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Data for this episode of Truth In Data is provided by Mercator Advisory Group’s report – B2B Payments: More Options Than Ever Before
- Wires are high-value interbank transfers through real-time gross settlement systems. Cleared, settled, and irrevocable. There are 3 types:
- Fedwire: Operated by 12 US banks and used by member banks. Note: limited operating window, Monday-Friday
- CHIPS: Operated by The Clearing House Similar to Fedwire: high-value real-time clearing with limited operating hours Typically used for cross-border transaction
- RTP Operated by The Clearing House Available 24 x 7, with more robust messaging systems than Fedwire or CHIPS
- Automated Clearing House (ACH): low-value high volume transfer system uses batch processing requires 2 days net settlement NACHA is the trustee of the network and TCH and the Fed are operators
- Fed ACH & TCH facilitates the credit & debit transactions between originators & receivers
Batches run 3 times per day.
- Same Day ACH: Enables settlement on the same day as origination does not include international transactions or those over $25,000. About 5% of overall ACH B2B occur through SDA.
About this report
Fintechs’ digital solutions are changing the business-to-business payments space. As new technology emerges and modern upgrades to legacy systems provide better user experiences, businesses have an expanding array of choices for more effective and efficient business-to-business (B2B) payments. The influence of financial technology companies (fintechs) on the B2B space is growing and filling in the payments gaps as usage of paper payments starts to fade away.