Real-Time Payments Are Coming To The US With TCH

by Sarah Grotta 0

There are several entities working on the very broad category called faster payments; Early Warning and Clearxchange, NACHA’s same day ACH, Fiserv’s partnership with Early Warning on bill pay and deposits, the global card networks and several others. The one highlighted here in Forbes, provides an update on The Clearinghouse and VocaLink partnership:

Once complete, the system will be the most comprehensive real-time payment system ever developed. Not only will it empower U.S. consumers and businesses to send and receive real-time payments from their existing accounts at financial institutions, but it will also provide a platform to launch innovative new services that will power a new economy built around real-time payments.

“We will have the core technology pretty much built and in place by the end of this year,” said Steve Ledford, senior vice president at TCH. “Then the issue is when will financial institutions be ready to send and receive. This requires significant investment and we are actively working with banks and credit unions to support this integration.”

I appreciate the honesty of the comment that faster payments will require a significant investment. The Fed, in their FedPayments Improvement initiative has done some research that suggests faster payments might be nominally positive after the investments are made. So where’s the business case? One use case mentioned by TCH that could have some very positive benefits, financial and otherwise, is in medical payments, since this platform is designed to tie payments and data together:

We are taking the VocaLink platform and they are adding functionality for our market,” Ledford said. “In addition to basic payment message, it will have request for payment, certain payment confirmation messages and the ability to carry remittance information.”

The information that can travel with payments is an example of how the technology keeps improving he added. The message that travels with the payment can reference an unlimited amount of external data.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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