The flagship real-time payment system in the U.S., The Clearing House’s RTP® network, reaches 65% of all demand deposit accounts in the country, according to The Clearing House, and any depository institution can connect to the RTP network through more than 20 technology providers. Experts predict that the U.S. real-time payments transaction volume will reach 8.9 billion by 2026, up from 1.8 billion last year.
The RTP network has dominated the real-time payments industry in the U.S. since its 2017 launch, but there is a new kid on the block in the form of the FedNow Service. Backed by the U.S. Federal Reserve, the system is raising awareness about real-time payments in the United States and will start the long journey to build volume and attract banks and credit unions. It remains to be seen which businesses will stick with the RTP network, which will hop on board with FedNow as their first real-time rail, and which could potentially switch systems or use both in tandem. Whatever the case may be, payments in the U.S. will never be the same again.
The “Real-Time Payments Tracker®” examines how the launch of FedNow changes the real-time payments industry in the U.S., and how it compares to existing options like the RTP network.
Canada was set to make a big stride this year with the launch of its Real-Time Rail (RTR) scheme, but Payments Canada has decided to delay the rollout. The organization noted in a statement that “current delivery delays, unrelated to the exchange technology components, are impacting the launch date of the RTR.” Payments Canada said that it will review its delivery risks over the next three months in anticipation of the launch date and use this time to undergo additional testing and investments.
India’s real-time payments journey hit a huge milestone, with the country announcing in June that its real-time transaction count has topped 9 billion in a single month. This marks a 58% increase year over year. The system — United Payments Interface, or UPI — was originally launched in 2016 with 21 banks, but the system is now leveraged by 350 banks around the country. The system plans to widen access to non-resident Indians in several countries, including those residing in Singapore, Australia, Canada, the United Kingdom and the U.S., over the coming years.
For more on these and other stories, visit the Tracker’s News and Trends section.
In many ways, FedNow is an extension of the winning formula that the RTP® network pioneered in the U.S., but despite similarities, its introduction could still rock the payments space. The addition of a new real-time option could foster healthy competition, which means more options for consumers and a better environment for everyone involved.
Expectations of small- to medium businesses (SMBs) regarding payment service providers have never been higher, with owners and employees expecting the speed and convenience in payments that they experience in every other part of their digital lives. In the U.S., the only widespread real-time option was The Clearing House’s RTP network, but that is changing with the launch of FedNow.
This month’s PYMNTS Intelligence examines FedNow’s capabilities, exploring the key differences and similarities between the two real-time rails.
The “Real-Time Payments Tracker®,” a collaboration with The Clearing House, examines how the launch of FedNow could change the real-time payments industry in the U.S., and how it compares to existing options like the RTP® network.