MUFG Union Bank has announced it will be offering business customers real-time payments on The Clearing House (TCH) RTP network – a real-time payments platform that all federally insured US depository institutions are eligible to use for payments innovation.
The bank confirmed that receipt of real-time payments will be available for its corporate, retail, and small business clients via the network. Real-time payments enable MUFG Union Bank clients to improve cash flow, manage working capital, and streamline processes.
Ranjana Clark, Head of Global Transaction Banking and Transaction Banking Americas, and Bay Area President said in a press release: “Real-time payments offer our clients the payment processing speed to meet their business needs in a rapidly changing digital commerce environment. MUFG Union Bank is committed to supporting the movement toward real-time payments in the United States to enhance the client experience.”
The US real-time payments agenda has gone through substantial change recently.
FedNow – the proposed payment system by The Federal Reserve – was announced six months ago. It was said to demonstrate an important effort by the Fed to bring US payments services closer to those of other major economies. The Fed aims to have FedNow running by 2023 or 2024.
Ken Montgomery, Program Executive at FedNow, is bullish. “Real-time gross settlement of faster payment transactions aligns the speed of settlement to the speed of the underlying payment. Funds will be available immediately through digital instant payment services built on the FedNow Service infrastructure. This can have a thousand uses in everyday commerce, especially where payment immediacy and irrevocability is important,” he said in an internal interview.
“The cleaning lady who is paid by a homeowner on the 30th of the month can use the money for her mortgage payment that same day. A business can improve its cash flow by immediately using a customer’s payment to quickly replenish stock or get discounts for paying its own bills earlier.”
According to The Motley Fool, banks could experience a drop in overdraft fee revenue, as companies’ funds would be available to use sooner. Big banks could be potential losers. Most obviously, giving the same payment capabilities to all banks regardless of size helps level the playing field. And the roughly $1bn the big banks spent to develop Automated clearing house (ACH) service could end up being wasted money.