The Clearing House’s Real-Time Payments system is open to all depository institutions with no volume discounts and with a model that will lead to lower pricing as the system reaches scale, TCH President and CEO Jim Aramanda said today at the ABA Payments Forum in Washington. RTP—a new real-time core payments system that is the first new U.S. payment rail in more than four decades—currently reaches about 50% of U.S. demand deposit accounts and seeks to connect every U.S. bank and credit union by the end of 2020, he added.
While TCH is owned by 24 large banks, it operates as an industry utility, covering its costs but not making a profit or distributing dividends to its owner banks. Aramanda highlighted the role of community bankers in guiding RTP, including yesterday’s announcement of new community bank and credit union slots on the RTP Business Committee. “We’ve always had input from non-owners,” he said. “To formalize this, we’ve added four seats to this committee.” TCH is also working with core processors to ensure community banks can implement RTP, Aramanda said. “We’re offering incentives to them,” he said, and TCH is also covering implementation fees banks pay the cores to go live with RTP. Banks can also connect directly to RTP, and TCH charges no connection fee.
Aramanda sought to clear up confusion following the issuance of eight business principles for RTP in March. “As long as we’re a utility, pricing will be the same for everyone,” he said. In fact, Aramanda said he expects pricing to drop as volume grows and the RTP cost basis falls. But should the Federal Reserve develop a competing system, as it is considering doing, he said TCH cannot predict whether that model would remain workable. “It’s not going to service anyone if we don’t have ubiquity,” he explained. “The real competition out there isn’t the other banks. It’s the fintechs and others who are using the payments system to disintermediate you from your customers.”