When it became widely known that the Federal Reserve was considering participating as an operator of a real-time payments network back in October 2018, many in the payment industry slowed their development of real-time and faster payment solutions as they assessed the market and held their collective breath until the Fed’s decision was made.
The Fed’s announcement on August 8 that it will indeed build a real-time platform has unleashed a sense of urgency to move forward with integrations and faster payment products. Those benefiting include competitors of the Fed such as The Clearing House, as PaymentsSource reported:
“Since the Fed announced this month that its service would be in widespread use by 2024, The Clearing House has enjoyed a significant jump in sign-ups and inquiries about its own Real-Time Payments rails.
“We’ve had a great deal of interest generated by the Fed announcement, almost three times as much activity,” said Steve Ledford, the RTP network product executive for The Clearing House.
This type of increase in awareness is important to TCH and the payments industry, Ledford said Tuesday at the annual Mobile Payments Conference. “We arte constantly adding users to the network, and working with financial institutions and billers to prime the pump of our request-for-payment service.”
With more users comes more use cases, including the ability for consumers to be alerted about payments due through the request for payment service, and then making those payments immediately, Ledford added.”
And the card networks have also benefited:
“…the card networks are not standing by idly watching faster payments developments.
Mastercard plans to launch the Mastercard Bill Pay Exchange by October, bringing a bill payment portal to consumers that would allow real-time payments through the Mastercard Remote Payment and Presentment Service (RPPS) and its Vocalink faster payments rails.
“Thirty percent of all consumer payments are to pay bills, and the other 70% is payments for purchases or person-to-person,” said Russ Barenboym, vice president of product development innovation for North America at Mastercard.
One of the main consumer pain points that the bill exchange hopes to address is that consumers are tired of having their account information held by numerous biller sites.
“It is a cause of some anxiety when knowing your information is out there,” Barenboym said. “Plus, when making those payments, the funds generally are not instant and there is no acknowledgment of a payment being made.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group