Independent Banker - November 2020 - 19

The first transactions out of the gate
were consumer-to-business payments
via providers like PayPal and Square,
but the community bank expects to
see increased differentiated volume
as it moves into sending payments in
late 2020.
For Royal Bank, going live with RTP
was always in the cards, which led to
the institution becoming a beta testing
bank for Jack Henry and Associates,
its core provider.
" I had been following [real-time
payments] for some time, knowing
that customers and businesses want
to get their money quicker, " says Jean
Thompson, the community bank's
senior vice president of operations and
IT. " We're always on the front edge of
technology, and I wanted to make sure
that we were in line to move forward. "
A killer app?
Volume for more mature faster payments
services continues to climb,
but it only represents a minuscule
fraction of yearly transactions. In
fact, in 2019, more than three years
after same-day ACH launched, its
volume comprised just 250.4 million
of the 24.7 billion annual ACH
payments. While adoption and corresponding
use of this kind of payment
will increase over time, this trend is
causing community banks to wonder:
Is there an undiscovered killer app for
faster payments?
" When I think about a small business,
I think it might be that request
for payment [RfP] could play a role, "
says Kathy Strasser, executive vice
president and chief operating officer
at $1.6 billion-asset IncredibleBank
in Wausau, Wis. " You could have
the technology that says, 'Here's the
request for payment,' and all the
receiver has to do is click, and the payment
happens. "
Faster Payments and the Potential
to Transform Consumer Bill Pay,
a whitepaper from the U.S. Faster
Payments Council and Glenbrook
Partners, supports this hypothesis,
pointing out that RfP functionality
has the potential to shift the consumer
bill payment infrastructure.
The whitepaper also extols the
benefits of leveraging this approach,
which would result in greater end-toend
payment transparency, increased
satisfaction for consumers, and
streamlined payment and exception
processing for the biller. Overall, the
instantaneous nature of real-time
payments opens doors to new bill
payment functionality.
Yet, experts agree that RfP is only
one area where faster payments
may add value. Use cases-including
payroll (see sidebar on page 20),
insurance reimbursements and justin-time
bill payments-emerge as
possible avenues to increase use of a
more immediate payments rail.
In addition, small businesses present
a different flavor of functional need
for real-time payments. For example,
the good funds model that comes
with real-time payments strengthens
certainty around the payment. The
instant visibility of the transaction
and the memo line that can move with
it ease the reconciliation process.
This year in particular, small businesses
have placed a greater weight on
cash flow, with 76% reporting shortages
and 37% dipping into personal
funds to cover them. This extra layer
of urgency has led to a greater demand
for more rapid payments; 42% of
small businesses have even indicated
they would switch providers for realtime
settlement.
" Community banks can help keep
communities vibrant by supporting
healthy cash flow for their small
businesses, " Phillips says. " It's not
too soon to engage in discussions
with business clients to understand
their needs. Some business needs
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Independent Banker - November 2020

Table of Contents for the Digital Edition of Independent Banker - November 2020
