Now that The Clearing House’s Real-Time Payment (RTP) rail has several major banks live, when will we start to see the United States embrace faster payments? Ubiquity and the use of APIs and overlay services on top of real-time rails can move a country toward RTP adoption – just as we’ve seen happen in other parts of the world. But when will the US stop playing catch-up?
Open Banking fuels innovation
Open[1] Banking[2] hasn’t been formally embraced in the United States as it has been in the UK, Europe, Singapore, and Australia. This is mainly because it hasn’t been driven by regulation or central authorities[3]. Yet an increasing number of US financial institutions are choosing to open their APIs[4] to better collaborate with FinTechs and compete with the innovations Open Banking brings forth in other parts of the world.
Over the past five years, we’ve seen a correlation between faster payments[5] adoption and the extent to which a region’s rails encourage collaboration on them. When this results in the perception of enhanced user value, adoption follows.
Take, for example, India’s faster payments rail - the Immediate Payment Service (IMPS). It has been in existence since 2010, yet the faster payments transaction volume and value that takes place on it continues to grow significantly, as though the service is new. Much of the attraction stems from its Unified Payments Interface (UPI[6]), an overlay on IMPS. This enables the initiation and collection of payments for developers; innovation is an inherent component of its real-time rail. In September 2018, a record-breaking 400 million+ transactions were processed
