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More than a year after the launch of real-time payments by the Federal Reserve, financial institutions of all sizes are adopting the service. Some mid-size and smaller institutions are also looking ahead to related issues, including the looming ISO20022 standard for financial messaging.
The latest example emerged Thursday with an announcement that Chicago-based Lakeside Bank is the latest mid-size or smaller institution to agree to adopt end-to-end real-time payments through both the Fed’s FedNow service and The Clearing House Payments Co.’s Real Time Payments (RTP) network.
Lakeside, which with $2.64 billion in assets ranks 394th among the nation’s banks, according to the Fed, had already begun a related project with a looming regulatory requirement—the adoption of the ISO20022 financial-messaging standard before deadlines that fall next year. The technology for both efforts is coming from Jersey City, N.J.-based Volante Technologies, which works with banks and card networks.
As for real-time payments, the bank says the work involved in adopting real-time capability will pay off in better service for clients, particularly retailers and other service providers handling large volumes of transactions. U.S. banks collectively are already processing more than 1 million real-time transactions daily through both national networks, according to estimates from Volante.
But mid-size and smaller banks are preparing for an expected big jump in adoption of real-time payments, particularly among U.S. businesses, according to vendors to the market. American business transactions processed immediately will reach $129 trillion in volume this year, according to figures from Volante. That will balloon to $258 trillion in 2025, the firm projects.
