Page 30 - GS190502

CoverStory

reflected in their account balances within minutes or hours. But settlement in The ACH also has been moving in
final and irrevocable funds occurs on a batch basis, typically once or twice a day the direction of faster payments. In
using the automated clearing house (ACH) system. RTP, as its name implies, is recent years, NACHA ‒ The Elec-
a real-time network, with transactions settled through a centralized clearing tronic Payments Association (which
account pre-funded by participating financial institutions and managed by oversees the ACH rules process) has
TCH. Gunasena pointed to several use cases for a real-time payment options, opened two new clearing deadlines
like RTP, including faster funding of merchant accounts by acquirers, employee specifically for same-day settlement
reimbursements and rental payments. of both ACH credit and debit transac-
tions. A third deadline is set to open
The Federal Reserve said it is considering building its own real-time payment in 2021. NACHA reported that 52.7
network. One of the Fed's mandates is that it provide payment services to all million same-day payments were
federally insured financial institutions, and many small banks and credit sent through the ACH during the
unions see the Fed as a less costly alternative to private-sector networks like first quarter of 2019, a 24 percent in-
RTP. Any movement by the Fed to support faster payments, however, will crease over the first quarter of 2018.
require that it be able to support real-time settlement 24 hours per day, seven
days per week, 365 days per year. As it stands now, the Fed provides clearing Enter the card brands
and settlement of inter-bank payments between 7:30 a.m. and 5:30 p.m. Eastern, The card brands also are getting be-
Monday through Friday, except for national holidays. hind faster payments. Mastercard
owns VocaLink, which provides the
The Fed has been soliciting public comments on steps it can take to support technology backbone for TCH's RTP.
faster inter-bank settlement of payments, including a 24/7/365 processing cycle It also operates Mastercard Send
and a liquidity management tool to support its own as well as private-sector which can be used to send payments
real-time payment schemes. But the Fed's rulemaking process can be protract- to debit and prepaid card accounts at
ed, and most experts agree any new Fed real-time payment services are several Mastercard-issuing banks and credit
years out. unions.

In February 2019, MetaBank, one of
the nation's largest issuers of prepaid
debit cards, launched a new faster
payments platform that incorporates
Mastercard Send. "This platform en-
ables our partners to deposit funds
in near real-time, providing quicker
access to funds for consumers and
improved cash flow for businesses,"
said Sheree Thornsberry, MetaBank
executive vice president and head
of payments. She pointed to several
use cases, including immediate pay-
ment of insurance claims, healthcare
claims, tax refunds and paying gig
economy workers.

The gig economy – which encompass-
es everything from ride- and home-
sharing, to pet sitting and at-home
coding – is expected to fuel faster
payments momentum. A new study
by Mastercard found that the global
gig economy generated an estimated
$204 billion in payments last year; it
is projected to grow to a $455.2 billion
market by year-end 2023.

On the wish lists of many gig workers
and the platforms that support them
are faster and more frequent payouts,
stated Silvio Piserchia, vice president
for global prepaid at Mastercard.

30