When The Clearing House (TCH) launched the first new payment rail in the U.S. in over forty years, most of the focus (rightly so) went to the money movement functionality of the system. TCH’s RTP® network officially brought the U.S. market to the modern money movement scene. Finally, we had a real-time payment system where money could move from an account at one financial institution to another “instantly.” At the same time, another less-heralded functionality was introduced, that was largely out of the public eye. That functionality has the potential to revolutionize the bill payment space as we know it, and it is called Request for Pay (RfP). RfP is also offered by the FedNow Service® and is supported by Zelle.
What is Request for Pay (RfP)?
Request for Pay (RfP), is a method to initiate payments, where the payee asks the payer for a specific amount, providing details such as the due date and other crucial information, with the opportunity for the payee to pay in real-time with the click of a button. RfP is commonly used in real-time payment systems for secure and prompt transactions. It’s important to note that all of the real-time payment systems globally are based on a credit push model, meaning that the individual or company paying must initiate the transaction. Therefore, you can’t give a company permission to debit your account in the same way the ACH network works. This helps mitigate fraud, which is an important feature due to the irrevocable nature of real-time payments.
Request for Pay Use Case: Bill Payments
The potential utility for Request for Pay is significant—around 65% of the 15 billion bills consumers pay annually are not recurring payments. They’re performed as a one-time exercise. And about 75% of those non-recurring bill payments are done through a biller website. That’s a lot of user names, passwords, and information input for each consumer—a stark contrast to the centralized RfP experience.
About 66% of accounts within the U.S. have access to instant payments solutions and more than 50% of banks have implemented Zelle and Same Day ACH, while less than half have started to implement the FedNow Service, RTP network, and Visa Direct/Mastercard Send. RfP links the instant settlement of funds to various use cases, such as funding brokerage accounts and paying bills, fostering the habit of immediate financial transactions for consumers. Large corporations are not the only ones that benefit greatly from this adoption; smaller businesses also get substantial rewards with better liquidity.
Many of you likely have already experienced this workflow in the closed-loop P2P offerings we all use in our personal lives. When you open up the app to send money to a friend, there are options to pay someone or request to be paid. Now imagine this at a grand scale where the request can go to ANY bank account in the U.S., and you can see why both financial institutions and businesses are so intrigued. This capability unlocks the possibilities for both consumer bill payment experiences and business invoicing as well as treasury payables and receivables.
In some markets, non-bank RfP solutions are already available and target businesses directly. Already, financial institutions need to take this opportunity sooner rather than later. RfP holds a lot of promise, allowing financial institutions to create new revenue streams and engage consumers in a new way.
Learn about the different ways your financial institution can connect to RTP in RTP: How to Connect?
Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.
