Readying For Real-Time, All The Time

When people began experiencing the joy of instant peer-to-peer (P2P) payments a few short years ago, the genie was out of the bottle. There was no going back. Now, the major real-time payments (RTP) players are ready to push the button on real-time, all the time, redefining fast money and revolutionizing multiple aspects of the commercial biome.

PYMNTS’ November 2020 Real-Time Payments Report, done in collaboration with The Clearing House, is rich in facts and figures on what’s become the rapid rise of RTP and related technologies. “The real-time payment use cases for businesses and customers are clear, but it is important to note that successfully enabling these transactions relies on coordination among numerous financial players,” per the report. “Banks are moving away from their legacy payment platforms to make real-time payments a reality, and even third-party P2P services are integrating with networks to send funds faster.”

The recent pact between Zelle and The Clearing House (TCH) on real-time payments shows that “such moves will become more common as failing to support faster payments becomes more of a non-starter for consumers and businesses alike,” the Real-Time Payments Report states.

Speeding Payments Flows

With over 150 U.S. financial institutions (FIs) currently readying real-time solutions, the Report notes that “this is a fivefold increase over the number of banks that reported having access to real-time capabilities in September 2019.”

With spreading awareness of what RTP can do to ease cashflow strains alone, more businesses are looking to tap into expanding real-time capabilities as they try to recoup on a bad year.

“SMB owners can opt to receive their payouts at the end of each day and have access to the funds immediately,” James M. Colassano, senior vice president of product development at The Clearing House, told PYMNTS. “It is a great way to get funds to a business just in time, allowing SMB owners to quickly adjust to changing business conditions. During the pandemic, the RTP network has [also] been utilized by FIs to distribute Paycheck Protection Program payments to businesses that needed the funds to meet payroll obligations to employees.”

These and other inventive uses of real-time rails hint at the enhancements to business process efficiency and resource management achievable with widely available RTP schemes.

RTP Use Cases Growing Faster

Use cases for real-time are growing as more players enter the space. An area of interest is payroll modernization, particularly in the aftermath of the global health and economic crisis.

“Sticking with established weekly or biweekly payroll schedules is out of the question for numerous entities that are now seeking alternative ways to manage these processes. This is where real-time payments come into play,” Tom Hammond, vice president of corporate strategy and product management for payroll, human resources and benefits solutions provider Paychex, said in a recent PYMNTS interview. The company recently became the first such provider to integrate with TCH’s RTP® network, which offers businesses and employees quick access to these funds through their FIs,” according to the Real-Time Payments Report.

As companies move away from paper checks and standard forms of payment and toward real-time adoption, a growing number are tapping into faster rails to speed the transition itself.

“A panel of experts recently told PYMNTS that businesses have moved away from paper checks and paper invoices as the pandemic limits in-person commerce and transactions. They found that companies are more frequently turning to digital solutions such as automated clearing house (ACH) or real-time payments, and some experts claimed this shift could help businesses finally ditch paper checks. They explained that ACH could be an important stepping stone in enabling businesses to adopt real-time payments as they transition from decades of paper invoices and manual payments,” per the new report.