A Panoply of Factors Help Drive Record Volume for the Big Banks’ Real Time Payments Network

The Clearing House Payments Co. LLC reported early Wednesday its 7-year-old RTP service on June 28 exceeded $1 billion in daily volume for the first time. TCH waited a week and a half to disclose the milestone as it worked out what the factors were behind the record-setting performance, only to conclude that “there’s no single driver,” says a spokesperson for the New York City-based processor, which is owned by 22 global banking heavyweights.

The RTP Network also set records for quarterly transaction volume and value in the three-month period ended June 30, the company reported, with 82 million and $55 billion, respectively.

The banner day for TCH comes in the face of formidable competition from the Federal Reserve, which in July last year launched its long-expected FedNow real-time payments service. FedNow has grown steadily since then but has not recently released statistics that are as comprehensive as those from TCH. The RTP Network has been singularly successful in signing smaller financial institutions, with each of some 90% of financial institutions on the system holding assets of less than $10 billion, says the spokesperson.

While the surge in daily volume at TCH may have had a number of drivers, several stand out, according to the spokesperson. A big cause is cash concentration, he notes, in which businesses tend to move large sums between accounts. Other factors include money movement in the so-called gig economy and a surge in mortgage closings, according to the spokesperson. He adds that sums moved because of the rising importance of earned-wage access also played a role. With EWA, employers can move compensation to workers digitally.

Another big factor is peer-to-peer transactions. “We’re starting to see large banks starting to enable [peer-to-peer] transactions on RTP,” the spokesperson notes. Also, consumers generally are starting to play a more prominent role in real-time payments, he adds, noting the network is seeing more than “5 million unique consumers sending instant payments every month.” That number, he says, has doubled in the past year. The surge is largely due to the wide-scale adoption of mobile wallets over the past few years, he adds.

On the corporate side, the network now serves 225,000 unique businesses monthly, up from 105,000 a year ago, he says. While businesses account for 80% of RTP transactions, 95% of those payments are received by consumers, according to TCH. Consumers, in turn, originate the other 20% of transactions.

Factors driving growth also include market reach—TCH is now connecting to institutions accounting for two-thirds of demand-deposit accounts, the spokesman says. “We’re seeing million-transaction days at least once a week,” he says. “It’s kind of refreshing to see it. It’s a network effect.”