In this month’s “Real-Time Payments Tracker®,” Rupa Krishnan, head of global real-time payments at J.P. Morgan Chase & Co., reflects on the RTP® network’s five-year anniversary and looks ahead to possible new use cases, including why it is poised to disrupt cross-border payments.
The launch of the RTP network was intended to solve clear problems with the existing payments status quo in the United States. Businesses and individuals both clamored for faster payment rails over the existing wire transfers and bank transfer systems that existed at the time, both of which took days to resolve.
“The U.S. was behind the global standard for faster payments in 2017, so a real-time scheme was needed to support changes both in business and consumer demands. The most demanding use cases were urgent disbursement, immediate cash-outs from wallets, access to payroll disbursements that needed to be made immediately, and so on.”
The system quickly grew in popularity as customers began to appreciate the higher quality of life that came with faster payments. Every digital interaction for both businesses and individual consumers was accelerating at the same time, so customers expected no less from their payments — and the RTP network delivered on the promise of speed.
“The key factor [in the RTP network’s growth] was customers’ desire for an always-on environment. Customers expect the same behavior in financial transactions as in everything else they do when it comes to everyday services, with the key theme being instant gratification.”
The ongoing pandemic was a major gamechanger for the RTP network. Businesses and individuals were not only forced to go digital in many ways due to social distancing but also needed payments faster than ever before to counteract some of the negative economic pressure.
“We saw with [the pandemic] that there was a heightened need for accelerated, faster payment solutions, which in turn accelerated the rise of [the] RTP [network]. Payment digitalization also got a huge boost amid the pandemic as individual consumers moved away from cash.”
The RTP network is well-positioned for a prosperous future if it plays to its strengths and brings instant payments to new market segments. Cross-border payments are one such arena that the RTP network has potential to disrupt, but this will require in-depth international cooperation to ensure that businesses and consumers are not hampered by competing national regulations.
“The RTP network is very focused on providing as consistent a consumer experience as possible across the industry to drive adoption, which becomes even more important with capabilities such as request for payment. Other use cases, like the ability to link the RTP network to other cross-border services could significantly lower the cost of traditional cross-border payments.”