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February 24, 2020 • Issue 20:02:02

Getting real about faster payments

office software solutions that support electronic payments.
"They just want acknowledgement that a payment has been
received." From a consumer's perspective once a card trans-
action is approved, the money they owe a merchant has
been paid, he added.
Faster versus real-time payments

In the world of payments, faster is always considered bet-
ter. Appearances can be deceiving, however. When a con-
sumer uses a platform like Zelle or Venmo, for example, it
may seem like a real-time transaction, and it is on the front
end, but settlement, which occurs on the back end, can be
delayed by a day or more. "Back-office systems are all batch
[systems]. They process what's come in at given point in the
day," Baldwin noted.
Typically, the automated clearing house (ACH) is the pre-
ferred route for executing transfers of funds between send-
ing and receiving banks. Recent upgrades to the ACH allow
By Patti Murphy for same-day settlement of many types of ACH payments,
making it a faster payment mechanism, but nothing ap-
eal-time payments are coming to the United proximating real time.
States, but don't expect them to replace lega-
cy card payment schemes at the POS. Why? One real-time payment network exists in the United States
R Because the newer platforms tend to be addi- today: RTP, launched in 2017. Built and operated by The
tive, not replacements, according to Jamie Topolski, direc- Clearing House, a payments consortium owned by a gaggle
tor of payment card product strategy at Fiserv. of large banks, RTP moves final and irrevocable payments
between accounts at participating banks in seconds, either
Sarah Grotta, director of Mercator Advisory Group's debit directly or through back-end processors.
and alternative products advisory service, agreed. "There
could be some impact, but we won't all be throwing our
cards away in preference for real-time or faster payments
networks," she said, adding that"financial institutions Contributed articles inside by:
aren't interested in giving up interchange." Also at play
are consumer preferences for rewards that come with us-
ing credit and debit cards. "We're accustomed to using our Dee and Emily Karawadra .................................................................28
cards, and interchange is what supports rewards," Grotta Chad Otar ................................................................................................30
noted.
Ralph Dangelmaier ..............................................................................32
Perception is also an issue. "Consumers probably don't nec-
essarily care that the merchant is getting their money right TOC on page 3
away," said Jack Baldwin, CEO of BHMI, which offers back-

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