US bank-backed ACH The Clearing House is to undertake a multi-year effort to build a new real-time processing platform, as the country finally begins to get to grips with its antiquated payment systems.
The Clearing House says the real-time payment system will be designed to address gaps in transaction processing and will enable consumers and businesses to securely send and receive immediate payments directly from their accounts at financial institutions. It is expected that the new system will route payments based on tokens that cannot be used to debit accounts, so senders and receivers will not need to provide complex, sensitive bank account details.
“The digital economy moves in real time and our customers expect us to keep pace,” says Richard Davis, chairman, president, and CEO of US Bank and chairman of The Clearing House. “We will work with the industry to build a real-time payment infrastructure, which will enable consumers to pay and get paid securely and conveniently.”
He says the shift will be a "comprehensive multi-year endeavor", requiring coordination among financial institutions of all sizes and their service and technology providers.
The decision demonstrates a sea-change in thinking among US financial institutions, which have been left behind as other countries have adapted their payments infrastructures to cater for the needs of digital consumers and businesses. Just two years ago, The Clearing House killed off a plan by Nacha to create a same-day ACH platform.
But with the pace of innovation showing no signs of slackening, the Federal Reserve has been pushing the industry to address the significant threats and opportunities that could arise from a move to update the payments rails to incorporate Faster Payments and improve security.
Jim Aramanda, president and CEO of The Clearing House applauds the Fed for its leading role in promoting the need for payment systems improvement and expressed a commitment to continue working with the public sector and others in the industry to create a "ubiquitous, national, real-time payment service".