Q: Where are we heading with real-time payments in the US? A: Ubiquity
In 2017, the US joined the global move towards real-time payments with The Clearing House’s launch of the RTP system. Rapid take-up since then among the largest banks means the system now covers almost half of the total demand deposit accounts in the US. However, volumes remain low and many banks are still not connected.
So, what’s the current state of play with real-time payments? And what are the growth projections? Anyone interested in the answers to these questions should take a look at a new research report, Real-time Payments: Linking Connectivity & Adoption, published with Aite Group.
The top-line findings tell their own story. Based on current trends in the US and past experience in other markets globally, demand for real-time payments will continue to grow among business and corporate bank clients across the US. And volumes on the RTP system will take off over the next 12-24 months, as more and more banks build on their initial ‘receipt’ capabilities and start to offer full payment initiation to their customers.
The implication? Banks should make full and active participation in RTP an urgent priority. The longer they wait, the harder they’ll have to run to catch up with early adopters.
By way of evidence, let’s take a few figures from the report. The complement of 12 banks live on RTP at the start of 2019 is projected to double to 24 by the end of the year. That may not sound like a massive increase. But it will bring the proportion of demand deposit accounts able to transact in real-time through RTP to 70%. And further rises in connections will likely take that figure to 90% by the end of 2020, putting ubiquity within reach.
What’s more, with—as the report highlights—a critical mass of 50% of banks now planning to offer both receipt and initiation on RTP, transaction volumes are also set to grow strongly. And as rising numbers of businesses become accustomed to the speed, convenience and efficiency of both receiving and initiating real-time payments, what bank would want to tell its customers it can’t offer these services?
For banks that haven’t yet joined RTP, the message is clear: get on board now. Which brings me to the importance of establishing connectivity, and how to overcome the hurdles it involves. I’ll look at these topics in my next blog. More to come soon…