RT1, CLEARING’s pan-European instant payment system, went live on the launch date of the Instant Credit Transfer ( Inst) Scheme on 21 November 2017 with participants from eight countries. It passed the 1-million-transaction mark in mid-April 2018. We interviewed Hays Littlejohn, the CEO of CLEARING, to learn more about the RT1 real-time experience so far.
Q. In November 2017, CLEARING launched RT1, an infrastructure solution for the processing of instant credit transfers at a pan-European level. Could you explain how CLEARING supports payment service providers () in implementing and operating their Instant Credit Transfer ( Inst) services?
Our RT1 system provides Inst-compliant infrastructure services at a pan-European level. The platform is open for participation to all adhering to the Scheme.
The RT1 access and participation model offers a wide range of options and support models to users wishing to access the platform, including explicit roles for the providers they may choose to involve for connectivity or liquidity services. The model is designed to facilitate access and reach, without introducing additional risks – and most if not all of the adhering to the scheme and live with Inst payments today are addressable in RT1.
Q. Could you share some quantitative data regarding RT1’s activity to date (number of participants, processing volumes and their growth, average processing time)?
RT1 went live on the Inst launch date with 17 participants and over 500 addressable payment service providers in eight countries. By July this year, these figures will have doubled with around 1,000 addressable in 12 countries. There are volumes in all countries and RT1 currently processes around 12,000 payments a day. The system passed the 1-million-transaction mark in mid-April. Transaction volumes are lower on weekends and in the wee hours of the night, but we do see some level of activity at any hour on any day of the week, even at this early stage.
The performance is very promising: nearly all transactions are processed between in less than 3 seconds. This is counting from the moment the originating creates the transaction until the moment it receives the confirmation that the beneficiary accepts the transaction and the payment has settled. It also includes routes where transactions are passing multiple hubs, for example from a in Latvia through its local processor via RT1 to a beneficiary in Spain via its local processor.
Q. How do you see the growth of Inst over the next 3 years and its evolution in the future?
We expect reach to extend quickly over the coming 12 months and we are doing our best to support this build-up at a pan-European level, for instance by offering ‘Instructing Party’ access to TIPS via RT1 from the TIPS launch date on.
On the other hand, it is difficult to make any predictions about Inst volume growth over the next three years, since we currently see a wide range of roll-out approaches across Europe. Some participants are migrating specific channels to Inst for each counterparty they can already reach. Others have created premium services for faster processing. Some are also looking into dedicated B2B solutions, as they are faced with a growing interest from their corporate customer base.
Aside from bank- or community-specific strategies and products, the development of value-added services or even new instruments, like the Request to Pay option that is currently under discussion, may have a major impact on the ramp-up of Inst volumes too. At the moment, volumes are small compared to the millions of daily transactions in , but the future is promising.
Q. What are the main lessons drawn by CLEARING after some 6 months of processing Inst transactions?
It has been of vital importance for early adopters to be able to learn how to adapt their systems and processes while volumes, and indeed customer expectations, are still low. Regular involvement of the ’ technical providers in the test and training process was also helpful.
We entertain a frequent dialogue with our participants, which helps flesh out a more thorough understanding of what it means to operate in real time and make timely adjustments. Thanks to this regular exchange, we have also identified and addressed a number of variations in local practices, such as reason code usage. Where relevant, we feed these findings into the industry bodies or groups that can help to remedy them industry wide, such as the or the Inst Migration Action Round Table (SMART2).
Q. Finally, as one of the pioneers of Inst, what is the single most important advice you would give to who are planning to join the scheme?
Don’t miss the train! The first instant payment was the most expensive one. But the opportunities to leverage on earlier investments in seem to be many and there is a clear early mover advantage, given the learning curve and the fundamental change of mindset that real-time processing and reporting constitutes for both and their customers.
* The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
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