Instant Payment Battle Heats Up In The US, As RTP Surpasses 1m Daily Transactions

September 13, 2023
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The Clearing House’s (TCH) real-time payment network (RTP) has hit a major daily transactions milestone, as TCH seeks to highlight the success of its own infrastructure following the launch of FedNow.

The Clearing House’s (TCH) real-time payment network (RTP) has hit a major daily transactions milestone, as TCH seeks to highlight the success of its own infrastructure following the launch of FedNow.

On September 1, the RTP processed more than 1m transactions in a single day for the first time. At present, the RTP processes over 60m transactions per quarter and is seeing increased usage, according to TCH.

The RTP is used to support use cases such as account-to-account (A2A) payments, digital wallets, consumer-to-business payments and earned wage access (EWA).

Mihail Duta, director of global solution consulting for payments at Finastra Americas, said that passing 1m daily transactions is a “significant milestone”, as it points to the “success of the rails in terms of adoption and volume”.

TCH launched RTP, a private instant payments network, in November 2017, and its volume has grown by more than 10 percent each quarter since then. In addition, the number of RTP participants continues to increase.

“There are currently more than 370 bank and credit union participants, and this number is expected to reach 400+ by the end of the calendar year 2023,” Duta told Vixio.

The network has 150,000 business users, and over 3m people send A2A payments and Zelle payments via RTP.

TCH no longer shy about RTP metrics

For several years after the rollout of RTP, TCH remained silent about its transaction metrics.

It was not until November 2022, on the fifth anniversary of the launch of the RTP, that TCH reported that the RTP had processed 45m transactions with a value of $19.7bn in Q3 that year.

However, as the launch of FedNow approached, TCH took steps to be more proactive in the promotion of its own instant payments network. 

On July 24, four days after FedNow went live, TCH announced that RTP had surpassed the 500m total transactions milestone for the first time since 2017.

Later, in August, TCH added a request for payment functionality to the instant payment network.

“There’s definitely a competitive aspect to having two instant payment rails now present in the US market,” said Duta.

“Given there’s been a lot of publicity around FedNow, TCH wants to ensure the market doesn’t forget about the success of its own instant payment rail.

Nevertheless, Duta believes that with the predicted strong growth of instant payments, there is “plenty of scope” for both RTP and FedNow to “grow and prosper”.

The competitive edge

Although it could be argued that FedNow has put competitive pressure on RTP, it is not unusual to have public and private networks vying for the same transactions in the US.

This is already the case with the Automated Clearing House (ACH) and whole payment networks such as Fedwire and the Clearing House Interbank Payments System (CHIPS).

The public networks have typically had a different focus from the private networks (and vice versa), however.

TCH’s private networks have mainly focused on serving large banks, while its public counterparts focus on smaller banks.

Therefore, many smaller banks are “somewhat reticent to put all their eggs in the TCH basket due to its ownership structure by the nation’s top 22 largest banks”, pointed out 

Deb Baxley, steering committee member and co-chair of the US Payments Forum's Mobile and Touchless Payments Working Committee, said that smaller banks are “somewhat reticent” to put “all their eggs in the TCH basket”.

This, she told Vixio, is due to TCH’s ownership structure, with the country’s 22 largest banks owning TCH collectively.

But when FedNow went live on July 20, the network also had its limitations, as covered by Vixio.

For example, many institutions participate in FedNow on a receive-only basis, meaning their customers cannot initiate instant payments (at least not yet).

Additionally, FedNow and RTP are currently not interoperable, and payment experts have indicated to Vixio that that is unlikely to change in the near term.

Interoperability is currently achieved via technology providers such as Finastra, Jack Henry and FIS, while some larger banks have decided to join both instant payment networks.

“The competitive edge boils down to which has the most compelling and innovative value proposition, features, partnerships and ease of ecosystem integration,” said Baxley.

“Some of this will be determined by excellence in execution, and by product governance,” she added.

“Managing a product roadmap from a myriad of stakeholders is often more challenging than the technology itself.”

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