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Why Banks and Credit Unions Need Multiple Real-Time Payments Options
Real-time payments occupy a unique niche in the payments industry, both for its diversity and its rapid growth. The Clearing House RTP® network processes more than $16 billion each quarter, and Zelle processes more than $120 billion. Direct push payments such as Mastercard Send and Visa Direct settle payments in less than thirty minutes and usually within seconds, and same-day Automated Clearing House (ACH) payments settle within hours.
All these options have different use-case benefits and combine to create a very rich environment. However, this level of choice can confuse financial institutions (FIs) as they discern where to place their bets based on what their customers will find most important.
To learn more about how FIs need multiple payment rails to achieve true payments innovation and why it is key for FIs to access rails through a unified “payments hub,” PaymentsJournal sat with Mark Majeske, SVP of Faster Payments at Alacriti, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.
PaymentsJournalWhy Banks and Credit Unions Need Multiple Real-Time Payments OptionsPaymentsJournal Why Banks and Credit Unions Need Multiple Real-Time Payments OptionsPaymentsJournaljQuery(document).ready(function ($){var settings_ap34859338 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"34859338",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_379811_28",settings_ap34859338); }catch(err){ console.warn("cannot init player", err); } });
Banks Should Not Just Focus on One Payment Rail
With the myriad choices available to FI executives, one might wonder why they do not simply focus on a one-stop-shop payment rail. “Not all rails have the same advantages,” Majeske explained. The RTP network, which was launched in 2017, covers 60% of the U.S. demand deposit account (DDA) market, so if a bank or credit union wants to cover the other 40%, it needs another payment rail.
Other options have similar blind spots or unknowns. The FedNowSM Service is coming out in 2023 with high expectations but zero ubiquity. Conversely, ACH is well-established but generally does not process payments over the weekend. “I don’t think there is one rail out there that is going to satisfy everyone’s needs,” Majeske continued. “There has to be a level of flexibility within financial institutions and service providers to provide a broad number o...
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By The PaymentsJournal PodcastReal-time payments occupy a unique niche in the payments industry, both for its diversity and its rapid growth. The Clearing House RTP® network processes more than $16 billion each quarter, and Zelle processes more than $120 billion. Direct push payments such as Mastercard Send and Visa Direct settle payments in less than thirty minutes and usually within seconds, and same-day Automated Clearing House (ACH) payments settle within hours.
All these options have different use-case benefits and combine to create a very rich environment. However, this level of choice can confuse financial institutions (FIs) as they discern where to place their bets based on what their customers will find most important.
To learn more about how FIs need multiple payment rails to achieve true payments innovation and why it is key for FIs to access rails through a unified “payments hub,” PaymentsJournal sat with Mark Majeske, SVP of Faster Payments at Alacriti, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.
PaymentsJournalWhy Banks and Credit Unions Need Multiple Real-Time Payments OptionsPaymentsJournal Why Banks and Credit Unions Need Multiple Real-Time Payments OptionsPaymentsJournaljQuery(document).ready(function ($){var settings_ap34859338 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"34859338",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_379811_28",settings_ap34859338); }catch(err){ console.warn("cannot init player", err); } });
Banks Should Not Just Focus on One Payment Rail
With the myriad choices available to FI executives, one might wonder why they do not simply focus on a one-stop-shop payment rail. “Not all rails have the same advantages,” Majeske explained. The RTP network, which was launched in 2017, covers 60% of the U.S. demand deposit account (DDA) market, so if a bank or credit union wants to cover the other 40%, it needs another payment rail.
Other options have similar blind spots or unknowns. The FedNowSM Service is coming out in 2023 with high expectations but zero ubiquity. Conversely, ACH is well-established but generally does not process payments over the weekend. “I don’t think there is one rail out there that is going to satisfy everyone’s needs,” Majeske continued. “There has to be a level of flexibility within financial institutions and service providers to provide a broad number o...