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Faster Payments – Instant Payments

There are two Networks: FedNow and RTP and they both work!  Why two?

These payments offerings have been available for some time, but many banks are not participating with either, or are using both (there is no interoperability). These networks provide every bank, large or small, with the ability  to provide safe payment services 24/7/365.

What is your bank’s position on faster payments? Volume and value continue to grow as well as use cases. Are you waiting for customers to express interest? Should you be proactively contacting business customers?  Are your customers’ needs satisfied by using traditional options such as Wire Transfers or Same Day ACH?

What do you need to do to offer these services? The first point of contact should probably be with your core system provider for a review of implementation plans, API development and associated fees. There are also other service providers, including The Bankers Bank, that offer the software.  Lists are available on FedNow and RTP websites.

Both Networks provide lists of banks and credit unions that use their services.  I would recommend reviewing the list of participants. Are these banks and credit unions you would expect to send to or receive transactions from?

All transactions are credit push and all transactions are irrevocable.   Both networks are real-time gross settlement in a matter of seconds.

The Federal Reserve relies on master accounts for settlement.  That means you can use a Master account directly at the Fed, or you can use The Bankers Bank’s master account, instead. Real-Time Payments require a prefunded account at the Federal Reserve in New York. If you have concerns about staffing 24/7/365, you can subscribe to a Liquidity Management Tool (LMT) with The Bankers Bank or another service provider that monitors and maintains a positive balance in your account after hours, on weekends and holidays.   

Some banks wonder how these networks compare to Zelle.  FedNow and RTP provide bank to bank services, while Zelle is a person-to-person service, available on bank websites.

Please reach out to your calling officer at The Bankers Bank if we can provide additional information or assist in any way.

by Kas Stewart, AVP & AAP