Adoption of real-time payments in the U.S. has been slow, particularly compared to other markets like the U.K. The assumption, of course, is that faster payment functionality only has a place in the peer-to-peer payments arena.
But Bottomline Technologies, which recently announced its collaboration with Starling Bank in the U.K. to connect corporates directly to the U.K.’s Faster Payments Scheme via their Real Time Payments Express Service, acknowledges the opportunity that faster and real-time payments have in the corporate realm.
“The stage is set for the U.S. to fully embrace real-time payments for both B2B and B2C activity,” Bottomline Technologies Vice President of Product Management and Strategic Solutions Jessica Cheney told PYMNTS in a recent interview, pointing to the previous rollout of Same-Day ACH and an acceleration of FinTech innovation in the country.
The U.S.’s push for real-time payments is led by The Clearing House, which aims for ubiquity of its real-time payments (RTP) network by 2020. That effort made significant progress this week with FinTechs and financial institutions looking to take advantage of the benefits of real-time payments for their customers — beyond speed, and with an eye on corporate end-users.
Massachusetts’ Berkshire Bank is one of them.
The financial institution announced Tuesday (June 18) its collaboration with Finastra to connect corporate clients into the RTP network directly via Finastra’s Fusion Global PAYplus solution.
While providing business clients access to faster payment capabilities is a plus, Berkshire Bank and Finastra pointed to the opportunities of transaction visibility and API integration as key to adding value for corporates.
“Today’s bank customers — both on the retail and corporate side — are increasingly accustomed to on-demand services in all aspects of their lives,” said Finastra Transaction Banking Solutions Head of North American Sales Jeff Otten in a statement. “By offering real-time payments, Berkshire Bank is meeting the trend head-on and providing a service that will lower settlement risk, increase operational efficiency and eliminate friction in the payments process.”
That sentiment was echoed by Citizens Bank Head of Treasury Solutions Michael Cummins in a recent interview with Forbes. Cummins also highlighted the potential for the RTP network to have a particularly large impact on corporate users. According to Cummins, Citizens is seeing the greatest adoption of RTP on the commercial side with its largest enterprise clients that have the resources to support real-time transacting and integrate the functionality into their ERPs.
“One of the biggest differences is it will let businesses, governments and people spend funds 24×365,” he told the publication. “ACH and wire are five days a week with cutoff times and their batch systems don’t give users the flexibility that RTP offers.”
The path toward real-time payments is in its early stages in the U.S., he added, and the current transaction cap of $25,000 could stunt corporate uptake of the tool.
“But to the extend that corporate systems are able to accept the payments and populate their systems, it takes a lot of manual and paper processes out of reconciliation,” Cummins added.
Further Adoption Ahead
In anticipation of continued appetite among banks and credit unions for access to real-time payments, payments firm Payrailz also announced Tuesday (June 18) its status as a third-party service provider to connect financial institution clients into The Clearing House’s RTP network. In a statement, Payrailz CEO Fran Duggan pointed to the benefits for both banks and their consumer and corporate end-customers of connecting into the RTP network.
“Our bank and credit union clients need financial technology tools that align with their personal and business needs,” he said. “Providing real-time payments is an important step for us, allowing us to deliver important new functionality to our bank and credit union clients and their customers or members, thereby improving their banking experience.”
As Forbes noted, the Federal Reserve is exploring whether to launch its own real-time payment service, though several hundred The Clearing House member banks opposed the idea late last year. Smaller banks, credit unions and tech giants, however, seem to be in favor of it.
It’s unclear whether the Fed will indeed launch its own rival real-time payments service, but this week’s announcements suggest U.S. financial institutions are ready to loop into the RTP network anyway — and to look at the tool from a stance other than payments speed for consumers.