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The Clearing House (TCH) has announced that it is expanding its "request for pay" (RfP) option on its real-time payments (RTP) network, just weeks after the rival FedNow system launched.
Broker dealers, billers and suppliers can now prompt their customers for payment through secure bank channels and receive funds instantly in response.
“Businesses have been looking for more efficient and user-friendly ways to send bills and invoices to customers, while customers have been searching for a better payment experience that gives them more control,” said Rusiru Gunasena, senior vice president of RTP product management at TCH.
“Request for payment provides a way for billers to efficiently and securely send bills and invoices to customers through a bank’s digital channel and allows customers to have full control and insight over the payment.”
Anticipating the expanded launch of RfP, over the past year TCH says that it has worked with RTP participants to enhance the risk management framework to mitigate the risk of potential misuse.
TCH and the RTP network are taking a risk-based approach to the initial introduction of the RfP capability and the use cases it will initially target.
Consumer bill payments, in particular, represents a significant opportunity for RfP. Billers, such as utility payment providers, could reduce failed payments and the cost of collections by enabling their customers to confirm payment when they know there is enough money in their account to cover the cost.
Businesses will be encouraged to take advantage of RtP to pay suppliers, business partners, contractors, freelancers or other third parties using RfP.
Payroll providers can send a RfP to their corporate customers so they can fund payroll on the same day that employees are paid, rather than two to four days prior to payday.
RfPs can also be used by firms to prompt customers to transfer funds between accounts. For example, brokers can send an RfP to customers so they can transfer money from their bank account to their brokerage account instantly to enable immediate trading.
“We’re seeing a significant evolution in digital payments, which are increasingly instant, embedded and connected to the processes, applications and software customers use every day,” said Shailesh Kotwal, vice chair of U.S. Bank Payment Services.
“Giving businesses the ability to request or move money on behalf of their customers in real time creates a better experience, increasing satisfaction and providing a competitive edge for businesses.”
Financial institutions Bank of America, BNY Mellon, Citi, Fifth Third, PNC Bank, U.S. Bank and Wells Fargo are among the RTP participants that are offering RfP capabilities.
Others, such as Bridge Community Bank and North American Banking, have also received certification to send RfP messages on the RTP network.
Meanwhile, numerous technology providers, including FIS, Fiserv, Jack Henry and Open Payment Network, have received certification to provide RfP to their financial institution customers that are RTP participants, according to The Clearing House.
“Expanding RfP usage across financial institutions is an exciting step toward wider RTP adoption,” said Connor McCoughlin, Chief Commercial Officer of APEX Fintech Solutions (AFS).
“Through the Clearing House’s RTP network and with U.S. Bank as AFS’s bank partner, we can help eliminate ACH return risk for retail broker-dealers and their investors,” he said.
The timing of the TCH announcement suggests a response to the growing competition in the market.
After years of work, on July 20, the US Federal Reserve announced that its rival 24/7/365 instant payment system, FedNow, had officially gone live.
