Faster Payments

DOJ Greenlights TCH/Bank Real-Time Payment Network

The Department of Justice (DOJ), coming off a nearly year-long antitrust review, has signed off on a real-time payment network that is being created by JPMorgan Chase, Citigroup, Bank of America, Wells Fargo and other banks.

According to a report in The American Banker, with the backing of the DOJ, the network can now come to fruition. “We are pleased that the Department of Justice has concluded that our forthcoming real-time payments system will promote competition in payment services. Their determination is well-timed, as we prepare to launch the system later this year,” Sean Oblack, a spokesman for The Clearing House, which is also behind the payment network, said in an email to the American Banker.

Back in 2014, The Clearing House announced news of its plans for the real-time payment network and was seen as the leading contender to upgrade the aging payment infrastructure, according to the report. The Clearing House asked the Justice Department to sign off on the system in October of last year, and the department did so in late September in a six-page letter.

In that letter, according to news from the American Banker, acting Assistant Attorney General Andrew Finch said none of the rules The Clearing House proposed appeared to limit the ability of bank rivals to access the system in a manner that could be deemed anticompetitive. He also said the new instant payments system could have pro-competitive results.

“Many other countries already have such a system, and the Federal Reserve has encouraged its development in the United States,” he wrote, according to the American Banker. The report noted that The Clearing House said the real-time payment network won’t replace existing payment options and that it will not steer banks toward the faster payment network if it is approved.

The Clearing House also told the Justice Department that the banks that participated, such as JPMorgan Chase, Citigroup, Bank of America and Wells Fargo would have to pay The Clearing House for each instant payment a bank sends along with a fee, under some conditions, that the bank whose customer receives the payment pays. That fee would go to the bank of the customer who made the real-time payment.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.