Real-time payments gain business traction

Citizens report shows nine of 10 corporate decision-makers are interested in new payment standard.
Customers using the RTP network can make payments electronically and the funds instantaneously move from one account to another. Photo by iStock

Real-time payments (RTP), the emerging standard in U.S. billing and payment processing, continues to gain traction among businesses, with over 90% of business leaders reporting interest in the network, according to a new report.

Citizens Commercial Banking’s second annual Real-Time Payments Outlook, a nationwide survey of 252 corporate decision-makers, found only 9% currently have no plans to implement RTP, which is the biggest upgrade to the U.S. payments system since the Automated Clearing House (ACH) in 1974.

Citizens, based in Providence, Rhode Island, with its Michigan headquarters in Detroit, is an owner bank of The Clearing House (TCH), and the RTP Network set up through TCH is the one survey respondents and Citizens use. At this time, it is the only RTP network in the U.S., with a previously reported FedNow system still several years away from launching. The RTP Network launched in November 2017.

“I’m encouraged to see the level of interest in real-time payments because it offers such tremendous advantages to businesses in terms of speed and certainty of payments,” said Matt Richardson, head of product solutions at Citizens. “It’s gratifying to see that, because a lot of work went into (the network) from Citizens’ perspective.”

Richardson said TCH has around 25 owner banks, and most (about 15 to 20) run their own core processors to enable RTP. He said smaller banks can join the RTP through core processing vendors, the biggest of which currently are FIS, Fiserv and Jack Henry. TCH is actively working with all of the core processing vendors to enable them to offer RTP to their clients. Some are up and running, and some are in process of getting onto the RTP network.

Richardson said of those banks in the 9% that aren’t thinking about implementing RTP, he believes it may be because they are concentrating on other business initiatives or simply aren’t aware of the option and its value.

Customers using the RTP network can make payments electronically and the funds instantaneously move from one account to another. Information about the transaction also travels with the funds, so recipients know where the money is coming from and why.

The ability to access real-time payments is a critical issue for business leaders, the survey showed. A bank’s ability to provide RTP was cited by survey respondents as the second-most important determining factor in choosing a banking partner, ranking right behind a bank’s ability to provide solutions throughout their business lifecycle. In fact, RTP solutions were ranked as a more important service for banks to provide than knowledge or expertise in the business’ industry or the lowest-cost financing.

When respondents were asked to name the ways in which they anticipated using RTP, the two most commonly cited applications were to manage cash flow more accurately (cited by 52% of respondents) and to conduct general accounts payable activities (46%). Other common uses included payroll (43%), facilitating payments requiring immediate receipt (42%), and improving collection activity and posting to clients’ accounts (40%). Another common use, cited by 38% of respondents, was to replace check payments.

Richardson said the latter ability would be useful for service-based businesses, which can use the RTP Network to request payment onsite at a customer’s home via email or text message, which creates a touch-free, paper-free way to process payments instantly. He said the advantage of using RTP Network over cash, checks, cards, Cash App, Venmo, Zelle or PayPal in these situations, is that payment from the customer, when it’s a response to a request for payment from the service provider, comes with all of the data attached that would be on a paper invoice, such as time of payment, service performed, customer details, etc.

“It makes it very easy for them to reconcile their receivables, so it really is an end-to-end collection solution for corporates,” Richardson said.

Another one of the uses that’s emerging in the gig economy is the use of RTP for on-demand payroll; for example, Uber or Lyft drivers or other independent contractors can use RTP to be paid more often than weekly or biweekly, so as to receive quick cash, Richardson said. Depending on how employers look at it, this could either give them a better competitive edge or lead to increased turnover.

Other survey findings:

  • 81% of respondents expect RTP to dramatically transform the way business is done.
  • 77% of respondents agree that digital currency will play a valuable role in the future.
  • 66% of respondents expect they will stop making or accepting payments with cash or paper checks.

“The pandemic has disrupted many businesses and exposed the downsides to relying on paper payments,” Richardson said. “We will continue to support omni-channel solutions and serve our clients however they need us, but the crisis has demonstrated how resilient and reliable digital payment methods can be and has prompted many businesses to redouble their efforts to digitize their payments.”

Richardson said Citizens Bank developed a “smart router” system that enables customers to send Citizens Bank payment instructions, including the information that would be needed both for an RTP or an ACH transaction, and Citizens is able to determine whether the receiving bank is on the RTP Network. If it’s not, then Citizens processes the payment using ACH. The customer then receives a report back on whether the payment was originated through RTP or ACH.

The Citizens Commercial Banking Real-Time Payments Outlook survey sampled a range of businesses in different sectors with annual revenue of $1 million to $25 million (32%); $25 million to $100 million (18%); and more than $100 million (50%). It was conducted in June 2020.

More information about real-time payments is available at

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