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Business-to-business payments were one of the first use cases for instant payments when the RTP network from The Clearing House Payments Co. LLC debuted in 2017. As more businesses and consumers want to use such services, the use cases are evolving, with digital wallets—like PayPal and Venmo—now being the largest use cases on the RTP network.
“We are now finding that customers, businesses, [and] individuals are finding more and more uses for instant payments almost daily,” Jim Colassano, TCH, senior vice president of product development and strategy, tells Digital Transactions News. Other uses, such as earned wage access and early wage access, are growing, as are gig-economy payouts, loan disbursements, and merchant funding used by Elavon, U.S. Bank, Square, and Stripe, TCH says.
As of the end of June, RTP has more than 1,300 banks and credit unions on its network, and 95% of them have less than $10 billion in assets, TCH says.
“We are seeing activity across the spectrum where customers are using it more and more,” Colassano says. “One of our biggest use cases is account-to-account transfers, where individual accounts and businesses … are moving money between accounts they own.” Consumers, particularly, find instant payments valuable for online-gaming purposes, he says.
“They’re moving their money from those closed-loop systems into their banking accounts using the RTP network,” he says. “The reason for that is the instantaneous experience they get. They see the money move out of their wallets, and within the blink of an eye, the money is actually in their bank accounts so they can use it.”
Businesses also see an advantage in the instant experience for their customers who may have had an issue with a service or product, he says.
Disbursements for customer complaints are a growing RTP use case. “We see a lot of that activity, where getting the money to the consumer as soon as possible to flip them from an aggravated, angry, and potentially lost customer into a very, very happy customer who now has the money in their account,” Colassano says.
Another use with potential is request for payment. Known as RfP, this option enables billers and merchants to receive nearly immediate payment by sending a request through a network to customers and clients who have received services. FedNow, the real-time payment service from the Federal Reserve, also offers an RfP capability.
Colassano says RTP has RfP activity on the network, with 300,000 to 400,000 RfPs processed monthly, but it has had a slow adoption rate for one specific reason.
“It requires banks who receive that message to make changes to the way it’s delivered to their customer,” he says. “So, it requires not only making changes to the payment application so that they can apply the money when they get it, but in this instance, we’re talking about a non-financial message that the banks have to ingest and then deliver it through their digital platform to their customers.”
The challenge of incorporating non-financial messages likely will be eased when RfP requests grow in volume, he says.
“We are seeing good usage for the number of use cases that’s operating [on it] today,” Colassano says. “But, we still need to increase that reach and the application before you’ll see that program scale.”
Other RTP mid-year data shows that the network processes an average of 1.5 million payments daily. These payments have an average daily value of more than $6 billion.
