BNY, Computershare make largest real-time payment in U.S. | PaymentsSource

A day after The Clearing House raised the transaction size limit on its real-time payments network from $1 million to $10 million, The Bank of New York Mellon Corporation completed a $10 million transfer for global transfer agent Computershare to Bank of America .

It was the first RTP transaction over $1 million. TCH in December said it would boost the limit for each real-time payment from $1 million to $10 million in an effort to attract large transactions such as transfers involving business accounts. TCH and FedNow are attempting to expand their instant settlement network, which has lagged in countries such as India and Brazil, where central banks mandate real-time processing.

The increase to $10 million for a single payment, will make the RTP system more attractive for businesses to use as it is much more cost effective than using a wire transfer, said Debbie Buckland, a director at Gartner.

“Announcing this large dollar, intercompany transaction is a great way to market a use case to other businesses,” Buckland said. “The fact that it is an intercompany transaction limits the risk and highlights a good way for companies to use the RTP network safely to move funds before they start using it to send money outside of their company.”

BNY was an early adopter of real-time payments, and it has added several newer options such as Request for Payment, which combines invoice delivery to the RTP network to enable payments tied to a bill, or scheduled for a specific time to avoid overdrafts. As part of its real-time payment strategy, BNY connects billers and banks like Verizon and Citigroup. The bank says 70% of its brokerage clients use RfP to fund their accounts.

TCH has gradually increased the volume limit for instant settlement, usually resulting in the introduction of new payment types. The use of RTP for brokerage transfers, for example, jumped after the limit was raised from $100,000 to $1 million in 2022. FedNow’s limit is $500,000. FedNow, which launched in 2023, and RTP, are still not interoperable.

“Since RTP launched in 2017, we have seen a lot of consumer-oriented uses, such as account-to-account payments, business-to-consumer transactions. The jump to $10 million opens up a lot more payments, such as vendor payment or intracompany transactions,” said Carl Slabicki, co-head of global payments at BNY Mellon. “It’s a good evolution for the network.” The $10 million limit makes it easier to execute transfers for real estate payments and supply chain finance. Transactions of up to $10 million can be sent instantly at all times, enabling real estate closings after business hours or on weekends. The $10 million limit is not mandatory.

“This limit increase will help organizations manage their liquidity,” said James Colassano, senior vice president of product development and strategy at The Clearing House, adding TCH’s network has about 285,000 businesses creating a large addressable market for real-time payments.

In many cases there are businesses that are processing more than 50 payments at one time, but most of those payments are above the prior $1 million limit, making the use of instant settlement difficult, Colassano said.Real estate payments are also getting larger, with home prices rising by double digits in the past year in 90% of the country’s metropolitan areas, according to the National Association of Realtors.

“There are use cases where the higher dollar limit is necessary,” Colassano said. Real-time payments are expanding in the U.S., but still make up a small percentage of overall U.S. payments. Counting RTP, FedNow and other real-time options, U.S. transactions are on pace to reach 11.4 billion by 2026, according to Statista. 11.4 billion billion would still be less than 4% of expected U.S. payment transactions projected for 2026.

The RTP network has processed more than $500 billion in the past eight years, passing the $1 billion daily plateau in 2024. In the third quarter of 2024, volume was more than 87 million transactions and $69 billion, both records. Thirty-three percent of American banks and credit unions offer FedNow, and 38% offer The Clearing House’s RTP network, according to research from Arizent, American Banker’s publisher.

“Raising the RTP limit is an important step, and will allow more use cases for sure,” said Gareth Lodge, a senior analyst at Celent. One of the many benefits of real-time payments is the sender can program when the payment gets made, he said.

“So imagine an invoice that gives a prompt payment discount if you pay within 30 days. You can diarize the payment to pay on day 29, to get the discount, but also get 29 days of interest on the payment,” Lodge said. “It is also a good alternative to a wire payment for example, with longer opening hours.”