Realtime Retail Payments (RTRP) systems are a global phenomenon. These systems exist or will soon in over 50 countries around the world. Some have been in operation for decades. The UK’s Faster Payments system, operated by Mastercard’s Vocalink unit, has been in operation for over ten years. Still others are still in the design stage.
These account-to-account systems (A2A) have gained in regulator popularity because:
Most Americans still have no idea there’s a new national payment system in operation. Or that a similar one will begin operation in a few years. Wallets like Venmo and the Cash App abound. But an entirely new set of payment rails? That happens once in a generation.
Some of those Americans, on the other hand, may have experienced what a system like this can do. Zelle is a fast push payment system that moves money between banks accounts. But Zelle is more of a directory-enabled messaging layer. The money movement between banks relies on older payment rails like ACH and wires. New Age messaging and user experience; old fashioned settlement.
Key RTP CharacteristicsPayments geeks, like Payments on Fire® listeners, know that the Real Time Payments Network takes a different approach. Operated by bank processor, The Clearing House, the RTP Network leaves management of the user experience and the use case up to the bank, the processor, or the provider serving a particular industry.
The RTP Network provides:
In short: the RTP Network provides the plumbing and pipes. What it looks like and how it’s used is up to another stakeholder.
Members of the network are financial institutions who either expose the RTP rails themselves or sponsor third party access so that those entities can make use of them. Nothing groundbreaking there.
An RTRP with RTGSOne of the impressive features of the RTP Network is that interbank settlement, the movement of funds between the sender and receiver banks, happens in realtime. The two banks settle their positions instantly. Settlement happens in realtime for every transaction. That’s what a realtime gross settlement (RTGS) does.
Contrast that with a system like Zelle that provides instant messaging among the stakeholders but typically leaves the final movement of monies between banks to an overnight batch process via ACH. And this is net, not gross, settlement. The amount includes all of the day’s transactions.
The RTP network achieves its RTGS capabilities using the following technique:
That’s a lot of background to help US contrast this system against the other four mostly digital systems in the U.S. (If you’re not clear on that, join us for the best in payments education at a Glenbrook Payments Boot Camp®)
The RTP Network is in its fifth year of operation. In this Payments on Fire® episode, Steve Ledford updates us on:
So, take a listen.
Here’s Steve talking about those new COVID-driven use cases.
For a snapshot of how the faster payments phenomenon is growing in the U.S. here is the 2020 Faster Payments Barometer.
Read the episode transcript
Find more podcasts, visit Glenbrook's Payments on Fire® site
Read expert payments industry commentary at Payments Views.
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Read our COVID-19 Payments Industry eBook
Episode 179 - Understanding US Payment Regulation with Jennifer Aguilar, Alston & Bird LLP
Episode 178 - Tokenization
Episode 177 - Fanning the Flames: Durbin-Marshall Credit Card Competition Act
Episode 176 - Fanning the Flames: PaymentsEd Forum 2022
Episode 175 - Delegated Push Payments, Russ Jones
Episode 174 - Fanning The Flames: Proof Of Work Consensus Algorithm
Episode 173 - Fanning the Flames: NFTs
Episode 172 - Fanning the Flames: Fast Payments on the African Continent
Episode 171 - How Wallets Are Transforming The Global Payments Landscape And What Merchants Should Do About It - Chuck Huang, Citcon
Episode 170 - No turning back at the crossroads of embedded finance and the metaverse - Ahon Sarkar, Helix by Q2
Episode 169 - Catching Up On The State Of Payments - Robin Gandhi, Nium
Episode 168 - Fanning the Flames: NACHA Smarter Faster Payments 2022 - Elizabeth McQuerry & Cici Northup
Episode 167 - Combating Fraud - Patrick Chen, SpecTrust
Episode 166 - Payments Trends & Best Practices - Casey Klyszeiko, Fiserv
Episode 165 - Fanning the Flames: Global Payments - Elizabeth McQuerry & Joanna Wisniecka
Episode 164 - 5th Annual RTP Network Update
Episode 163 - Payments Infrastructure and Foreign Policy
Episode 162 - Stablecoins, Cross-border Payments & Interoperability - Ran Goldi, First Digital Assets Group
Episode 161 - AI-ML and Bias - Ismini Psychoula, OneSpan
Episode 160 - Innovation in Payments Workshop - Russ Jones, Glenbrook Partners
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