It’s no secret that real-time payments offer numerous benefits not only for consumers but also for financial institutions alike. Some of the ways financial institutions benefit from real-time payments include the speed, immediacy, and irreversibility of a payment, the ability to consume contextual data (information about the payment that doesn’t detach throughout the payment process), and the ability to facilitate a new request for payment (RFP). 

The use of real-time payments continues to accelerate, as shown in the following industry research examples from the digital publication “Real-Time Payments Tracker:” 

  • A recent PYMNTS report found that 35% of consumers in the U.S. consider the ability to receive funds in real-time as “extremely” important. 

  • A separate PYMNTS study discovered that approximately 24% of U.S. consumers would switch from their current financial institution (FI) to one that provides real-time payments. 

  • The pandemic has created a significant surge in real-time payments usage with a recent report indicating business and financial institutions around the globe made over 70 billion real-time payments in 2020, representing a 41% increase from 2019. This trend is expected to continue, as a compounded annual growth rate of nearly 24% for real-time payments is projected between 2020 and 2025. 

If you’ve determined real-time payments are right for your credit union and you’d like to get started, one of the questions you’ll need to answer is: What technology and operational capabilities would be required for our institution to offer real-time payments? 

A TPSP can enable the connection needed to implement real-time payments, which is often financially and operationally burdensome for credit unions to oversee on their own.   

Engaging a third-party service provider  

Offering real-time payments means you’ll need to connect to The Clearing House’s (TCH) RTP® network and become a network participant. Your credit union will have the choice of receiving payments during the initial deployment and/or determining if enabling the ability to send and receive RTP transactions align to your broader payment strategy. 

Most credit unions will connect to the RTP network through a TPSP, such as a core processor, a hosted gateway and technology provider, a bankers’ bank, or a corporate credit union. The TPSP acts on the participant’s behalf to send/receive its RTP messages. TPSPs are helpful because they allow companies to outsource the support of stringent connectivity requirements and integrate RTP network functionality into various products and/or services that accelerate the delivery of consumer and business use cases.  

Identifying your TPSP options 

Although TCH does not endorse TPSPs, and financial institutions are responsible for their own due diligence and vendor management with respect to any TPSP they use, TCH does perform technical testing and certification with TPSPs to confirm they are capable of processing messages in accordance with the RTP technical specifications.  

TCH maintains a list of TPSPs that have met TCH’s technical testing and certification requirements, and they continue to add more as the network expands. This list includes major bank core providers, and TCH is happy to provide your organization with the current provider listing as you begin your process of joining the RTP network. 

Educating your organization further 

If you’re in the process of considering whether to become an RTP Participant and/or use a TPSP, it is important to understand RTP system functionality and the obligations of the RTP Rules, including the RTP technical specifications. Such understanding is important as prospective Participants review their business practices and procedures and consider appropriate changes and controls needed to comply with the RTP Rules and technical requirements. 

For more information, we encourage you to check out the following resource: RTP® Network Readiness Checklist for Banks and Credit Unions