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Treasury and Payments

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Smarter Payments

Why These Startups Chose Real-Time Payments, the First New Payment Rail in 40 Years

RTP is transforming business, 15 seconds at a time.

When the ACH payment rail launched 40 years ago, a speedy transaction took two to three days. In 2016, same-day ACH defined speed in hours.

But now? Real-time payments (RTP) clear and settle in seconds.

“RTP is the new frontier in payments,” said Nick Farrow, a Technology and Disruptive Commerce banker with J.P. Morgan Commercial Banking.

RTP transactions clear and settle 24/7 and clock in at a swift 15 seconds or less. It’s a leap for current technology and on trend to quickly become the standard for modern B2C and B2B payments.

With large and midsized banks leading the way, startups and expanding businesses hoping to compete in the global marketplace are launching RTP to deliver the instant transactions their customers demand. 

For example, the tech was critical for Digit, a B2C app that helps users create and manage savings accounts. Digit users typically have low-balance checking accounts and can withdraw funds from savings at any time, says Carlos Rotger, Bank Integrations Lead at Digit. 

“Living in a world where a customer has a primary checking account—which may as well be the cash they have in their pocket—there is a huge demand to get paid out instantly,” Rotger said. “RTP helped us deliver that.”


RTP’s Unique Impact on the Bottom Line

Eric Morse is a Product Manager at Plaid, a fintech that builds infrastructure to manage payments and other processes. According to Morse, both ACH and RTP require DBA to complete a transaction, but, beyond that similarity, RTP is largely unique.

RTP’s unique features include:

  • Speed and efficiency RTP confirms payments in seconds.
  • Robust messaging The new network includes two-way messaging and expanded information with payments, allowing for optimized auto-posting and reconciliation.


Benefits and Challenges to Building RTP

When Digit implemented RTP, the company saw an early win. With RTP they were able to use the routing number and customer authorization already collected from current customers—rather than asking for additional data. An API connection made the process even smoother.

However, RTP also features an “irreversible” capability, which means that once sent, transactions are final. Additionally, 24/7 transactions mean businesses have no space for errors or system glitches.

“In an RTP world, if .01 percent  of transactions fail, that’s 1,000 customers at your doorstep—businesses have to hold themselves to a higher standard,” Rotger said.


Getting Started With RTP for B2B

Sam Aarons, Co-founder and Chief Technology Officer of Modern Treasury—a platform that helps businesses manage payments—identified three key steps to implementing RTP:

  • Evaluate your eligibility
    Look at the publicly available list of routing numbers on the Clearing House website to see how many of your potential recipients are RTP eligible.
  • Find a banking relationship
    Get a banking partner with the resources to help you deliver at scale.
  • Investigate technical integration
    Consider downstream effects, and policies or software that can help manage exceptions, approvals, and reconciliation processes at scale.

According to Aarons, there are opportunities for RTP all around—especially as more industries adopt the payment rail.

“If you can send an ACH payment, it’s very likely you can send RTP,” Aarons said. “So anytime you send money, you have to think to yourself, ‘Can I upgrade this to RTP?’

“And remember, businesses want this—they love being paid faster.”

Fast Facts on RTP at J.P. Morgan

  1. J.P. Morgan is among the major banks that are members and founders of The Clearinghouse1, which launched The Clearing House RTP network in 2017.
  2. J.P. Morgan launched its RTP product in 2018. In just one year, the bank went from client pilots to processing 1 million transactions per month.1
  3. Today, 10 banks can initiate RTP and 17 can receive them.
  4. The services of clients like PayPal and Digit are built around the solution’s capabilities.
  5. J.P. Morgan is an outlier among global banks, delivering RTP in USD, GPB and EUR.
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