In a recent episode of Volante Elevate, Vinay Prabhakar, Chief Marketing Officer at Volante Technologies, spoke with Keith Gray, Vice President of Partnerships at The Clearing House, about the Real-Time Payments (RTP) network. This blog post summarizes their conversation, providing insights into the current state and future of real-time payments in the United States. To get all of the insights from this conversation, listen to the full interview on the Volante Evolve podcast.

Can you tell us about your background and role at The Clearing House?

Keith Gray: I’ve spent most of my career in financial services technology, dating back to the early days of online banking. About ten years ago, I joined The Clearing House to help launch the RTP network. My role involves managing relationships with approximately 40 technology providers that offer various services around the RTP network. These partnerships are crucial since technology plays a vital role in enabling financial institutions to offer RTP-related services.

Can you share some statistics on RTP’s growth since its start in November 2017?

Keith Gray: The network has seen substantial growth. In our last quarter, we processed about 80 million payments, with a total value exceeding $40 billion. We’re now averaging close to or over a million payments per day, with Fridays typically being our busiest day. Its popularity leads to an immediate win for any FI that goes live on RTP – volume-ready and waiting for them on day one.

What kinds of transactions are happening on RTP?

Keith Gray: The average transaction value is about $550, but there’s a wide range. We increased our transaction limit to $1 million about a year ago, which has impacted our average. We see a good number of transactions in the $500,000 to $1 million range, particularly for business payments. This diversity in transaction values shows the versatility of the RTP network in handling various payment needs.

How are people and businesses using RTP?

Keith Gray: RTP is used for a variety of purposes:

1. Account-to-account transfers: Moving money between personal accounts or to and from investment accounts.
2. Wallet defunding: Moving money from digital wallets like Venmo into bank accounts immediately.
3. Business-to-consumer payments: Such as earned wage access, allowing employees to access their wages before payday.
4. Consumer-to-business payments, Particularly bill payments, are growing on the network.
5. Person-to-person payments: Services like Zelle and Venmo leverage RTP in different ways. Venmo uses it to move money immediately into a bank account, while Zelle uses it to clear and settle transactions with the network.

It’s worth noting that over 250,000 businesses originate payments on the RTP network each quarter, and about 5 million consumers make payments on the network.

What features of RTP set it apart from other payment methods?

Keith Gray: While the immediacy of payments is often highlighted, RTP offers more than just speed. Its 24/7 availability is a key feature. Interestingly, the busiest time on the network is after the close of business on Friday afternoon. This demonstrates the value of the “always-on” nature of RTP, allowing for perfect timing of payments, especially in the corporate world. For example, a business can wait until 11:59 PM to make a midnight payment, maximizing the time funds remain in their account.

How widespread is the adoption of RTP?

Keith Gray: We have about 700 financial institutions on the network, representing nearly 70% of the U.S. account base. While 90% of these institutions are smaller community banks and credit unions, all of the larger financial institutions are on the network. We’re adding banks every week, typically smaller Fis, through partners like Volante.

How can banks get started with RTP?

Keith Gray: The onboarding process involves several key steps:

1. Choose a technology provider: We have about 40 technology providers offering RTP services. Banks often already have a relationship with a provider like Volante that can offer these services.
2. Decide on functionality: Banks need to determine whether they want to start with receive-only capabilities and move to send later or implement both send and receive simultaneously. We’re now seeing more banks go live with both capabilities from the start.
3. Define your strategy: Consider whether this is a business-to-business initiative or if you’re trying to solve a specific use case. For example, a bank with many trucking customers might want to focus on the ability to support quick payments from trucking companies to their drivers regardless of their locations.
4. Consider cloud-based solutions: There’s a growing trend toward cloud-based Payments as a Service model for RTP implementation. Volante has been one of the vendors leading this transition. Moving toward a cloud-based model allows banks to onboard without buying infrastructure and with lower initial effort.

How does RTP compare to FedNow?

Keith Gray: While FedNow launched in July 2023 and has about 25% coverage, RTP has been operating since 2017 and has nearly 70% coverage. However, we encourage banks to connect to both networks for full coverage. From a customer perspective, whether a payment travels across RTP or FedNow isn’t important – they just want their payment to be fast and reliable.

Interoperability between the two networks is often achieved through technology providers like Volante, enabling connections to both rather than direct integration between the networks themselves.

What’s next for RTP?

Keith Gray: We’re excited about several initiatives:

1. Cross-border payments: We conducted a successful pilot with the UK last year and are looking to expand that, with Mexico and Canada likely being the next phase.
2. Enhancing Request for Payment functionality.
3. Developing ancillary services like tokenization and data warehouse capabilities.

Is it too late for banks to adopt RTP?

Keith Gray: While we’ve seen substantial growth in volume and coverage, there’s still plenty of room for more institutions to join. We’re still in the early days of instant payments, and I believe we’ve only scratched the surface of how these capabilities will be used. My advice to financial institutions is to develop their instant payment strategy now, considering both RTP and FedNow. The time is right to move quickly in this space.

Conclusion

The RTP network has made significant strides since its launch in 2017, but there’s still enormous potential for growth and innovation. Whether you’re a large financial institution or a small community bank, now is the time to consider how real-time payments can benefit your organization and your customers. The future of payments is here, and it’s moving in real time.

Gain even more insights and listen to the full interview.

Access the Volante Evolve podcast here.