We live in a customer-driven on-demand culture, we’ve gotten used to getting things done on demand. Packages get delivered to us in less than 12 hours and the cab arrives in a few minutes. We have established a new threshold for ourselves. A threshold for when it’s acceptable for the cab or the food to arrive. Sea of information is available in a few clicks. But when it comes to payment processing, it still takes 1-3 days thus introducing an obvious need for a new payment service. To overcome the limitations of current payments services the global market was graced by a future proof platform – The Real-Time Payments (RTP).
Real-Time Payments are the latest thing to hit the payment world by storm, being driven by the end-customers requirement for better speed, convenience, and security. It is the smarter alternative to cash, checks, and ACH; it enables instantaneous money transfer between banks and banking systems. The first known real-time payment system was developed in South Korea way back in 2001 which was followed by Turkey & UK implementing this new payment rail.
It was pretty clear that the US was lagging in this quest for a new faster and smarter payment rail. The US Financial system was in dire need of something equivalent to faster payments.
So the Federal Reserve took what the world had in their systems, and got the inputs from the advisory and working groups, and created the Faster Payments Task Force to identify effective approaches for implementing a safe, ubiquitous, faster payment capability in the United States. It consisted of over 350 members. As part of the Task Force’s effort, it solicited proposals from the private sector for end-to-end solutions that meet certain criteria. The Task Force contracted McKinsey & Company to conduct independent, objective assessments of all the proposals submitted to the task force. It was the proposal by The Clearing House (TCH) that ultimately got the Task Force’s approval. And it was in November 2017, TCH went live with the Real-Time Payments Network, the first new payment system in the US in 4 decades.
RTP was designed to expedite payments across all payments categories including business-to-business (B2B), business-to-consumer (B2C), consumer-to-business (C2B) and peer-to-peer (P2P) transactions.
Corporates are pushing for better payment services from their banks. They want payments cleared in smaller periods. Certainly, what is behind this motivation is better visibility on cash flow, inventory management, and the credit component. And the biggest push would be the rich data that can go beyond what any other platform type has
RTP RFP has initiated a new way to control your receivables-payment and information flow altogether. It guarantees:
It is the trend that cannot be defied as it has extensive benefits for all. The Real-Time Payments ubiquity must be the ultimate goal. Organizations need to build a flexible technical infrastructure and be ready for a world where payments will be truly instant. For now, real-time payment models will continue to exist next to the other payment systems but will be a more reliable choice.
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