Over the past two weeks, I attended two critical industry events: the Real-Time Payments Summit and the Fedpayments Improvement Community Forum. Although each event brought distinct topics to the table, a prevailing point emerged: Real-time payments may be enabled by a network, but without participation, it’s just a network.
The Real-Time Payments Summit focused on the fact that the Clearing House’s Real-Time Payments (RTP) network is a new payment channel. And as a new channel, in order for it to be useful, adoption has to occur. For adoption to increase, solution providers and financial institutions will need to solve for the use cases that make sense for a real-time payment solution.
Similarly, at the Fedpayments Improvement Community Forum people gathered to hear, “What’s next?” Attendees represented a cross-section of the industry, possibly a carry-over from the Faster Payments Task Force days when there were over 300 active participants. At this gathering of industry leaders, the Federal Reserve chose to release a Request for Comment on “potential actions to facilitate real-time interbank settlement of faster payments.” This RFC carries the concept of the Federal Reserve developing a new Real-Time Gross Settlement (RTGS) service for faster payments—or not—hence the request for comment. NEACH will be responding to this RFC with the help of our member input, but at first blush, there’s more to consider than real-time settlement alone.
For example, any RTGS service offered by the Federal Reserve will just provide the infrastructure, the backbone. The system will offer financial institution account-to-financial institution account transfers in real-time. And like TCH’s RTP, the proposal is simply for new rails.
In order to be successful, to thrive as a new payment channel, RTP needs to have vested users. Solution providers in the payment ecosystem will need to develop new tools, applications, and systems to communicate payment information with “end-users,” both the senders and receivers of payments. And not to get too far from the main point, but they also must provide a way to move the vast amount of potential payments information through these new channels.
All of this begs the question: If the backbone exits, what will financial institutions do?
That is why NEACH is offering Innovating Payments 2018 on November 14, 2018, in Providence, R.I. The conference is designed to bring together financial institutions and fintech startups to explore opportunities for partnership. Working together, FIs and fintechs can build solutions to capitalize on real-time rails and other faster payments infrastructure to meet the needs of consumers and corporations.
For real-time payments to be successful, the ecosystem needs creative solutions that realize the value of real-time for consumers and companies. As a non-profit trade association for financial institutions and companies, NEACH is seeking to help drive payments innovation. Join us at Innovating Payments 2018 to find out what opportunities exist to do just that.