Memorial Day marked the unofficial start of summer and the start of a slower, more relaxed pace of life, at least for a few months. Trips to the beach, backyard barbeques, and time spent with friends and family are a welcome relief from the relentless pace most of us keep throughout the year. But summer’s not all sunshine and lemonade for the faster payments crowd. Like the temperature, faster payments are heating up.
Let’s take a closer look at a few of this month’s headlines.
New Study Says Real Time Payments Will Transform Commerce
In a May 23 news release, Citizens Financial Group, Inc. announced the release of its Real-Time Payments Outlook study with the headline, “Businesses Nearly Unanimous That Shift to Real-Time Payments Will Transform Commerce.”
According to the bank’s Real-Time Payments Outlook, 90 percent of businesses expect real-time payments, the super-fast, new standard in U.S. billing and payment processing that is currently being deployed, to dramatically transform the way business is done.
The news release quoted Michael Cummins, Head of Treasury Solutions at Citizens as saying, “Real-time payments is the most sweeping change to the U.S. payment system since the 1970s, and businesses see this as a crucial opportunity to modernize their payment practices. There are tremendous advantages in terms of speed and certainty of payments. Cash flow predictability and payment reconciliation will also be greatly improved. It will be absolutely transformative.”
Other key findings reveal that the real-time payments network is gaining momentum, with 41 percent of businesses saying they are currently discussing it with their banks or implementing it.
Eighty-two percent of businesses said real-time payments solves many of the problems with the current payment options, such as the gap in time between making or receiving a paymentand when the funds clear. They also noted the real-time payments network’s ability to reduce fraud, include payment data with the payment, and automate payments more easily.
The survey of decision-makers at more than 150 companies nationwide, conducted in March and April of 2019, sampled a range of businesses in different sectors with annual revenue of $10 million to $100 million (37%); $100 million to $500 million (25%); and more than $500 million (38%).
The Federal Reserve
The Federal Reserve’s decision regarding operating a real-time payments system is still a ways off. As reported by Digital Transactions, Susan Foley, senior associate director of program direction for the Federal Reserve System, promised a packed town hall session at NACHA’s annual payments conference, that they would make an announcement soon, which, in this case, means about seven months. “I can only say generally, by the end of the year, but we obviously know that isn’t necessarily the answer you want to hear. But I can’t give you anything more specific than that,” Foley told Digital Transactions.
The Clearing House
In a surprise announcement on May 16, the Clearing House (TCH) announced that Avidia Bank, a Hudson, MA-based bank with roughly $1.6 billion in assets, is joining TCH’s RTP® network. As reported in a May 17 Digital Transactions (DT) article, Avidia is the first “smaller bank lining up for real-time payments.” The article also suggests that other smaller banks are “in the pipeline, though not yet announced.”
NEACH is inviting Avidia to speak about their experiences and offer insights on their decision to join RTP at the 2019 Innovating Payments Conference. Visit NEACH’s Innovating Payments Conference page for conference details.
Some in the industry view TCH’s RTP network as serving big bank’s interests, but public perception could be shifting with news of Avidia signing on and interest reportedly growing among smaller banks.
But that’s not all that’s new with TCH.
A May 21 news release revealed that TCH has added four representatives from community banks and credit unions to the RTP Business Committee, the group that provides input and guidance to the strategic execution of the RTP network. The new members will serve a three-year term, ending May 2022, and they will join representatives from each of the TCH member banks on the Business Committee. According to the release, the four new seats expand the size, type, and number of depository institutions that help govern the RTP® network.
Also of interest, Kyriba, a global leader in cloud treasury, announced on May 22 the launch of a new service through J.P. Morgan’s API (application programming interface) that allows Kyriba clients that are also J.P. Moran clients to send real-time payments in the U.S. through The Clearing House’s RTP® network.
Kyriba is the first treasury platform to offer real-time payments through J.P. Morgan to corporate clients.
Faster Payments Council
On May 20, the Faster Payments Council (FPC) announced its first elected Board of Directors. As stated in its release, the FPC Board is accountable to the members for setting strategic direction and ensuring processes, activities and recommendations are consistent with the fundamental principles of the organization. In addition, the Board is responsible for ensuring the views of segments with fewer members are heard during deliberations at the Board, committee and work group levels.
The release noted that the Board’s near-term objectives include formalizing the organization’s strategic direction and establishing foundational structure. With the help of the Executive Search Committee, one of the Board’s most immediate tasks will be to confirm the FPC’s first executive director. This announcement is expected by early summer 2019.
Also of interest, the FPC held its inaugural member meeting on May 29, 2019, with NEACH senior vice president Joe Casali, AAP, NCP in attendance.
“Through its active involvement in the FPC, NEACH is committed to representing its members’ interests and concerns by assuming a critical role in discussions, the development andproduction of deliverables, and in the decision-making process,” says Casali.
The FPC is the result of an industry effort facilitated by the Federal Reserve’s Faster Payments Task Force. The Faster Payments Task Force coordinated the work of 300 participants, including vendors, financial institutions, companies and consumer groups in recommending goals needed to establish faster payments in the US.
At its annual Payments Management Conference, held May 13-15, at the Boston Marriott Quincy, NEACH announced the availability of a new white paper analyzing the New England FinTech evolution and what it means for community banks and credit unions. Partnering for Innovation: The New England FinTech Evolution draws expert insights from NEACH, New England community banks, and FinTechs to help financial institutions make informed, strategic decisions for innovation and growth.
The paper investigates four critical considerations in evaluating a potential partnership: understanding the state of the industry today; identifying and vetting FinTech collaborators; selecting the solutions that best align with business needs; and addressing risk and compliance challenges. In addition, the paper offers real-world examples and next steps for developing FinTech partnerships that work.
Visit NEACH.org to learn more or to download a copy.
For more on faster payments, visit NEACH’s Pacing Payments website.