Real-Time Payments, Real-World Answers: RTP 101 with Alogent and The Clearing House

For joining us today. My name is Cara Talcott. I am the Marketing Communications Coordinator here at Allergan, and I will be your moderator for today's webinar. Today, we'll be having a Q and A style fireside chat with from Allergan and The Clearing House. We'll be breaking down what financial institutions need to know to successfully navigate the evolving real time payments landscape. We have a great set of speakers here with us today. We have Doug Hendricks, a senior product manager here at Allergan, and Keith Gray, the Vice President of Strategic Partnerships from the Clearing House. We will have a designated Q and A segment at the end to answer any questions you might have, so please feel free to type them into the chat box at any time. And with that, I'm gonna hand things over to Doug to kick things off. Thanks, Kara. So I think we'll jump right into it. Keith, thanks for joining the conversation. I know we've had lots of conversations, you know, kinda going back and forth about RTP and faster payments. So, you know, we appreciate you coming over from, you know, the clearing house. As everybody knows, you know, a core payments operator delivering across multiple payment rails. But most importantly, the RTP rail is the one that we wanna talk about today. So, you know, feel free to jump in, give us, you know, kind of a little bit of a glimpse into the world of RTP. Cool. So so thanks, Doug. Thanks all of you guys for taking the opportunity. We've we're into almost our eighth year. I think we hit eight. Our eighth year anniversary is next month since we've launched, RTP. A lot of lot lot of stuff under the bridge, since over the past eight years. A lot of progress, and, we'll talk more about that as we get into the the podcast here. Alright. Sounds good. So why don't we just jump over and you can kinda peruse some of the the numbers. I think this is kind of the the telling story in the landscape of faster payments. Always a hot topic, but being able to kinda see the adoption and see the numbers, you know, kinda shows the the indicators of where the industry is going and, you know, gives gives financial institutions an idea of why they really need to be kinda thinking about this and planning this now. Yeah. So, you know, it it's easy to get lost in the numbers a little bit, on this. Like I said, we're while we're in our eighth year, I think it's still I think it's still early days, for the network. I think, maybe we're past the baby stage and we're into our teenage years, but there's still, you know, strong momentum moving forward, but a long ways to go as well as far as, full adoption, full usage of the RTP network. Some of the interesting stats, that I think are big on there is not just the over one thousand FIs on the network. We continue to add more about every day. But, but we cover about the way we measure, one of our measurements, I should say, is the percentage of the accounts that are available on RTP now. And it's just over seventy percent of the US account base can at least receive an RTP payment. Somewhere around fifty percent can actually originate an RTP payment. So that number continues to tick up little by little, as, as FIs continue to come on the network. Of those over a thousand FIs that are on the network, pretty much all of them, I think all but twenty or thirty came to the network through a technology partner, like our new friends at Alligent. As an example, it can be, a core provider or it can be a noncore provider like Alligent, payment hub providers. There's a, there's a host of technology providers that provide different services as it relates to RTP. So FIs have a broad range of options, and you're not limited to to one technology partner. Another interesting data point, I think, as it relates to RTP is is of all of that volume, one point two, one point three million transactions a day, half of those transactions come after the network after the banking hours. They're in in other words, when when banks are closed, we're still processing volume. So so that just says the fact that RTP is always on is a big, is is a big, value proposition for a lot of these use cases that we're running. Yeah. I mean, that that true twenty four seven, three sixty five day, you know, that's that's I mean, I know that we've heard real time and we hear, you know, instantaneous a lot, you know, from the industry side of things, but, obviously, that's certainly the uniqueness of that, you know, sixty seconds less, you know, instantaneous, seven days a week, you know, always available transaction, that's that's pretty it's pretty unique, and it's nice that it's kinda made its way and, you know, landed. And so it's interesting because you said, you know, the received position for seventy percent coverage. So, I mean, that would almost indicate that, really, at this point, any FI who's not using the RTP rail, probably upon connection, would probably start seeing transactions come through the receive platform. I guess, once the technical elements are all put in place and the handshake is there, is kinda what that sounds like. Yeah. Exactly. We just I just saw a bank go a small community bank up in Cape Cod went live this morning. And literally within minutes, they started seeing transactions coming in. And there there's enough volume on the network now to support regardless of the FI size or location. There's enough the there's enough transaction volume waiting where the their customers immediately start seeing value. And from the bank standpoint, RTP creates new deposits into the organization. So not only are you providing a service your customers want, just that they wanna get paid faster, smarter, and simpler. Right? RTP provides all of that. But but you drive new deposits into the banks, which allows more loan capabilities and a host of other benefits to the financial institution. So, so there's there's there's benefits are very quickly realized, when you get on the RTP network at this point. Okay. Yeah. I think that's a great point, you know, because I I think, to to that kind of understanding, you know, the education piece, obviously, the ISO twenty zero two messaging, but really, you know, I think the big element that it's not new anymore and the stability that now exists that you would start receiving transactions immediately, that's a pretty significant statement. Right? Because, I mean, there hasn't been a new payment rail, you know, until the faster payments platforms came along. And, you know, FI is trying to understand when to get engaged, how to get engaged. You know, third party technology, Allegiant, we firmly believe, and it's part of our, you know, evolution with our Unifi platform, seeing the real time payments, come into play and seeing the stability. The use cases just start exponentially increasing from there. Yeah. Almost day by day, we see new capabilities, new use cases that banks are unable to offer by leveraging the RTP network. And, again, we the clearinghouse and RTP are the infrastructure. Our technology partners like Alligent and, and the and their FI clients provide the applications that run on top of that infrastructure. So the the infrastructure provides a range of new capabilities as it relates to payments. Yeah. And, Doug, you've touched on it. A lot of, you know, I mean, we call it RTP for a reason. Right? It's real time. It clears and settles instantly. Twenty four by seven is a big deal like we've talked about. The visibility of the transaction is a key benefit too. So so as a credit push network, I have to send you the funds. You can't pull them from my account. So we both have immediate visibility into the transaction. I know I paid you, and you know you've been paid. So so just the visibility of that transaction really is a key benefit for certain use cases. Right? And, also, it really reduces customer service requests coming into the FI as well and a benefit to the customer. Right? You don't have the overdraws. You don't have, I wonder if I paid that bill or is it coming out of my account? Is it gonna come out of my account? You see that immediately on both sides of the transaction. Another key component of the network is that it's not just about the payment, but information about the payment can travel with it, like an invoice or or just here's why I'm short paying this bill as an example. You know? So so you get not only twenty four by seven real time, you get all the data associated with the payment, and and both sides of the transaction know exactly what the status is as well at all times. So, yeah, a lot different than some of our other payment fails, like ACH as an example. Yeah. I would agree. I mean, I think the data element is another unique but very key kind of baseline for FIs to understand who are looking into faster payments. Right? Because right now in the world of digital transactions, having data to support the movement of the money, well, that's, you know, step one, two, and three in the world of fraud and risk mitigation and management. So the fact that, you know, this is all encapsulated in one space and you can choose how much, you know, to ingest or support, it's just another one of those spaces that in the digital transactions, I think that's an amazing offering to be able to to leverage for for the FI position. Yeah. And it's not only with RTP and and the Fed's alternative, but but, you know, we moved our wire network to ISO twenty thousand twenty two some time ago. The Fed has just recently moved it moved Fedwire to ISO twenty o twenty two. It's just a you know, it provides a bigger pipe is the way I think about it and a more standardized pipe, across all of our payment infrastructures. So, so RTP kinda led the way here in the US with ISO twenty thousand and twenty two, and and we see a lot of other, payment rails following as well. Yeah. No. Absolutely. So why don't we jump in a little bit and, you know, again, kinda sticking with the baseline platform, you know, of just trying to help FIs, you know, who are looking into it today. What is that you know, obviously, Allergan, it's part of our evolution with UNIFY. We see the ability for you to not only do your end of day check processing, day one, day two, through Unifi. We see faster payments being able to leverage and manage that same effort under one user experience in the Unifi platform. What does the where does the world connectivity look for FIs to, you know, plug into the RTP network? Yeah. So it's like I mentioned earlier. Most FIs choose not to connect directly. They leverage companies like Alligent, partners they already work with, in different ways and and, to leverage the RTP network. So what that typically means is what you know, you wanna figure out as an FI, you wanna figure out, you know, what's my short term and long term payment strategy? Some FIs that are coming on the network come on initially as we wanna just turn on the receive capability. Frankly, that's a very easy lift. And and as we mentioned earlier, you see immediate benefit from that. And it's kind of a you know, you don't as an FI, you don't have to do a lot. You just turn it on and boom, you see payments coming in. Right? So this is a good slide. So you've got, RTP is bank to bank. And in other words, you if you're a company like Venmo or Square that are big users of the RTP network, you can't leverage the network directly. You have to do it through your bank relationship, and your bank can choose to use a technology provider, like I said, which most of the time they do. So you have a business or consumer on both sides of the transaction at the endpoints there. You've got the network in the middle, and then you've got the participants, which are the banks and credit unions leveraging a technology provider that has already built the rails and the the plumbing to connect to and process payments on the RTP network. If you start on the receive side, you start creating value both for the bank and your customers very quickly, and then you can figure out what your longer term strategy is around the SIN side of the equation. You know, we have banks that focus on small business use cases and banks that focus on corporate banking applications as an example. And, you have a host of different capabilities and options for that that you can choose that you don't have to do it all in one big bite. You can do it step by step by step and make it a a part of the process. What I would suggest, though, is you start you know, if you're not on the network now, you know, I wouldn't say you're way behind, but there's a lot of banks that have really moved forward to the next generation of their offering. So you might, you know, you might I would definitely say turn on receive very quickly. That that's e or I should say that can be done very quickly, and then figure out what your strategy is on the SIN side of the equation following that. And you have a lot of different options based on what your, you know, what your strategy is and your focus point is. Yeah. I mean, I think the SIN space seeing the use cases flowing through that right now, it's it's pretty cool. Right? Because it's things that we used to, you know, payroll funding. You know, had to make sure that you got your payroll file sent over by, you know, Wednesday afternoon so it could be uploaded and everything could move through Thursday, and then checks that got issued on Friday would now clear. So, you know, the directory model is kind of that same methodology in the business to business landscape, being able to, you know, manage your risk because you have complete visibility, you know, on the origination point and the receive point. And, you know, you've built your directory model to support only a and b. Therefore, you know, you're not competing against, you know, potential challenges in other spaces. So, yeah, I mean, you know, the the the sin space is really starting to move. You see a lot of the industry level conversations and, you know, the large FIs out there talking about how they're managing it. So, but I also like the uniqueness, you know, when you're thinking about the FIs, you know, who are kind of working through their strategy. The fact that it's bank to bank is, you know, that's a very different landscape in that credit push world than what's out there today. You know, no swiping the card, hey, Target wants, you know, a hundred dollars from, you know, from Truist. The fact that it's the bank to bank communication. Again, you really open up opportunities from a risk strategy and appetite, that you can't with other rails. So, you know, it's really neat to see the alignment and the setup. Yeah. So back in February, we bumped the transaction. The individual transaction limit went from a one million dollar limit on the network to a ten million dollar limit on the network. In other words, a business can send up to ten million dollars in a single transaction if the originating bank allows it. The network limit is ten million bucks. The originating bank can make it whatever they want it to be based on their customer per profile, risk appetite, etcetera. Right? But what that did is that really drove the value of those our daily value almost quadrupled or even times five in one day simply because that increased limit. So what you have is a lot of corporations, companies are using that increased limit to really manage their funds to get them where they want them to be at exactly the right time. Doug, you mentioned payroll funding. You know, you can buy yourself a whole day or two by by just waiting to the last minute to fund that payroll account, right, as an example. And you're earning the interest right up until you park that money in the other account. So, so there's a lot of advantage to that as well. And, I think of that as having control over your funds. The banks can offer their customers complete control over those funds. And what we've seen that if you give the customer control over their funds, they're more likely to leave it parked in the bank longer because they know they can get access to it where and when they need it immediately through that, you know, that send capability that you're offering. Well, yeah. I mean, you know, having that six figure check that needs to be paid out on, you know, net thirty, but you had to mail it out on twenty to ensure that it lands by, you know, thirty. And all the while you're accounting for that money in the account to make sure the check clears, you know, having the new landscape where, you know, on thirty, you're sending the money, the money settles. Yeah. It's it's certainly a a different landscape, and I can only imagine that, you know, upon you guys reviewing to determine if you're gonna open up the transaction limit even more, I mean, the the use cases are only going to continue to increase at that point in time, across, you know, really all platforms, business to business. You know, I always, you know, being someone you know, we have the conversations. I always enjoy the RFP and business to consumer, scenarios and strategies because that's something that, you know, I think people consumers today, it aligns very much with, you know, the instant need to be able to swipe your card, to be able to, you know, tap your phone, things like that. So, yeah, it's it's it's neat to see as the things evolve, you know, the move forward, how FIs will choose to use it. I also think it's great that FIs you get a unique strategy for yourself. Right? You said it. You know, you can choose to sit and receive. You can start playing and send. You can play and send at your own speed. You know, and I think that's kind of how we see things here, you know, with the Unify world. You know, yes. It's check processing, But at the same time, you don't have to go to five places. You don't have to do fifteen different things. There's one interface for any channel, you know, return processing and clearing. So it it's kind of funny because I I was having a conversation and I realized, you know, you had made the comment about, you know, the data traveling with the money. And it's like, well, I mean, it truly is almost the equivalent to the check. Right? I mean, the check, you got your addresses, you've got your signatures, you've got your memo lines for birthdays, all of these elements. And when you look at it, it truly is that, and that's really kind of a landscape that we see the same way with UNIFY, thus the evolution to include, faster payments as part of that. And I think we're gonna get to the question space. I'm gonna throw one out just initially. I'll let Kira time it if she has one, but I'll throw one out because I know I always see it here at industry conferences and things like that. Faster payments equals faster fraud. You know, a little bit of insight from that landscape for for the clearinghouse, you guys RTP. You know? I I know that's not the case, but love to get, you know, some of that fraud insight. Faster payments does not equal faster fraud, but, you know, fraud in the RTP world. Yeah. So and and, clearly, it's something that we pay a lot of attention to. The good news is that, RTP has proven itself to this point anyway to be the safest and most secure of all your payment options. And and, you know, we measure, you know, fraud on the network by fractions and fractions of a basis point. It's almost unmeasurable, to be honest with you. Couple of reasons for that. I think just the overall the the nature of the network being a credit push network with no data or no debit capability goes a long way in protecting you know, it cuts off a whole channel of fraud, you know, that we see in other rails, which is, you know, you came in and you got you debited my account, and I didn't know it for a couple of days as an example. Right? So you just by the nature of the network, you can't do that. It's a credit push network. I have to send you the money. You can't pull it. The other thing, in a real time environment, really, you have to lock down the front end of the transaction. Right? You have to know it's Keith on the other end of of that cell phone. As an industry, we were already doing a really good job with things like multifactor authentication and biometrics. So so that hasn't been an issue either, you know, account takeover type things haven't been an issue. The thing you have to think about, in a real time environment is authorized fraud, where I I meant to send care of the payment, but she tricked me into doing it. She never sent me the pony, whatever, you know, whatever it is. Right? So so, so you really a lot of that's just educating your customers. Once that again, the clear those funds are gone immediately, it's cleared and settled immediately. It's harder to get back, you know, if it does in a situation like that. So you just have to make sure you educate your customers. You go up, you know, and again, the it doesn't become a real time transaction until you send it to the network. So whatever time you have to take on the front end to secure that transaction based on the type of transaction it is, who's sending it, that's up to the institution to determine how they wanna handle that. So so knock on wood, we've been doing a great we, the industry, have been doing a really good job on that, and, and we'll continue to monitor and watch that moving forward. Yeah. I mean, I I think, you know, I think the other piece again in that bank to bank world, the fact that the industry has done a good job doing bank push communication. Right? I think that's another one that is going to prove very valuable and helpful as things evolve, because that's not such a foreign concept for consumers and businesses. So, Gary, did we get any questions in the chat? Yeah. It looks like we just have, one so far. What does a consumer faster payment look like? Consumer faster payment? So some of the use cases, the big use cases that are consumer based are, we do a lot of p two p. So a lot of Zelle transactions clear and settle via the RTP network. Venmo uses the the the network to move money out of your Venmo account into, into your bank account. So a lot of consume you know, a lot of the wallets that consumers are using are leveraging RTP for moving money to and from your bank account. We see a lot of consumer bill pay, happening as well. And but the biggest consumer use case is moving money from one of my accounts to another or from me to my son as an example. Right? So, I think the last I checked of something like twenty to twenty five percent, I may be a little off on that, but around there are consumer related consumer originated versus business or other originated as well. So twenty, twenty five percent of all volume. Thank you for that. Looks like yep. That's our question. Anything else we wanna bring up before we wrap up? Well, yeah. I'll just throw it to Keith. There's a few few minutes left. So if there was one thing that you wanted to leave, financial institutions who are exploring the faster payments, you know, connecting to the RTP rail, one thing you could leave them with as a kind of key piece of advice to help them you know, start making their plans and strategizing their effort, what would that be? So the I I would say that, you know, seventy some percent of customers, whether businesses or consumers, have said that payments are an important thing to them. And they're willing to switch financial institutions to get paid better, faster, and smarter. So it's a competitive advantage to to offer, better payment capabilities. Ninety eight percent of the instant payment volume is on the RTP network right now. So, it pays to get on the RTP network. Companies like Alligent can make that a very easy path for you. So so I would say start moving down the path of figuring out what your strategy is. And, and and frankly, you, you know, you won't have any lack of customer demand for it. It's it's become one of those things that, yeah, we expect that it's not just a nice to have. And and we consistently see that, across the board. Yeah, no, I mean, I couldn't agree more. It makes perfect sense. So, yeah, thanks for that. And thanks for the time today. Enjoyed the conversation and appreciate the support from the clearinghouse and you know, continuing to put in the effort out there into the industry to, you know, provide education for RTP and what the faster payments world looks like. Thanks. And, if you're looking for if an FI is looking for additional resources, we have a lot of great content on our website. We do a great podcast. I can say that because I'm not involved in it, but but, our communication guy, Greg, is the moderator, and he talks to people using the network. We do it, I think, a monthly release on whatever podcast, or whatever thing you use to listen to podcast. It's called Payments Nerds. That's a great source of information. The Faster Payments Council website has a lot of great information as well. So there's a lot of sources out there where you can start, educating yourself on on what what's involved, how to launch, and and what you can expect as well. And please feel free to reach out to me directly or Doug directly, and, we're glad to help. Yeah. Thank you both so much. And we appreciate everybody else for joining us today. Like I said before, if you do have any additional questions, feel free to reach out to us or email us directly at marketingalligent dot com. Please be sure to check out our events page for all future events and webinars. We really appreciate your time with us this afternoon and have a great day. Thank you to both of our speakers. Thanks.