When The Clearing House launched its Real-Time Payments (RTP) network in 2017, the service was bound to rewrite some rules, and it has. More than two-thirds of executives surveyed for the January 2020 Making Real-Time Payments a Reality: Rising Demand for Real-Time Payments report from PYMNTS and Mastercard say they’re “very” to “extremely” aware of RTP, and over 85 percent report that they are now implementing RTP, or plan to, over the next three years.
The initial blush of RTP has been around improving cash flow, and that remains its core appeal. But financial institutions (FIs) and others are starting to imagine wider possibilities for RTP, as the technology does more than just send funds fast. The suite of RTP functionality is also gaining fans, especially among firms in the financial firms and technology sectors.
But news of RTP is spreading to other verticals as unfamiliarity and integration fears start to vanish before the prospect of faster payments and an amazing set of new features.
There’s More to RTP Than Fast Money
Even though roughly 40 percent of respondents to the January 2020 Real-Time Payments Index said concerns over RTP technical integration are holding back implementation plans, the adopters are moving full speed toward real-time payments. For example, nearly 83 percent of companies with $1 billion or more in annual revenues report high levels of RTP awareness, which is also be expressed as readiness to adopt in 2020. As the revenue size of companies gets lower their reported awareness/interest in RTP falls off proportionately. This mostly tracks to fears over the cost and complexity of integration more than any perceived downside to real-time payments.
While getting paid faster is the most popular aspect of RTP, there’s also considerable interest in what else the system can do. Respondents to the latest Index noted that increased system flexibility, improved process efficiency and better data access all contribute to higher levels of supplier satisfaction. Specifically, enhanced fraud and security was favored by nearly 80 percent of respondents, with attributes including instant funds, 24/7 availability and improved reconciliation with enhanced data all popular with over three-quarters of executives surveyed.
Banks, FinTechs Race to RTP Glory
The dawning “instant” economy are giving rise to scores of startups that isolate and streamline traditional bank services — like wiring funds — and build entire business models around them. In the case of real-time payments, banks are winning the perceptual war, at least for now.
PYMNTS research has found that more than 66 percent of companies see banks as the best FIs to handle RTP — proof that legacy institutions still enjoy a higher level of consumer confidence than the typical FinTech. That won’t prevent FinTechs from innovating with RTP, of course; the industry is relying on it, actually. While banks have the infrastructure and market presence to propagate RTP to its inevitable place in the financial system, it will be nimble and creative FinTechs that derive yet unimagined value from RTP beyond the speed of money.