single, elusive "killer app."
Innovation Thrives on Real-Time Rails
The technology behind RTP fosters rapid innovation in the payments space. Unlike legacy systems, RTP provides a modern platform for FinTech companies to build and deploy creative solutions. This allows for the development of more user-friendly and efficient payment experiences. The ability to move non-financial messages alongside payments opens up new possibilities for value-added services. This combination of real-time capabilities and rich data transfer creates an environment ripe for innovation and improved customer experiences.
Early Adoption and the Power of Experience
Getting started with RTP is key to unlocking its full potential. The network's value becomes clear with repeated use, as businesses discover new applications and efficiencies. Starting with internal processes, or "eating your own dog food," allows banks and organizations to gain firsthand experience and understand the benefits before offering services to clients. This approach not only improves internal operations but also provides valuable insights to tailor solutions and address client needs effectively. The high rate of repeat usage demonstrates the network's value and encourages wider adoption.
Episode Highlights
The Importance of Endpoint Reach in RTP Adoption - Timestamp: [00:04:00 - 00:07:00]
Early on, the RTP network focused on establishing a broad reach of endpoints, recognizing that sending capabilities are useless without corresponding receiving infrastructure. This initial focus on building a solid foundation enabled early adopters, like PayPal, to leverage the network's potential. As the network expanded, the focus shifted to demonstrating the value proposition beyond speed, encompassing aspects like transparency, finality, and 24/7 operation. This comprehensive approach broadened the appeal of RTP and paved the way for wider adoption across diverse use cases.
"You can't start on day one. Everybody wanted to send, but if you've got nobody to receive, then it doesn't make a difference. So the early stages, we were really focused on getting endpoints and getting reach."
Addressing Objections and Finding the Right Use Cases - Timestamp: [00:12:00 - 00:15:00]
Many businesses hesitate to adopt RTP, questioning its relevance if major players already utilize the network. However, the focus should be on the specific applications and pain points rather than the customer. Jim emphasizes that businesses of all sizes, from small startups to large corporations, have employees that need to be paid, and all companies can benefit from streamlined refund processes and improved customer complaint resolution. This approach highlights RTP's versatility and its ability to provide tailored solutions for various needs.
“Businesses big and small have to pay their employees. So when you talk about these early wage access capabilities, that's offered to a business no matter what size, because employees have that same need."
The Evolution of Payroll and the Rise of Early Wage Access - Timestamp: [00:07:00 - 00:12:00]
Initially, the developers of the RTP network assumed that payroll processes were already optimized. However, the rise of the gig economy and the demand for early wage access revealed a significant opportunity. RTP enables workers to access their earned wages instantly, eliminating the need for costly payday loans and addressing financial emergencies that often occur outside of traditional banking hours. This shift empowers employees and provides a much-needed solution for managing short-term financial needs.
“People don't want to get the full amount of their paycheck when they may only need $50. And emergencies in terms of cash that people need never happen during business days. They always happen in the middle of the night or on the weekend. So using instant payments in that 24/7 cycle is one way of really achieving that goal.”
The Expanding Landscape of RTP Use Cases - Timestamp: [00:34:00 - 00:37:00]
While initial expectations focused on specific use cases like peer-to-peer payments, the RTP network has proven far more versatile. It's now being used for mortgage settlements, closing escrow funds, and other high-value transactions requiring immediate asset transfer. This expansion demonstrates RTP's adaptability and its ability to solve diverse problems across various industries. The focus has shifted from finding a single "killer app" to addressing a broad range of payment challenges.
“The solutions are as varied as the problems…mortgage settlement and closing escrow funds, all of those things that require an immediate transfer of assets and money with finality…all of those are solved by the RTP network.”
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