Growth in Volume on the RTP Network Sets the Stage for Community Banks’ Transition from Receive-Only to Send
Real Time Payments (RTP) will end the year with about 56% of US-based DDA accounts able to receive transactions, including the customers of more than 100 community-based financial institutions. This number is expected to grow to 70% or more next year. And many more Third Party Service Providers (such as core processors) will go into production with RTP Receive solutions during the first half of 2021, further expanding availability to the network. As adoption grows, community banks will be gearing up for the next evolution in usage – RTP Send. This service, already live at regional and national banks, will allow customers to push a payment to any other participant on the RTP Network at any time. Customers of participating community banks will be able to pay and be paid, creating a fully realized payment rail.
While RTP provides opportunities to develop powerful payments solutions, its instant nature has been a source of concern for banks accustomed to the processing cutoff times allowed for by delayed settlement. There are no overdrafts on the RTP Network, and transactions that exceed the pre-funded balance simply decline, creating challenges in managing liquidity in real time, 24x7x365. This is the primary problem that our Funding Agent service solves. With Bankers’ Bank managing funding balances, customer banks have fewer concerns about no-funds declines as we combine pre-funded balances with Fed Funds lines (if available) to help ensure liquidity.
As community banks move to RTP Send, those that use Bankers’ Bank as their Funding Agent will find themselves able look beyond day-to-day processing. Our customer banks can focus on developing use cases that add customer value while we take over the liquidity piece critical to success with RTP.