Shrugging off the Impending FedNow, TCH Marks Five Years of Real-Time Processing Growth

As the market for real-time payments continues to develop in the United States—and as the Federal Reserve prepares for a commercial launch of its own real-time network next year—The Clearing House Payments Co. is celebrating the five-year anniversary this month for its own nationwide service.

“We keep plowing forward,” Jim Colassano, senior vice president of RTP product and development for New York City-based TCH, tells Digital Transactions News.

The company’s real-time payments network—known as RTP—went live in November 2017 with two participating institutions and 1,000 transactions in quarterly volume. Now, the system claims 285 participating institutions and an expected 50 million transactions for the December quarter, up from 45 million last quarter, according to numbers the company released on Thursday. Transaction volume has now grown at a rate of 10% or better for 16 straight quarters.

There have been a few surprises along the way for TCH, which is owned by many of the nation’s biggest financial institutions. One of these has to do with the payroll application, which has won wider adoption on the RTP platform than TCH expected. “We thought payroll was done and dusted,” says Colassano. But now, with the steady growth of digital functions such as earned-wage access, payroll is becoming “one of the dominant use cases” for RTP, he notes.

Another unexpected development early on, Colassano adds, was the slow development of business-to-business volume. Ultimately, TCH discovered its dollar limit per transaction was too low. “Businesses wanted to take the bulk of their payroll activity and move it over” to real-time processing, he recalls, leading TCH to raise its cap from $25,000 to $1 million. Now, he says, “We’re seeing business-to-business use cases open up.” With this kind of growth, TCH is eyeing new applications for RTP, including cross-border payments, according to Colassano.

FedNow, the Fed’s real-time payment service, has been in development for three years and is set to launch in July. With the Fed behind it, it is expected to offer formidable competition for all real-time systems, including TCH. But Colassano says the Fed’s venture has certain benefits for the RTP system. “The Fed has really raised the visibility [of real-time payments] in the marketplace,” he says. “We’ve been benefiting from the marketing clout and presence that the Fed brings.”

In the end, though, any competing system will have to go up against RTP’s reach, big-bank backing, and headstart in the market for faster payments, Colassano says. “What the Fed is going to be launching is what we launched five years ago,” he says. “We’re a more established network. We’ll keep plowing forward.”