transforming payments for the digital...

Peter Davey Vice President, Payment Innovation The Clearing House July 19, 2017

Transforming payments for the digital age

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The Clearing House: Hub for Interbank Exchanges

Founded by New York banks to

improve efficiency and remove

risk from daily exchanges 1853

Owns and operates core U.S. payments system

infrastructure, clearing and settling approximately $2

trillion each day, representing half of all commercial

ACH, wire and check image exchange volume

TODAY

Working to modernize the U.S. payments

infrastructure by building a new, ubiquitous,

real-time payment system

RIGHT NOW

©2017 The Clearing House Payments Co. LLC

The advent of mobile technology and the growth of digital commerce are driving real-time payments innovation

around the world

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The whole world is moving to faster payments. . .

2001 South Korea HOFINET

2002 Brazil SITRAF

2004 Mexico SPEI

2006 South Africa RTC

2008 U.K. Faster Payments

Chile TEF

2010 India IMPS

2011 Nigeria NIP

2012 Sweden BiR

Poland Express ELIXIR

2014 Denmark NETS

Singapore FAST

2017 Australia NPP

EU SEPA Instant

TBD Columbia

Thailand

Canada

Operational In design or development

CANADA


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There are multiple efforts underway to move payments faster in the US*

Visa/MC Federal Reserve Faster Payments Task Force

NACHA Same-Day ACH

EWS clearXchange/Zelle The Clearing House RTP

Platform

Enhancement to the existing ACH network and rules • Enable 2 same day settlements

for Credits & Debits • Faster availability for SDA

transactions

Financial Institution network that enables P2P payments • Alias directory services • Bank to Bank messaging in near

real time • Leverages ACH & V/MC rails for

settlement

New payment rail being built for the US

Enhancements to the existing rules and networks • Allows for credit payments to be

sent in near real-time • Mandates availability in < 30

minutes • No changes in final settlement

Industry task force to identify and assess approaches for implementing faster payments • Established criteria for faster

payments in the US • Independently reviewed 22

proposals • Developing a series of reports to

help guide the industry

*Not exhaustive


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RTP is the first digital native payment rail built in the US….

Built on a modern architecture

Highly scalable and flexible

Open when your customers want to do business 24/7

Available to every Financial Institution in the US

Safe, Secure and Reduces Risk


24/7 RTP

Clearing 24/7

Continuous Input/Output

Continuous Settlement

Immediate Confirmation = Simplified Reconciliation

Real-time posting and visibility

TCH RTP is real-time in every way

6 ©2017 The Clearing House Payments Co. LLC

RTP’s core features create a digital payments platform that can be used to innovate and puts the end customer at the center of their finances

Payment Status

Immediate notification of successful transfer to end users, providing certainty for both senders and receivers

Payment Certainty

Receivers have certainty that payments will not be reversed or revoked

Complete AR/AP Messaging

Ability to link multiple messages associated with the same transactions through a common reference

Data Extensibility

Allows banks to develop Value added services based on extensible data

Fulfillment Messaging

Ability to provide confirmation by the receiver that they have received funds, combined with fulfillment information

Immediate Availability of Funds

Receivers have funds available in real-time 24/7/365

Credit Push Only

Customers send payments directly from their existing accounts – complete transparency, no pending payments

Global Ready

ISO 20022 is a global standard that supports the needs of multi-national customers and will enable cross-border payments in the near future


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RTP Messages: Product Building Blocks

Credit Transfer

Basic multi-purpose payment message, including remittance information

Request for Payment

To support funds request, e-invoicing or e-billing

Acknowledgment by Receiver

Message from the receiver to the sender regarding payment disposition (e.g., invoice paid, goods, shipped)

Request for Information

Request for additional information about a payment (e.g., requesting customer account or invoice number

Invoice/Remittance Advice

Extensive invoice or remittance detail not included in the request for payment or credit transfer Debit

Credit Push Only


RTP is an all new “rail” for clearing and settling transactions between accounts at financial institutions. It’s the first

new interbank payment system in the U.S. in more than 40 years.

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Real Time Payments supports many use cases

INITIATION MESSAGING AUTHORIZATION CLEARING SETTLEMENT

U.S. Payments Systems or “Rails”

PAYER PAYEE

PAYER’S FI PAYEE’S FI

Check Image Exchange

ACH

Wire Corporate Disbursements

Payroll

Bill Pay / Individual Payments

B2B Payments


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RTP enables a complete contextual conversation about the full payment lifecycle

Company A is owed $2,000 by Company B

Request for Payment

Company A doesn’t know what the extra $3,000 was for

Request for Information

Company B sends Company A $5,000

Credit Push

Company B needs to show they are paying multiple

invoices

Extended Remittance

Company A has applied the payments from Company B

Acknowledgment Message


• Payments become conversational

• Allows for messages to be routed to different locations for different purposes more

efficiently and timely

• You can leverage Non-$ messages to kick off events

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The single message nature of RTP that supports both $ and non-$ messages is a game changer


End Customer System Financial Institution Interface

RTP Message

• Banking and payments can become more deeply integrated into your customers

processes

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Leveraging Application Programing Interfaces (API’s) makes more sense with RTP


Request for Payment

API Integration to ERP/Payables

System

Auto Linking to Purchase Order

Triggers Approval Flow in ERP

System

System Submits Credit Transfer at Scheduled Time

API Integration to ERP/Payables

System Credit Transfer

• FI’s can provide an “account” number that is only used for someone to push a credit or

RFP to the customer

• Leverage your mobile applications to allow your customer to generate a unique number

for a transaction when they need it

• In the business world a Financial Institution could generate a unique token for their

customer to be used for a specific transaction to aid in reconciliation

TCH CONFIDENTIAL 13

Leveraging a credit push system with no debits allows us to re-think the way we protect customers credentials

Illustrative RTP ecosystem

Note: There should be no difference in the user experience for customers of direct FIs and those connecting through a TPSP.

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RTP is available to all US financial institutions

The Clearing House

Financial Institutions of all sizes

Third-Party Service Providers

Banks*, Bankers’ Banks, Community banks and Corporate Credit Unions

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With RTP, FIs can offer new services and improve existing ones


Efficient

Safe

Immediate • RTP makes payments immediate and final

• Quicker closure means no loose ends and ability to move on to what’s next

• Payments and information travel together

• Efficient way to improve reconcilement and other processes

• Avoid off-cycle ACH batch processes

• Reduce exceptions

• Potentially improve liquidity management

• Trusted and secure bank channel

• Reduce fraud risk (and related costs)

Bill Payment

©2017 The Clearing House Payments Co. LLC 16

Bill Payment


Payment on Delivery


RTP is a platform for innovation in payments!


transforming payments for the digital...

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