How Comerica, U.S. Bank mix instant payments and embedded finance

Shelby Tauber/Bloomberg

As the size of individual real-time payments gets larger, ensuring smooth, secure processing is becoming more complicated. That has attracted banks such as Comerica and U.S. Bank, which have recently tweaked their payment systems to accommodate broader uses for instant settlement, including transactions for their client's customers.

Comerica is among the first banks to adopt new rules from The Clearing House that guide on-behalf-of, or OBO, payments on the RTP network, while U.S. Bank has expanded its embedded payment systems to enable businesses to integrate payments into their existing systems.

Both banks are taking steps as higher limits for RTP payments open real-time payments to more uses, such as supply chain finance and high value real estate payments. At the same time, the expansion of embedded payments and finance, which integrate financial services into other products, are creating a need for reliable and secure instant settlement.

"The ecosystem of tech companies will get more complicated, and banks will play a big role," Allysun Fleming, executive director of payments for Comerica, told American Banker.

Banking on real-time payments

Comerica has begun using the new OBO rules, processing real-time transactions for payments fintech Monex USA, one of Comerica's clients. The bank is also working on a project to build an application programming interface for real-time OBO payments.

While Comerica is monitoring the impact of Trump's tariffs and overall economic uncertainty, bank executives also said the institution was committed to investing in new technology, including payment processing.

Comerica is anticipating the expansion of e-commerce and the broader technology industry will create opportunities to support real-time payments for a variety of purposes, including supply chain financing and other third-party vendor transactions. Supporting disbursements for contract workers will also be a big opportunity as payroll firms use OBO through banks and the RTP rail to support their clients payments to freelancers. "We can power these companies to make payments to their own customers," Fleming said.

The Dallas-based Comerica is working through the RTP network to expand uses for embedded finance, enabling technology companies to make payments to their own customers. The bank has a pipeline of development with related products scheduled to launch by the end of the year. The processing speed and always-on nature of the RTP network is amenable to supporting a variety of payment use cases for the technology industry, Fleming said.
The technology industry often uses development techniques that use contractors, creating irregular payroll cycles and supply chains.

"Legacy payment rails don't support this, but the rails do," Fleming said of the OBO payments. "These technology providers can meet the demands of their users and partner businesses."

The new OBO rules also eliminate the overnight and weekend cutoffs of wire transfer services. This always-on network and the standardized disclosures will improve the ability of real-time payments to manage balance sheets while securing transactions, according to Fleming.

"Third party clearing has existed for years, but with real-time payments we're thinking a lot about fraud," Fleming said. "We want to make sure we have the right framework to protect the network."

Traditionally, corporations with centralized treasuries have used third party clearing, Gareth Lodge, an analyst at Celent, told American Banker.

"So a central office can make and receive payments on behalf of subsidiaries and related companies. It's also getting widespread use due to open banking. So, for example, a fintech initiating a payment on behalf of a client," Lodge said. "This creates all sorts of opportunities for businesses to build products on top of the RTP network."

At Comerica, the new API will be a companion to ISO 20022 compliance, which standardizes the fields in payment messages, considered a key element in risk management for real-time processing.

The broader library of messages, such as the Swift MX message, already contains fields for things such as ultimate debitor, debiting agent, initiating agent, and forwarding agent, Lodge said. "As the standards converge, there will be greater and greater benefits. ISO 20022 is a financial messaging standard, not just a standard for a particular type of payment," he said. "Given the broader library and its flexible nature, adding additional fields (and not just data) is a further example why the standard is the way forward."

U.S. Bank also recently released an expanded menu of embedded payment products, enabling businesses a way to integrate payments into existing systems. This includes what the bank called a for-benefit-of product for companies to move funds on behalf of the client company's customers. This system enables businesses to track funds for each participant in the transaction. U.S. Bank verifies and onboards its clients' customers and powers real-time payments and other digital options.

U.S. Bank, which is one of TCH's operators, did not answer questions about the new OBO rules for this article. In a press release about the bank's updated capabilities, Kristy Carstensen, head of U.S. Bank Treasury and Payment Solutions, said "today's finance leaders are under increasing pressure to optimize liquidity, reduce friction in payments, move quickly and enhance the customer experience. Our expanded embedded payments suite empowers organizations to embed secure, real-time payment capabilities directly into their platforms — streamlining operations and strengthening financial control."

What did TCH change?

The new TCH rules cover OBO, or RTP transactions that a sender executes for another party. The sending party bears responsibility for the source of the payment. This includes a variety of messaging and risk management tasks, such as flagging payments for potential fraud, know-your-customer responsibilities and other similar tasks.

"'Intermediary payments' are growing and we have many third-party providers that want to use the benefits of real-time payments," Cheryl Gurz, vice president of RTP product management at The Clearing House, told American Banker.

Since real-time payments process in about five seconds, there's a time crunch to vet transactions. Banks have always worried about the security risk of real-time payments due to this narrow processing window. Adding new wrinkles such as larger volumes or multiple parties, such as a digital marketplace accessed via a bank account, makes transactions harder to vet.

"It's more complicated than just sending funds from me to you. There's someone else involved," Gurz said.

Read more about real-time payments. (Real-time payments | American Banker).

TCH's new OBO rules for RTP network transactions were released in June and will require full compliance by April 16, 2026. These rules require that payment messages must follow standardized formatting and "clearly show" who is "really paying" and receiving the funds, using legal names only.

OBO parties also cannot alter payment details to make cross-border payments appear to be domestic and cannot involve "middlemen" as funders. RTP members, which are generally banks, are required to vet any party that is sending or initiating an OBO payment, have internal OBO controls, update agreements to ensure fraud is reported to TCH and the receiving party, and be willing to submit to an external audit for OBO compliance. The new rules replace existing requirements for Payment Service Providers and apply more broadly to RTP activity, TCH said.

"We want to have a consistent experience between senders and receivers of a transaction," Gurz said. "So everyone knows who is who in the value chain."