The Federal Reserve's real-time payment option,
Ahead of FedNow's launch, TCH is focused on interoperability rather than competition. "We want to make sure they don't run into the same problems," said Rusiru Gunasena, head of the RTP network.
RTP has shared specifications with FedNow to ensure alignment between the two networks, and has engaged with FedNow on technical issues, according to Gunasena. The Federal Reserve declined to comment.
FedNow has been controversial, with
Many banks and credit unions may be biding their time to see how the competition shapes up before adopting real-time payments, but consumers are already on board, Gunasena said.
"Banks that are in a wait-and-see mode with instant settlement will be surprised about how much consumers already know about real-time payments. They run the risk of these consumers going down the road to another provider," such as a standalone P2P app, Gunasena said.
Financial services adoption in the new year is already showing signs of life. The Bancorp Bank this week partnered with small business neobank NorthOne to provide real-time settlement through the RTP network.
NorthOne, which just raised $67 million, is in the midst of building a financial platform for small businesses, with real-time payments acting as the centerpiece of a cash flow management platform.
"There's a lot of opportunity for businesses to have more real-time money flow," said Eytan Bensoussan, CEO and co-founder of NorthOne. "One of the drumbeats of our users has always been, 'Can you move money faster?' But they are still often using traditional rails."
TCH in the next year will try to bring more financial institutions onto the RTP network and boost adoption for Request for Pay, which pairs real-time billing with real-time payment. It's part of a schedule at TCH that also includes welcoming
An early move was a Jan. 1 update that included a warranty for the billers to manage fraud risk, which is designed to make RfP more attractive for billers to offer to consumers. "This was based on feedback that we got from banks," Gunasena said.
The RTP network recently passed 300 participants. That leaves a total of more than 10,000
About 45 million transactions went through the RTP network during the third quarter of 2022, and TCH reports 16 consecutive quarters of more than 10% growth.
TCH is also working with
"The challenge in connecting globally is more about compliance and local regulations than technology," Gunasena said. "We're not looking to reinvent RTP in other places. It's more about looking at what's there and making sure we connect in an interoperable way."
Software developers, particularly those that cater to banks and technology firms with corporate clients that are anxious to streamline
RTP and the introduction of FedNow will have a significant impact on the payments market, particularly giving payments software a boost, said Asaf Darash, CEO of Regpack, which develops merchant onboarding technology.
"Software and software actions are measured in milliseconds, which is not something that regular human action can relate to," Darash said. "Yet these speeds are needed due to the number of actions done for what most people will consider a 'simple action' in software."
Payment processing and authorization are still behind progress in other areas of software development, Darash contends. With payments being a relative missing link, ubiquitous real-time processing and settlement will remove a major pain point for other business software deployments, according to Darash.
For software-as-a-service products, payments often remain stuck in a "pending state" for a few hours, even though the underlying software provides instant access, Darash said, adding software companies rely on "trust" and are usually reluctant to restrict access until a payment settles.
"Real-time payments will solve all this entanglement and will allow all businesses to focus on bringing higher-value services to their clients rather than dealing with the ins and outs of the payment world," Darash said.
