How BNY Mellon is leading the evolution of real-time payments in the US

Last month BNY Mellon and Volante Technologies announced that they had been collaborating to enable BNY Mellon to become the first bank to successfully originate a real-time payment over the Clearing House’s (TCH) new Real-Time Payments (RTP) network.

Journalist Alex Hammond spoke with Vijay Oddiraju, CEO of Volante Technologies, and Carl Slabicki, the BNY Mellon director who manages the company’s Immediate Payments Product Line, to find out more about how the launch will boost the evolution of payments in the US.

Please outline the nature of this collaboration. How does it work in practice?

Vijay Oddiraju: Volante’s decade old relationship with BNY Mellon was taken to the next level when leadership at the bank trusted us once again on the strengths of our technology and our philosophy of working with clients in a collaborative way. This collaboration in the payments space, required an innovative and agile solution and we believe that VolPay hub played an integral role in helping deliver BNY Mellon’s RTP capabilities and extending our long term strategic relationship.

Carl Slabicki: BNY Mellon’s strategy was to position ourselves and our clients as early adopters of Real-Time Payments and Zelle’s business-to-consumer disbursements. So we decided to work with Volante to leverage their VolPay hub and development resources to embark on a co-development effort and work together jointly as a collaborative team.

Was launching the technology a difficult project to get off the ground?

Vijay Oddiraju: It was challenging in the sense that it was launching something new, which required the combination of fresh thinking and technology to enable RTP and its integration with BNY Mellon’s internal banking systems. Volante had already created RTP solutions for use in other parts of the world, but in this case it was about adapting these innovations for the U.S. payments market and integration into existing banking and payments processing within BNY Mellon.

How easy was working with The Clearing House on a new project?

Carl Slabicki: New payment innovations are typically more successful if banks work collaboratively with each other, with industry organisations like The Clearing House, and with technology partners. Everyone in the industry is very eager to collaborate because working with partners on new projects is essential for new technology to build up critical mass and progress quickly to widespread adoption.

Vijay Oddiraju: It was a positive and collaborative experience, carried out in a similar style to when we worked with BNY Mellon’s business analysis and development teams. The Clearing House were keen to announce their ability to act as intermediaries in the processing of RTP and as TCH’s role is to ensure clearing capability for payments in the U.S., they were very enthusiastic in being able to offer RTP capability.  In 2017, Volante made a joint collaboration announcement with TCH to develop and bring to market their RTP capability.

This is the first RTP announcement of its kind in the US. Will we see other banks follow similar lines?

Carl Slabicki: Right now the focus among large banks who want to be early adopters is speed to market, so collaboration can help them accelerate development. Over time, as more banks come online and support RTP, they may be even less likely to want to reinvent the wheel. In fact, small to mid-sized banks may do so by necessity. They are likely to seek out technical service providers, gateway providers, or other banks to get themselves on the RTP network more quickly with lower cost.

Will Volante be involved in those projects?

Vijay Oddiraju: We certainly hope so as we have developed the technology enabling accelerated implementations of RTP, either as a solution that can be integrated with existing payment processing systems or as a complete standalone solution for RTP.

Is this a genuinely historic moment for US payments?

Carl Slabicki: We are seeing the first substantive innovations to the payments ecosystem in over four decades, but it’s just the beginning of accelerated and increasingly global change. The new capabilities of these networks change the way payments and information exchange between businesses, their partners and their clients. The genie is out of the bottle.

How radical is this first step into the RTP space? Is there further to travel?

Carl Slabicki: We’re seeing substantial change from a lot of the legacy-type payment networks. For banks such as BNY Mellon, they involve 24/7 365 processing, instant immediate payment settlement, and real-time reporting to our customers. It really changes the whole dynamic of how clients and banks interact when we’re talking about around-the-clock availability and speed of payment.

Beyond speed, RTP enables a new degree of interactivity during transactions between a business and their consumers and business partners by utilizing the robust ISO 20022 message set for items such as Request for Payment and Request for Information.

Vijay Oddiraju: The first step into the RTP space is radical in the sense that both consumer and corporate bank customers are used to waiting a few, if not several, days for a payment to be processed and their processes have been traditionally geared towards this.  RTP now enables business to be conducted more smoothly and efficiently and from a bank’s perspective, RTP opens the door for further innovation in terms of offering new products to their direct and indirect customers.

On the Volante side, we believe it is now about continuing our collaborative work with BNY Mellon, tweaking and refining the processes as volumes pick-up and nuances emerge that will need further enhancements from both a procedural and technical viewpoint. As traction increases in the U.S. RTP market, this will allow Volante to engage in a broader sense in enabling widespread RTP in the U.S. payments market.

What are BNY Mellon Tokenized Payments? Why new service does this offer customers?

Carl Slabicki: BNY Mellon “Tokenized Payments® now available with Zelle”® is designed to let businesses make payments electronically to almost any consumer with a bank account in the U.S., typically within minutes if the recipient is already enrolled with Zelle. The Tokenized Payments service eliminates the need for our clients to store or process a payees’ bank account information, and provides a fast, secure, convenient and digital consumer experience. It also eliminates the cost and hassle associated with physical checks and traditional payment options, which take longer and cost more to process.

Related reading