The Acceleration Of Payment Rails, Old And New

When it comes to payment rail innovation, transaction speed is often the catalyst driving change. This week’s examination of the latest innovation initiatives finds this to be true both for innovators exploring ways to improve existing rails — like ACH — as well as those that have embraced the development of entirely new rails, including real-time payments (RTP) and blockchain-powered transactions.

The Clearing House Expands RTP Opportunity

The Clearing House, which operates one of the U.S.’s newest real-time payment rails, the RTP network, is looking to expand the opportunity for payers to use the faster payment rail by increasing transaction limits.

Announced last week, the higher transaction thresholds raise the limit from $25,000 to $100,000 starting Feb. 1, a move that could encourage broader use of RTP in the B2B payments arena.

“Increasing the transaction limit value to $100,000 is the next logical step for the growing RTP network,” said The Clearing House Senior Vice President of Product Strategy and Development Steve Ledford in a statement. “Businesses and consumers often want to send higher value payments and the $100,000 limit helps to address their needs.”

As more banks integrate into the payment network, those financial service providers are also exploring how to wield RTP for their corporate customers, too.

One of the latest to do so is MUFG Union Bank, which announced the launch of RTP services for its corporate and commercial clients. Expanding access to the payment rail for corporates, the financial institution said, will support those clients’ cash flow management initiatives.

“Real-time payments offer our clients the payment processing speed to meet their business needs in a rapidly changing digital commerce environment,” MUFG Head of Global Transaction Banking and Transaction Banking Americas and Bay Area President Ranjana Clark said in a statement.

Same-Day Boosts ACH Adoption

While RTP emerged as a new payment rail to address payment friction, NACHA, which manages the ACH payment rail, announced that its newest service on the legacy payment network, Same Day ACH, is helping to accelerate adoption of the rail.

In a press release last week, NACHA said 6.4 billion transactions were completed on the ACH Network in the fourth quarter of last year, an 8.1 percent year over year. Same Day ACH spiked an impressive 39 percent during Q4, hitting 71.3 million payments.

“The fourth quarter was the first full quarter in which the volume of Same Day ACH payments exceeded 1 million per day,” said NACHA President and CEO Jane Larimer in a statement. “We’re delighted to see the growing acceptance of Same Day ACH among businesses and consumers.”

While it’s unclear how much of that Same Day ACH transaction volume facilitated B2B payments, NACHA did note that B2B payments recorded 1 billion ACH transactions in the quarter, a 12.6 percent jump.

SMBs Embracing the Blockchain Rail

Outside of the mainstream financial services market, blockchain continues to introduce some intriguing opportunities and challenges in the B2B payments arena.

New research from HSB, for instance, found that one-third of small and medium-sized businesses (SMBs) in the U.S. currently accept cryptocurrency as payment, with even more investing in crypto for their own use. While there are benefits to this new payment technology, including speed, HSB Vice President Tim Zeilman recently told PYMNTS that the trend is also exposing many small businesses to security and fraud risks, particularly considering the infancy of the crypto and cybersecurity business insurance space.

Losses related to cryptocurrency exchange hacks can rarely be recovered, for example, while a heavy presence in crypto trading could capture the attention of some nefarious actors, he warned.