The move toward faster payments ubiquity continues. While faster payments hit a fever pitch over the past several months, much of what is happening now seems to be happening quietly, away from the spotlight. The Federal Reserve is currently reviewing industry comments on its recent RFC involving developing a real-time gross settlement system as the industry waits to hear of their decision. NACHA and The Clearing House continue to plug away at Same Day ACH and Real-Time Payments (RTP), respectively. Although not exactly faster-payments related, JP Morgan announced plans to issue its own digital coin to run on its Quorum Blockchain platform as the whole world is evolving to embrace speed.
Let’s take a look at this month’s highlights.
Same Day ACH volume soared in 2018, the first full year with same-day debits as well as credits. There were nearly 178 million Same Day ACH payments last year: 98.3 million credits and 79.7 million debits. Overall Same Day ACH volume jumped 137 percent from 2017. Total Same Day ACH value in 2018 was $159.9 billion, up 83 percent over the year before. According to NACHA, “If the value of 2018’s Same Day ACH transactions was stacked in $1 bills, it would be 57,325,749 feet tall, the equivalent of 39,426 Empire State Buildings.”
“The results for 2018 make clear that the ACH Network is vibrant and continues to be a vital component of the nation’s economic engine,” said NACHA Chief Operating Officer Jane Larimer. “With more enhancements to Same Day ACH being rolled out this year and next, the experience for businesses and consumers will only get better.”
The enhancements Larimer is, of course, referring to are raising the Same Day ACH dollar limit from $25,000 per transaction to $100,000, which goes into effect March 20, 2020, and expanding the Same Day ACH processing window for an additional two hours each day. The new Same Day ACH processing window will go into effect on September 18, 2020.
But even without these enhancements, ACH Network volume reached nearly 23 billion payments in 2018, a year-over-year increase of 6.9 percent and the highest growth rate since 2008. That’s nearly 70 payments for every person in the U.S.
Also of note, the Faster Payments Playbook Workgroup, co-chaired by NEACH’s senior vice president Joe Casali and Christopher Chazin, Citibank, NA, met Feb. 26-28, 2019, to continue working to provide tools for financial institutions and business end users seeking better understanding and clarity on faster payments as they look to develop their faster payments strategy. The workgroup, a part of NACHA’s Payments Alliance, has an aggressive timeline to complete the project before the 2020 faster payments ubiquity goal set by the Fed.
Meanwhile, comments on the Federal Reserve’s proposal to build its own real-time gross settlement and liquidity management system are in and under review. All is quiet on the Fed front as the industry waits for the Fed’s decision regarding its potential involvement in faster payments.
The U.S. Faster Payments Council
Work is already underway by the FPC to establish workgroups to address the key issues that, when addressed, would further catalyze broad adoption in the United States. Starting in January, workgroup activity will begin in the following areas:
- Safety and Security – to promote adoption of practices that enhance safety and security for service providers and users of faster payments, enabling a high-quality user experience for all and bolstering confidence and trust, which ultimately supports achievement of broader adoption.
- End-User Transparency – To foster service provider strategies, policies, practices and capabilities that give end users transparency into what to expect when making faster payments, and ultimately bolstering confidence in faster payments which results in greater adoption.
- Education and Awareness – To develop an educational and awareness program that results in better understanding of faster payments and greater confidence among providers and users, ultimately driving adoption and transaction volumes toward the industry goal of ubiquity.
Additional workgroups are planned for later in the year in the areas of Fraud Information Sharing, Directory Models, and Regulations and Regulatory Guidance.
In related news, the U.S. Faster Payments Council has begun its search for a permanent Executive Director. They are working with DDJ Myers, an executive search firm, to identify the best individual to lead the FPC. A description of the position can be found online. If you are interested in applying for this position and meet the qualifications provided, you can submit your application here.
To learn more about becoming a member of the FPC, visit the FPC website.
The Clearing House
In other news, the Clearing House (TCH) continues educating the industry about the benefits and opportunities inherent in its Real-Time Payments® (RTP) system. This March, TCH is holding two half-day town halls focused on the implementation of Real-Time Payments:
- Pittsburgh Town Hall — March 12, 2019, from 12 noon to 4:00 pm ET.
- Philadelphia Town Hall — March 14, 2019, from 12 noon to 4:00 pm ET.
For more information and to register, click here.
According to TCH’s website, during the town halls, attendees will learn how RTP fits into the current faster payment trends in the U.S. and how this new network enhances an organization’s relationship with account holders, bringing opportunities and benefits to financial institutions of all sizes. Attendees will receive a framework around which to build their individual strategies for implementing RTP.
And speaking of RTP, PYMNTS.com recently reported that in forthcoming offerings, TCH’s efforts to connect banks with real-time payments will use customers’ routing and account numbers as a foundation with the added capacity for additional messages, such as a request for payments.
In Other News
In a surprising twist, JP Morgan announced February 14 plans to issue its own digital “coin” to run on its in-house Quorum Blockchain. Two years ago, JP Morgan CEO Jamie Dimon bashed bitcoin, as a “fraud” that global governments would “crush.” Today, JP Morgan is the first U.S. bank to create its own cryptocurrency.
The news is creating a lot of buzz because it could drive other financial institutions to consider their own blockchain or crypto-related coins.
And that’s not all.
As reported by CNBC, JP Morgan CEO Jamie Dimon hinted at JP Morgan Chase’s annual investor day that the bank’s cryptocurrency could one day be used for retail payments and by consumers.
What are the implications for financial institutions? That remains to be seen. But one thing we know for sure—nobody wants to be left behind.