Real-Time Payment Solutions Push Forward Without The Fed

Earlier this month, Volante Technologies announced it had removed barriers to entry for real-time payments (RTP) processing for all banks. 

With Volante offering free RTP processing as a service in the cloud, any bank, regardless of size, can now benefit from offering immediate payment capabilities to their customers, the company said. It will connect to The Clearing House’s (TCH) RTP system in the U.S. and to the Single Euro Payments Area’s (SEPA) RT1 or TIPS systems.

“Free implementation and onboarding are provided alongside, and there are no service or per-transaction fees. Certain limits will apply,” the company said in its announcement.

RTP: Becoming the Norm?

“The capability to offer RTP is rapidly becoming the norm for large banks and an emerging necessity for smaller and mid-sized banks,” the company said in its press release. 

Except that’s not quite true, at least in the U.S. 

Although TCH says about half the current accounts in the U.S. have access to RTP, fewer than half of its member banks offer both send and receive capability.

Made up of 24 of the largest banks in the world, including several foreign banks, TCH has seen slower-than-expected takeup of its RTP. 

Since the Fed announced it would offer a similar service by 2023 or so (after years of delays), TCH is eager to get more banks onboard so it can become the de facto RTP standard before the Fed launches its service, FedNow.

The Fed has arguably taken the worst possible path to long-overdue RTP modernization for the U.S. — first studying the issue for several years, then pondering for months, and finally announcing it would create its own system that will compete with TCH but won’t go live for another three years, effectively freezing, or at least dampening, the market.

Cloud Architecture vs. Infrastructure Investments

Volante offers a cloud native microservices architecture that allows for quicker implementation cycles at a low enough cost that it is offering free implementation through year’s end.

Vinay Prabhakar, VP of product marketing, said banks need multi-network connectivity to prepare for the future of RTP. Volante can connect to cross-border payment providers Ripple, Earthport, SWIFT GPI, and Visa B2B Connect (which, as an aside, just announced it has doubled its reach to 62 countries). 

Volante’s cloud approach to RTP means banks using its PaaS will be able to accommodate growth, he said.

“We don’t know where the volumes are going to go. In the U.K., they grew quickly but it took over eight years to get to a billion payments, which represents 20% of UK payments. In the U.S. it may grow faster or slower, but because banks don’t know it doesn’t make sense to invest in hardware. We aren’t sure whether it will be corporate services or retail.”

Adopting a cloud service avoids infrastructure investments, and instead banks can use the money to run pilots and see what customers want.