News

Clearing House announces plan to pursue real-time payments

The multiyear project will address gaps in payment processing in order to ensure secure and immediate payment in merchant and consumer sectors.

October 23, 2014

The Clearing House and its member banks will undertake a multiyear effort to build a real-time payment system to serve an increasingly digital economy, according to a news release. The system will be designed to address gaps in payment processing and will enable secure and immediate payment among businesses and consumers directly from their FI accounts.

"The digital economy moves in real time and our customers expect us to keep pace," said Richard Davis, chairman, president and CEO of U.S. Bank, and chairman of The Clearing House. "We will work with the industry to build a real-time payment infrastructure, which will enable consumers to pay and get paid securely and conveniently."

Core customer benefits will include:

• convenience — consumers will be able to pay each other directly from their existing accounts using online or mobile banking;
• account data privacy and ease of use — the system will route payments based on tokens that cannot be used to debit accounts, so senders and receivers will not need to provide complex, sensitive bank account details;
• cost savings — an efficient real-time payment service provides a superior alternative to costly funds transfers, check cashing services and last-minute bill pay;
• certainty — senders and receivers will receive immediate notification of payment, and risk of returned payments will be eliminated, because sending financial institutions immediately verify good funds;
• safety — sending and receiving financial institutions, which have existing relationships with their customers, will be responsible for authentication; and
• cash management — the ability to send and receive payments immediately will give customers more control over cash flow, which is particularly important for cash-constrained small businesses and consumers.

"Consumer safety and privacy are core competencies of the banking industry that will be brought to bear in the development of this system," said Jim Aramanda, president and CEO of The Clearing House. "But real-time payments will incorporate strong safeguards to protect account information, building on The Clearing House initiative to develop and implement tokenization."