US banks speed up with first new payment system in 40 years

NEW YORK: An organisation of 25 US banks this week started the first new payment clearance and settlement system for the United States in more than 40 years, offering the prospect that businesses and individuals will be able to better track their funds minute-by-minute and use fewer paper cheques.

The inaugural transaction came late at 4:59:40pm (20:59:40 GMT) on Monday in a test when Bank of New York Mellon and US Bancorp and moved a nominal US$3.50 (RM14.65) between different accounts owned by a single client at the two institutions, according to BNY Mellon.

The little bit of money moved over RTP, the name for a new “Real-Time Payments” system set up by The Clearing House, a 164-year-old, bank-owned institution.

The system showed that the funds moved between accounts in three seconds, compared with the hours, or days, it takes now to clear over the commonly used ACH system or by cheque, officials from The Clearing House said.

The first transaction also delivered descriptions to test that the RTP system will carry invoice-like detailed requests for payments, which are irrevocable. Such additional information and certainty should allow businesses, from big insurance companies to small cleaning services, to reconcile their accounts more quickly and inexpensively.

The system is the US banking industry’s most significant step towards meeting the demands of impatient business customers who want to see banks move more quickly to use digital tools to deliver better services. It is intended to make ordinary tasks such as issuing invoices, paying hourly employees, and settling insurance claims faster and easier to track. – Reuters