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US-Euro Real-Time Payments Expected to Launch in 2022

PYMTS | Oct 12, 2022

Real time payments - US-Euro Real-Time Payments Expected to Launch in 2022Cross-border B2B transactions — done in real time — are on the cusp of being as simple as domestic real-time payments (RTP).

  • Russ Waterhouse, executive vice president for product development and strategy at The Clearing House (TCH), told PYMNTS’ Karen Webster that after months of development, joint efforts between payments services providers will streamline the compliance and technical heavy lifting needed to link real-time payments systems around the globe.  Those linkups are no easy task, given the fact that it is the bank-to-bank interaction where the complexity sits.
  • Beyond the mechanics of initiating payments and linking up with application programming interfaces (APIs) to get FX rates, there are additional messaging requirements and compliance mandates that include destination banks’ information.  Cross-border payments require the participation of one bank that provides the actual foreign exchange and another bank that provides liquidity downstream.

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  • Unifying Systems and Payments
    • As has been reported, TCH, EBA Clearing and SWIFT said last week that they are on track to begin piloting their transatlantic instant payment system known as Immediate Cross-Border Payments (IXB).
    • As reported this past spring, the IXB pilot will leverage the existing real-time payment systems, RTP in the United States, run by TCH, and RT1 in Europe, run by EBA Clearing.  The service will connect existing infrastructure to enable synchronized settlement of RTP and RT1 payments.
  • Beyond framework and into reality: Waterhouse noted that the announcement proves that RTP has moved beyond the framework stage and has made the leap toward reality. The announced support of 25 banks, he said, underscores the acceleration toward full-scale rollout within the next few months.  Roughly half of those banks — or 12 FIs — are already committed to participating in the pilot and doing the technical work behind the scenes to enable synchronized settlement of funds in an automated fashion. The efforts of TCH et al, he said, are aimed at automating the payment initiation, the compliance and the downstream interactions.
  • Transparency and confirmation in seconds: Among the benefits: Corporate senders get full transparency into FX rates and when settlement will occur — all with confirmation of the transaction within seconds. That level of transparency helps solve the existing pain points of batch systems and the fact that cross-border payments are a multi-day process.

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“My hope and expectation is that toward the tail end of next year, we really can open things up,” he said. Early use cases and adoption will likely focus on B2B payments, and banks will become more confident in RTP’s appeal, replacing wire payments to some degree (RT1 payment limits are still €100,000, so the initial uptake will be with mid-market firms).

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