Whether it was helping small businesses get their PPP payments or convert to eCommerce, getting cash in the hands of workers delivering food, or accommodating digitized mortgage closing and escrow activity, the coronavirus has foisted a lot of change on the financial services industry in a short amount of time.
“A lot of what the pandemic did was force our industry to truly be digital, to facilitate frictionless transactions,” TCH Senior Vice President Elena Whisler said in a recent conversation with PYMNTS. “It also pushed our industry to think about ways to provide faster availability of funds to people and businesses in need.”
In short, the global pandemic has ushered in rising usage — and use cases — for TCH’s RTP® network, and Whisler doesn’t see that slowing down anytime soon. “We’ve seen a lot of excitement this year with the RTP® network, and we’re very much expecting next year to grow even faster,” she said.
Becoming A 24/7 RTP Shop
With a full pipeline of onboarding projects, Whisler expects business in the first half of the year to quickly expand and then snowball from there. Even so, there’s still plenty of work to be done to raise awareness about how sending or receiving RTP transactions can improve the banking client experience.
“Some institutions believe what they have is good enough,” Whisler said, though that’s changing a bit. “People need funds faster, [financial institutions] need to facilitate the movement in real time, but there’s also the experience of confirming the payment, making it available and just being aware when transactions have been sent and received,” which is something the RTP® network provides.
To do that, and to clear the next hurdle, Whisler said many financial institutions (FIs) still need to “modernize internally to be a 24/7 operation shop.”
“It’s not just technical connectivity that financial service executives need to think about as their business or their FI moves to 24/7,” she said. “One thing is customer service, but the other is liquidity management or cash flow forecasting, and that’s new to a lot of organizations.”
For example, that might mean having a process in place so that funds are appropriately applied or available when money comes in during off-hours or on the weekend, she said, and really thinking through the process from an accounting, liquidity and treasury management perspective.
To facilitate this transition in handling 24/7 cash flow, Whisler said TCH offers services such as intraday reconciliation.
As she noted, “We’re also starting to see greater popularity in [the] use of funding agents,” which are financial institution participants that help RTP participants manage their funding requirements. So this means that funding agents are able to use tools provided by the RTP® network to help monitor the funding needs of the RTP participants that the funding agent supports, said Whisler, calling it a “great expansion of the [RTP] ecosystem.”
So Much More Than Payments
The term real-time payments is “a bit of a misnomer,” Whisler said, since the actual payment is just one piece of a much broader transaction and experience, that includes instant confirmation of the payment and additional data about the transaction. when businesses or consumers need to deliver or receive goods, she said.
There’s also a messaging component that goes along with RTP payments, which includes vital information like confirmation of payment or requests for details if an invoice was partially paid.
“So that ‘conversational commerce,’ as we call it, is really critical to the success of the real-time experience, not just the payment,” Whisler said.
Limits And Fees
One such rule currently being internally and externally assessed is the $100,000 daily transfer limit, which she anticipates will be raised.
“When we saw there was demand [to increase] the original limit of $25,000, and we saw that we could raise it safely and effectively, we were happy to do that,” Whisler noted.
TCH currently has a few different work groups and committees that help guide its understanding and prioritizing of a limit increase, which has already been done in many countries around the world. “We will definitely see that continuing to evolve,” Whisler said.
As far as fees are concerned, she explained that existing competition from other providers, card networks and same-day ACH will likely keep fees in line. “To me, the bottom line is the more volume, the better the pricing for all participants in the industry,” she said.
RTP Outlook
Whisler noted that there are three key areas of focus for the RTP® network in the year to come.
First is continuing education about the payments ecosystem as an experience. Secondly, she wants to make sure that all FIs in the country understand that they can connect. And lastly, it will be critical to continue to innovate in a way that is still safe and secure. Pulling off those goals will take continued education that enables different parties to understand their roles.
In addition to adding hundreds of institutions over the next year, Whisler is also eager to identify new use cases.
“I think about text messaging and what it’s done to conversations between individuals,” she said. “I’d love to see an [RTP] use case that we can talk about next December.”
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