I spent yesterday in NYC attending Payments Perspective 2019 hosted by The Clearing House. It wasn’t surprising that the focus of this meeting was the Real Time Payments (RTP) Network, developed by The Clearing House to facilitate immediate payments in the United States. I must say however, that I gained a new perspective at this meeting.
As the CEO of EPCOR, which serves nearly 1,900 financial institutions in the central U.S., I’ve heard time and again that: the Federal Reserve Banks must develop an RTGS system to level the playing field … the U.S. will never achieve ubiquity of faster payments if the Fed doesn’t develop a solution … community banks and credit unions don’t, can’t or won’t trust The Clearing House owner banks that invested in the development of the RTP Network to operate RTP as a utility … and that a Fed-operated faster payments solution will assure resiliency in a time of crisis.
While I am not going to challenge any of these statements, as there may be some validity in each of them, I do want to share some of what I learned yesterday and some personal observations. One of the most compelling speakers I heard was Michel Jeon of Uber during a panel discussion focused on early RTP adopters. Michel shared that RTP allows Uber to pay their drivers on a schedule that meets the needs of the individual drivers, be that at the gas pump when the driver needs to fill-up their tank, at the end of their work day or on some other schedule. Not surprisingly, this option is only available to Uber drivers with accounts at RTP-enabled banks. So, a logical question from the audience was … is Uber encouraging drivers to move their accounts? I found the answer very interesting, Michel said, “No.” She added that the research they have done indicate that drivers have strong relationships with their banks and really aren’t inclined to move their accounts but are none-the-less interested in receiving immediate payments.
I was curious, so I did a little research … there are estimated to be over 5 million Uber drivers in the U.S. Certainly, 5 million Uber drivers across the U.S. doesn’t make a business case in many smaller markets, but when you consider the entirety of the growing Gig economy, which according to an August 2018 Forbes article represents 36% or 57 million U.S. workers, it suggests there could be real demand for faster payments. With this realization, I asked myself, if our typical EPCOR member waits for the Fed to announce their intentions related to an RTGS system and begin the process of RFCs, Federal Register Notices, etc. and then build a system, what is the real impact going to be on community banks and credit union and their account holders? Forget the concerns, fears and hostility directed toward The Clearing House and the owner banks … what other players could potentially disenfranchise community banks and credit unions?
While I will continue to support our members’ stated desires to have the Fed develop an RTGS system, I did leave Payments Perspective 2019 with a new perspective. If financial institutions are interested in speed to market for faster payments, listening to what The Clearing House has to offer with RTP may be a worthwhile investment of time. If that idea still doesn’t resonate, I would encourage all our members to at least begin thinking about what they should be doing to prepare for the implementation of faster payments regardless of the Operator they choose.