The Clearing House (TCH) has announced its plans for a real-time payments initiative for the U.S. The Real-Time Payments (RTP) system, scheduled to go live in April of 2017, will support the sending and receiving of credit transfers, requests, remittance advices and non-transactional messages across the network in real-time in a 24x7x365 processing environment

In preparing for the initiative, connectivity may be the easy part. Even though the messaging will be based on ISO 20022 modeling methodology which, as a result of its own flexibility and extensibility, results in market-centric versions, the TCH RTP should present a comparatively straight forward mapping exercise. The ISO 20022 RTP market practice guidelines developed by the Real Time Payments Group (RTPG) set the foundation for global payments across markets. The real challenges may lay in integration with the back-office applications, core ledger platforms, Demand Deposit Account systems, other payment channels, and any necessary OFAC and sanctions processing solutions. For example, in order to check for funds availability, any system holding account balances must be able to be accessed in real-time. Further, can the system accept and apply transactions to the account in real-time? Granted, notional and shadow postings can be made with balance updates completed in batch mode but the timings of the transactions will still need to be addressed. Similarly, OFAC checking will need to be done in real-time in order to stay compliant. If the payment needs to be re-routed to another payment network, what are the connectivity and message transformation capabilities? Familiarity with ISO 20022 messaging is also a prerequisite in order to achieve global interoperability. While the TCH participated in the RTPG in establishing guidelines, there could be differences in payment processing rules and the TCH RTP schema itself.

These challenges go beyond integration and require solutions with rules-based engines, dynamic mapping and intelligent routing capacity. Especially in the case of global interoperability in which orchestration and message flows are based on market schemas. Given the timeframes and the pressures to offer customers new real-time payment products, legacy system providers may not be in a position to quickly develop the required adjustments to replace their batch processing applications. Short of implementing a new back-office system, one capable of supporting real-time inquiries and postings, the use of integration engines would be the quickest and least expensive option.

For each financial institution wanting to participate in the initiative, it will need to thoroughly review its internal technical infrastructure and back-office functionalities to ensure that it is in a position to participate in the initiative and take full advantage of the benefits of the platform.