World Bank Fast Payments Toolkit

Case Study: United States

RTP | 2017

Payment Instruments

Credit Transfer E-money

Use Cases/ Services

Merchant Bulk/Batch Bill

Payment Payment Payment

Request to Recurring
pay Payments
 Glossary of terms
S. No. Term Definition
1 GDP Gross Domestic Product at current price
2 Income Category Classification as per World Bank based on Gross National Income (GNI) per capita
3 CPMI Committee on Payments and Market Infrastructure
As per CPMI, fast payment System is defined as payments in which the transmission of the payment message and the
4 FPS availability of final funds to the payee occur in real time or near-real time and on as near to a 24-hour and 7-day (24/7) basis
as possible
5 Oversight Regulating or governing body supervising the payments system
6 Operator Institutions responsible for the operation of the payment system
Alternative to bank account numbers for increased convenience of the customer. For e.g., mobile number, national
7 Alias
identification number
8 Access Channels Modes used by customer to initiate transaction on FPS. For e.g., branch, internet, mobile
Individual Payment
9 Person to person (P2P) – Payment between individuals for non-business purposes
Type
Person to Business (P2B) – Payment from an individual to a business entity
Business Payment
10 Business to Person (B2P) – Payment from a business entity to an individual
Type
Business to Business (B2B) – Payment between two business entities
Government Person/Business to Government (P/B2G) – Payment from person/Business to a government institution
11
Payment Type Government to Person/Business (G2P/B) – Payment from government institution to a person or business entity
Credit transfers are payment instruments based on payment orders or possibly sequences of payment orders made for the
12 Credit transfers
purpose of placing funds at the disposal of the payee

Direct debits are payment instruments in which the transaction is pre-authorized, and funds are blocked in account for a debit
13 Direct Debits
to be initiated at a future date. In direct debits, payer’s account is debited on execution of mandate by merchant or payee

E-money is a prepaid value stored electronically, which represents a liability of the e-money issuer (a bank, an e-money
14 E-money institution or any other entity authorized or allowed to issue e-money in the local jurisdiction), and which is denominated in a
currency backed by an authority
World Bank Fast Payments Toolkit 2
Abbreviations
S.No. Term Expanded form

1 ABA American Bankers Association

2 CUNA Credit Union National Association

3 ICBA Independent Community Bankers of America

4 FDIC Federal Deposit Insurance Corporation

5 FFIEC Federal Financial Institutions Examination Council

6 FRB Board of Governors of the Federal Reserve System

7 NACHA National Automated Clearing House Association

8 NAFCU National Association of Federally-Insured Credit Unions

9 OCC Office of the Comptroller of the Currency

10 RTGS Real-time Gross Settlement

11 RTP Real time Payments

12 SIFMU Systemically Important Financial Market Utility

13 TCH The Clearing House

14 TLS Transport Layer Security

15 TPSP Third Party Service Provider

World Bank Fast Payments Toolkit 3

Select parameters

GDP Income Category Population

GDP – $21.42 trillion High 328.23 million

Access to mobile phone* Access to internet* Bank account*

94.86% 90.40% 93.12%

Branches per 100,000 Made or received digital Received government wages

adult payment in last 1 year* or transfer in account*

31.46 91.10% 64.98%

Source : World Bank – 2019, Income Category: World Bank – June 2019

Others – World Bank 2017

* For age >15 years

World Bank Fast Payments Toolkit 4
How to read this report

• This deep dive report relates to the RTP system in USA

• It has been developed based on primary interviews with key stakeholders such as regulators, operators and participants in the
system as well as by leveraging secondary sources
• Key secondary sources include TCH website and RTP playbooks
• The table below presents a legend to assist readers as they navigate through different sections of the report

Legend

The first slide of every section includes a chapter summary to provide readers with an overview of the section contents

The green box with the adjacent icon indicates section/sub-section summary across the report. Reader may choose to
read through this for a high-level overview on the selected topic

World Bank Fast Payments Toolkit 5

Table of Contents
Slide number
A. Executive Summary 8
B. Detailed Report
1 Overview
1.1. Background and Objectives | RTP 11
1.2. System Development | RTP 12
1.3. Key Milestones | RTP 13
1.4. Background and Objectives | FedNow 14
1.5. System Development | FedNow 15
2 Business and Operating Model
2.1. FPS Structure 17
2.2. Participants 18-20
2.3. Payment Instruments and Payment Types 21
2.4. Access Channels, Agent Network and Aliases 22
2.5. Scheme Pricing and Fee Structure 23
2.6. Use Cases / Services 24
3 User Adoption 25
4 Technical Details and Payment Process
4.1. Technical Details (Messaging Format, QR Codes, APIs and Customer Authentication) 27-28
4.2. Payment Process (Customer Registration, Transaction Fulfilment, Liquidity Management and Settlement) 29-32
5 Governance Framework
5.1. Legal and Regulatory Aspects 35-36
5.2. Risk Management 37-39
5.3. Dispute Resolution and Customer Complaints 40
6 Annexure
6.1. Key Features 42

World Bank Fast Payments Toolkit 6

A. Executive Summary
RTP | USA FPS

• RTP is a real-time electronic fund transfer system operating on 24*7 basis. It was
launched in November 2017
• The Clearing House (TCH) is the owner and operator of RTP. TCH Supervisory Board
and TCH Managing Board have appointed RTP Business Committee to oversee and
govern the system
• RTP’s development was primarily a market driven initiative. In 2014, TCH announced
Future Payments Initiative, this initiative paved the way for system development. RTP
enables consumers, businesses and government agencies to make real-time payments
in American Dollars
• TCH collaborated with Vocalink for the system development. The implementation of
the RTP network took approximately 30 months
Key features of RTP system are:

• Real time payments • Operates 24x7x365 • Real time gross settlement

• Separation of technical • ISO 20022 messaging • Fraud detection services

connection and settlement standard
mechanism

• Users can make RTP payments via traditional and alternate delivery channels
(Branch, ATM, internet or mobile banking platforms)
• Currently, the RTP system supports use cases/services like Bulk/Batch payments,
Bill Payments, Merchant Payments, Request to Pay and Recurring Payments
• TCH is currently collaborating with participating institutions to promote the usage of
bill payments. US Faster Payments Council has a working group that is looking at the
possibility of enabling QR payments using real time payments, including the RTP
network

Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 8

B. Detailed Report
1. Overview

Chapter sections: Chapter Summary:

1.1. Background & Objectives • Future Payments Initiative was announced in 2014 by The Clearing House that paved
the way for development of RTP system
1.2. System Development
• The guiding principles of RTP system include Ubiquity, Adaptability, Extensibility and
1.3. Key Timelines Global Compatibility

• RTP system was a market driven initiative as TCH worked closely with industry associations
to develop a system that would fulfil payment needs in an increasingly digital economy

• TCH partnered with Vocalink for system development. It took approximately 12 months
to assess business requirements and 18 months to develop RTP system and on-board
initial six participants

• RTP system core infrastructure is based on Vocalinks’s Instant Payment Service and
resembles the basic architecture used in the FPS in Singapore and Thailand

• Access model for RTP system has been customized to meet the requirements of the USA
market. It separates technical connection and settlement mechanism and allows
several approaches to participants for connecting with the system

Source: TCH | Primary Interviews

World Bank Fast Payments Toolkit 10
1.1. Background and Objectives | RTP

RTP system is the first new core payments infrastructure in the USA in the last 40 years. It was launched by The Clearing House (TCH) in
November 2017. RTP is a real time, 24*7 payment and messaging system that allows immediate fund transfers through accounts at financial
institutions. The Clearing House, payments consortium of 25 banks and various technology companies, is the owner and operator of the RTP
• The Clearing House system.
launched the RTP
RTP system was built for financial institutions of all sizes and serves as a platform for innovation allowing financial institutions to deliver new
network in
products and services to their customers. Financial Institutions can integrate into the RTP network directly, through Third-Party Service
November 2017 to Providers, Bankers’ Banks and Corporate Credit Unions.
bring real-time
payments to the RTP system was a market driven initiative as TCH worked closely with industry associations to develop a
USA system that would fulfil payment needs in an increasingly digital economy

• RTP system was a In 2014, The Clearing House launched its Future Payments Initiative based on the recommendations from its supervisory board, which
market driven consists of several industry leaders from financial institutions. The aim of this initiative was to develop a strategic view of RTP based on an
initiative as TCH extensive study of payment needs in an increasingly digital economy. Through this review, TCH assessed several aspects surrounding RTP:
worked closely with • TCH worked closely with industry associations including the Federal Reserve, NACHA, ABA, ICBA, NAFCU, CUNA and TCH banks to
industry association identify consumer and business cases with the greatest need for RTP that represent the best incremental value for customers
to identify consumer
• The Future Payments initiative considered the experience and lessons learnt from other countries who had already established
and business cases their own real-time payments system
with need for the
• TCH also reviewed ways in which a potential RTP system for the U.S. could maintain and improve the safety and soundness of existing
real time payments
payment systems
• The guiding TCH has developed a safe, sustainable, standards-based RTP system that is inclusive of all the financial institutions (FIs) in the USA. RTP
principles of RTP system includes extensible messaging and robust security and allows FIs to develop creative and innovative products for their customers.
system include The guiding principles followed by TCH for development of the system include the following:
Ubiquity,
Adaptability, Ubiquity – Accessible to FIs of all sizes and charter
Adaptability – Able to adapt as expectations and risk
types in order to reach the vast majority of U.S. account
Extensibility and environment inevitably change over time
holders
Global
Compatibility Global Compatibility – Use of international global
Extensibility – Rich, flexible messaging functionality to
standards to facilitate future interoperability & to ease
support innovative value-added products
the implementation burden for multinational FIs
Source: TCH | Primary Interviews
World Bank Fast Payments Toolkit 11
1.2. System Development | RTP

Based on the findings from Future Payments Initiative, TCH announced a multiyear initiative to build a ubiquitous RTP system for the
USA. Faster payments Task Force was formed to identify and assess approaches for implementing safe, ubiquitous, faster payments
capabilities in the USA. TCH had submitted the design of the RTP system for an independent evaluation. RTP's proposed design met all
the 36 assessment criteria identified by the task force.

• TCH announced the Infrastructure Setup – Key decisions

development of the • RTP system resembles the basic architecture used in the FPS in Singapore and Thailand. However, it has undergone extensive
RTP system based modifications to meet the local market requirements in particular settlement mechanism, access model and non-payment messages
on findings from its (request to pay, request to confirmation, etc.)
Future Payments • Access model separates technical connection and settlement mechanism. This model was adopted keeping in mind the complexity of USA
Initiative market. It allows all the financial institutions to connect with the using several approaches

• Vocalink was on- • Network connectivity is via MPLS or Secure VPN. In addition to the security provided by the MPLS or Secure VPN connection, MQ
boarded for Transport Layer Security (TLS) is utilized and each message is digitally signed to ensure authenticity in accordance with ISO 20022
development of RTP • Real time gross settlement (RTGS) mechanism was chosen for final settlement for ensuring the settlement finality
system after a
vendor selection
process
Development Process Implementation Timelines
• Technical costs involved in the
• System development • The Clearing House partnered with Vocalink for the development system development were not high
Development
timelines were of RTP system though cost of deployment for
Cost participant was significant ranging up
approximately 30 • An RFP was issued for vendor selection for which TCH received
months as RTP was to $2 billion
response from 3 service providers. After the selection process laid out
launched in by TCH, Vocalink was on-boarded for system development in
November 2017 December 2015 • 12 months defining the requirement
of the system in collaboration with
• As development of the RTP system was a market driven initiative, the
Development market participants
system development cost has been paid by the financial institutions
owning The Clearing House Timelines • 12 months for system development
and 6 months for testing and on
boarding initial six participants

Source: TCH | Primary Interviews

World Bank Fast Payments Toolkit 12
1.3. Key Milestones | RTP
With its launch in 2017, RTP is a relatively new system. There is a scope of several milestones as the system progresses ahead in its lifecycle journey

2014 2015 2016 2017 2018 2019

RTP was
Vocalink launched in FirstBank
was on November joins the RTP
boarded for 2017 network
the system
development

TCH launched
its Future Wells Fargo
Payments declares it will
Initiative offer RTP to
corporate
customers

TCH forms an
RTP Advisory
Committee to
gather additional
input
Note: Above list is not exhaustive

Source: TCH | News Articles

World Bank Fast Payments Toolkit 13
1.4. Background and Objectives | FedNow

Federal Reserve announced on August 5th, 2019, that it will build and operate a real-time payments system called FedNow. Key drivers
for development of the FedNow are prevailing market conditions as well as future market outlook. Federal Reserve also worked on policy
considerations in case of its involvement in real time payments. Policy considerations by Federal Reserve are as follows:
• System should recover cost in the long run
• Service has to provide clear public benefit
• Service should be one that other providers alone cannot be expected to provide with reasonable effectiveness, scope, and equity
• Federal Reserve
worked on policy While there weren’t RTP specific gaps which prompted development of FedNow, the Federal Reserve Board’s assessment determined that in
considerations for case there would only be a single fast payments solution in the USA, it would face significant challenges, including achieving nationwide
reach.
its involvement in
real time payments.
Federal Reserve FedNow
Board’s assessment
determined that a
Objectives
single FPS solution
in the USA would
Accessibility: Federal Reserve looked at accessibility to real time payments in case it operates the fast payments settlement service.
face significant
There are 10k+ financial institutions in the USA, which are quite diverse in terms of geography, size and type of customers served.
challenges, including FedNow would be accessible by all these financial institutions and hence would provide nationwide reach
achieving nationwide
reach.
Safety: Having an additional fast payments settlement service in addition to RTP would ensure resiliency in case one service faces any
crisis situations. Also, as the Federal Reserve is the Central Bank, it would be able to provide liquidity and continuity in case of any
• The key drivers for crisis or natural disasters
development of
FedNow were Efficiency: With FedNow as the core infrastructure, other financial institutions would be able to build modern and innovative service on
Accessibility, top of this infrastructure. Having another fast payments settlement service would also provide a healthy competition just like other
Safety and payment services operating in the USA. This would also ensure reduced pricing and enhanced service quality.
Efficiency
FedNow service is intended to be a platform which would enable FIs to develop innovative use cases / services. This service is primarily
meant to facilitate real time interbank settlement. FedNow would also enable certain use cases / services based on input received from the
industry participants. For example: Request to Pay service to enable convenient online bill payments, etc. Over time, participants and their
partners would develop the uses cases/services desired by the end users. Federal Reserve will work with participants to supplement those
service.
Source: Primary Interviews
World Bank Fast Payments Toolkit 14
1.5. System Development | FedNow

Infrastructure Setup Development Process

• The Federal Reserve carried out public benefit analysis and put out a • FedNow would be a completely new system. Settlement mechanism
public notice for comments on features and functionality that this would be based on credit and debit of master accounts held by FIs
service should have. Based on the feedback from this public notice, with the Federal Reserve. FedNow is currently scheduled to be
the Federal Reserve will develop functionality of the FedNow system launched in 2023 or 2024.
• Going forward, the Federal Reserve has also constituted the FedNow • The Federal Rerserve has requested information and currently in
community consisting of stakeholders from private sector to provide process of examining the proposals sent by the vendors. Meanwhile,
insights and inputs for the development of FedNow Federal Reserve has completed drafting of ISO message flows,
specifications for industry feedback, established FedNow community
and drafted business requirements for the system

Implementation Timelines Interoperability

• FedNow is expected to go live by 2023 or 2024 • The Federal Reserve is open to exploring the message exchange
model in the future but that is the one that would require
• Before the launch of the system, pilot testing will be conducted with
participation by TCH. The initial launch of the FedNow service will be
FIs. The detailed timelines will be put in place by Federal Reseve
intended to facilitate routing interoperability
• The Federal Reserve is committed to working towards compatible
standards and operating procedures with the existing private-sector
service, which will enable interoperability through the model of
payment routing, and has initiated discussions on this subject with
the existing private-sector service toward that end

Source: Primary Interviews

World Bank Fast Payments Toolkit 15
2. Business and Operating Model

Chapter sections: Chapter Summary:

2.1. FPS Structure • TCH is the owner and operator of RTP system. RTP Business Committee has been
2.2. Participants appointed for overseeing the system activities
2.3. Payment Instruments and Payment Types • RTP allows every federally insured depository institution in the USA to become a
participant in the system. These institutions can connect with the system directly or
2.4. Aliases, Access Channels & Agent Networks through a third-party service provider (TPSP)
2.5 Scheme Pricing and Fee Structure • RTP enables consumers, businesses and government agencies in the USA to make
2.6 Use Cases/Services payments in American Dollars between accounts, e-wallets of the participating financial
institutions
• RTP doesn’t support aliases for completion of payments on its core infrastructure, though
third-party PSPs can enable aliases through their application for the end users
• RTP supports form-factor neutrality and allows transactions across both traditional and
alternate delivery channels
• Agent networks (assisted mode of transfer) are not supported in RTP network
• RTP system follows same pricing structure for all participants with no volume discounts,
no volume commitments and no monthly minimums to ensure that financial institutions of
all sizes participate on the same terms
• RTP Participants are free to decide on charges levied to end users
• RTP supports multiple use cases/services like Request to Pay, Merchant Payments,
Bill Payments, Bulk/Batch Payments and Standing Orders

Source: TCH | Primary Interviews

World Bank Fast Payments Toolkit 16
2.1. FPS Structure
ii Overlay Services
Additional
3rd-party
services

iii Real Time Rail Utility

• The Clearing House
(TCH) is the owner Payment Exchange
& Notification
operator and
overseer of RTP Bank Payment Payment Bank
Settlement Settlement
system. Channels Gateways Request Notification Gateway Channels Receiving
& Notification Customer
• TCH is owned by the i

consortium of Sending
v
Customer
commercial banks RTR Participants RTR Participants
and technology
companies in the
USA and is Interbank Clearing and Settlement Services
iv
responsible for (Real-time settlement)
overseeing the day-
to-day operations
and maintenance of Regulators The Clearing House (TCH)
the system
• Board of Governors of the Federal Reserve System (FRB), • TCH is owned by consortium of commercial banks and
Office of the Comptroller of the Currency (OCC) and the technology companies in the USA
Federal Deposit Insurance Corporation (FDIC) jointly • It is responsible for overseeing the day-to-day operations
regulate TCH and services provided by it. and maintenance of the system
• These institutions are not responsible for direct supervision
of RTP system. RTP Business committee is responsible to
govern the RTP system
Source: TCH | Primary Interviews
World Bank Fast Payments Toolkit 17
2.2. Participants (1/3)

RTP

• RTP allows every

federally insured
depository Direct
institutions in the Financial Third Party Service Corporate Credit
Connection Bankers Banks
USA to connect with Institutions Providers (TPSPs) Unions
the system. These
institutions can
either directly
connect with the Indirect
Connection Financial Community
system or through Credit Unions
Institutions Banks
TPSPs

• Prospective
Participants need to
Participants can connect as either funding participants or non-funding participants. Non-funding participants have to appoint funding
comply with the providers or funding manager to fulfil their settlement obligations.
business and
operating rules
and undergo
Requirements for Participants Membership Statistics
technical
assessment to
• To become a direct participant in RTP system, financial institutions have to meet the • As of November 2020, there are 63
connect with the
following requirements: participant banks and credit unions in
system the RTP system
• Comply with the business and operating rules set by the TCH
• Undergo technical assessment • Other service providers:
• 19 Third Party Service Providers (TPSPs)
• Financial institutions connecting indirectly through TPSPs also have to undergo • 4 funding agents
certification process for connecting with the system
Source: TCH | Primary Interviews
World Bank Fast Payments Toolkit 18
2.2. Participants (2/3)

Regulatory Considerations Onboarding Process

Only a depository institution is eligible to become a Participant in the RTP System. These For participation in RTP, interested
institutions should have ability to connect with the system either directly or through a TPSP that depository institution must communicate
has been approved by TCH, in accordance with RTP Operating Rules and the RTP Technical intention to TCH
• There are four Specifications.
participant Certification testing to verify the
Bankers’ Banks and Corporate Credit Unions may provide connections to the RTP network as well
categories defined as liquidity management services for financial institutions that may not want to connect directly technical requirements for handling
as per RTP both payment and non-payment
to the RTP system.
participation rules – message
There are four participant categories defined as per RTP participation rules:
Funding participant, TPSPs must also certify all the FIs
Non-Funding • Funding participant: Funding participant becomes a party to the RTP Prefunded Balance connecting through it or the core
Participant, Account Agreement with the Prefunded Balance Account Bank Agreement and requests and banking solution (in case of large
Receiving participant receives disbursements from the Prefunded Balance Account to its Federal Reserve account. TPSP)
In case it is a sending participant, it is required to fulfil prefunding obligations. Funding
and Sending
participant is required to Documentation (participants
Participant
must enter into a participation
• Maintain a reserve or clearing account with a Federal Reserve Bank
agreement with TCH
• Both financial • Be accepted as a funding participant by TCH and the prefunded balance account bank
institutions and Interoperability
TPSPs undergo • Non-funding participant: Non funding participant has to designate a Funding Agent to act
on its behalf to prefund in accordance with these RTP Participation Rules and the RTP • Transfers between banks and non-
certification testing
Operating Rules banks participants are allowed
to verify the
requirements for • Receiving participant: Participant that holds the Receiver’s Account and that receives a
handling both Payment Message Connectivity
payment and non- • Sending participant: Participant that holds the Sender’s Account and initiates a Payment • Due to the high number of Financial
payment message Message Institutions in the USA, ease of
connectivity is critical for all FIs. Using
A participant must be (i) either a funding participant or a non-funding participant, and (ii)
TPSP’s technical connection, small FIs
a receiving participant. A participant also may be a sending participant
that are able to connect with the
system through TPSPs. This
connectivity option was an added
incentive for smaller FIs to join.
Source: TCH | Primary Interviews
World Bank Fast Payments Toolkit 19
2.2. Participants (3/3)

Regulatory Considerations

RTP Prefunded Balance Account Agreement is an agreement that TCH, funding participants and funding agents enter into with the
Prefunded Balance Account Bank. The joint prefunded balance account is used for the purpose of supporting the operations of the RTP
System. According to this agreement:
• TCH, funding • All the funds deposited in prefunded balance account are payable exclusively in accordance with the instructions of TCH, which acts as
participants and agent on behalf of all funding participants and funding agents
funding agents enter
• Prefunded Balance Account is only used in support of RTP activities. Participants and funding providers can maintain excess liquidity for
into an agreement only in case of reasonably anticipated liquidity needs for their or their non-funding participants’ RTP Payments
with the Prefunded
Balance Account • Funding agent become a party to the Prefunded Balance Account Agreement. It is either a Funding Manager (provides prefunded
requirement, supplemental funding and requests disbursements for its non-funding participant); or a Funding Provider (depository
Bank
institutions that have their own current prefunded position and provides funding for non-funding participants through it)
• This joint
prefunded balance
account is used for Use of Third-Party Service Providers
the purpose of
Participants can designate a third-party service provider to act on its behalf as agent to send and receive transmissions of Payment
supporting the
Messages, Payment Message Responses, and Non-payment Messages, using the TPSP’s technical connection.
operations of the
RTP System Requirements for Third-Party Service Providers are:
• It must be designated by one or more Participants to act as a Third-Party Service Provider in accordance with procedures established by
• RTP Operating Rules TCH
also establish
• It must satisfy the applicable provisions of the RTP Information Security Standards and Requirements and the RTP Technical
requirements for
Specifications, as certified by the Participant in accordance with procedures established by TCH
Third-Party Service
Providers

Source: TCH | Primary Interviews

World Bank Fast Payments Toolkit 20
2.3. Payment Instruments and Payment Types
Payment Instruments Supported

Credit Transfer ✓ Interoperability

• RTP allows credit • RTP supports credit transfer and e-wallets as payment instruments. TCH supports Venmo (which is a
transfer and e- Direct Debit wallet) to use RTP for instant money transfer to a consumer’s account
wallets as payment
instruments. Direct • Account to account interoperability is supported in RTP through credit transfer. The design principle
Debits are not of RTP network is based on ‘Credit Push’ meaning that the customer authorizes the debit each time
supported for RTP E-money ✓
payments

• RTP enables
consumers,
businesses and
Payment Types and Transaction Limit Transaction Currency
government
agencies in the
USA to make
payments in Payment Business Government
Individual
American Dollar Types
between accounts of
the participating American
depository ✓ ✓ ✓
institutions Dollar
(USD)
• Credit transfer limit Credit transfer limit on the RTP network is currently $100,000
on the RTP network
is currently Transaction
$100,000 • Sending Participants are allowed to establish a lower transaction limit for
Limit
their senders. Receiving Participants are not allowed to establish a lower
transaction limit for their receivers

Source: TCH | Primary Interviews

World Bank Fast Payments Toolkit 21
2.4. Aliases, Access Channels and Agent Networks
RTP doesn’t have its own aliasing service though third-party application can enable use of aliases for RTP payments. RTP allows transactions though both
traditional and alternate delivery channels. It does not support payments through agent networks

Aliases Access channels and Agent Networks

• RTP system inherently doesn’t support use of aliases or proxies for

payments. Though the network allows third parties to enable alias or proxy
Branch ATM Mobile
payments
Banking/Apps
• PayPal & Venmo currently use the RTP network for transfers to their clients
bank or credit union accounts using aliases. TCH has entered into partnerships
with payment service providers Zelle to provide settlement services. Currently,
Internet
integration of RTP and Zelle is under progress. Zelle allows use of mobile
Banking
number or email address as aliases

• There are no plans to launch RTP’s own social alias/proxy service because • RTP supports form-factor neutrality and allows transactions
the market is already well served and existing alias/proxy services might across both traditional and alternate delivery channels
transition to RTP payments to clear and settle transactions
• RTP network is core payment system and doesn’t deploy any
end user applications. It can support payments through
• The RTP network will support tokenization of account numbers which could
proximity-based channels. Though currently there are no end
be a way to allow payment originators and payment service providers to replace
user applications supporting payments through QR and NFC
account numbers with tokens that cannot be used to debit accounts, nullifying
the threat of data breach • Agent networks (assisted mode of transfer) are not supported in
RTP system

Source: Primary Interviews World Bank Fast Payments Toolkit 22

 2.5. Scheme Pricing and Fee Structure
RTP system follows same pricing structure for all participants with no volume discounts, no volume commitments and no monthly minimums to ensure that
financial institutions of all sizes participate on the same terms

2
3 1

User / Sending The Clearing Receiving

Payee participant House participant

1 Network fees 2 Fees owed to other participants

The system participants are not required to pay joining fees while onboarding the Request for Payment Incentive Fee: Upon each successful RTP Credit Transfer
system. Participants pay only for the transactions they originate. sent in response to a Request for Payment message, the participant that initiated
the Request for Payment owes the incentive fee to the participant initiating the
RTP credit Transfer.
Request for Prefunded Balance TCH facilitates the collection and disbursement of Request for Payment Incentive
Credit Remittance
Payment Account Drawdown Fees between participants. TCH is not obligated to distribute incentive Fees that
Transfer Sent Advice Sent
Sent Request Executed TCH is unable to collect from the owing participant.

3 Fee charged to users/payee

Each RTP Participant is free to decide the transaction charges levied to end
users

Network-at-Cost Pass-through
Overall cost of connectivity associated with either the MPLS or secure VPN connections to the RTP network is calculated by The Clearing House and charged as pass through on
a monthly basis. Connectivity costs applies to any participant with a direct connection. In case of third-party service provider, connectivity fee is shared by financial
institutions connecting through it

Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 23

2.6. Use Cases/Services
RTP is a core payment system which has been designed to accommodate multiple use cases/services. TCH is focused on facilitating an able infrastructure
using which FIs can develop innovating use cases/services for end consumers

Request for Payment Merchant Payments

Payment Instruments Payment Instruments
Credit transfer • Merchant Payments are supported as a use case Credit transfer, E-money
• RTP system supports ‘Request for Payment’, which
require a payer to authorize a payment in in RTP system Access Channels
Access Channels
response to the request • Similar to Bill Payments, Request for Payment
• In the payment message, the payer is provided acts as a complementary service to drive the Mobile
with the necessary pre-populated information adoption of Merchant Payments Pricing Scheme
Mobile Internet
for the RTP payment • No special charge
Pricing Scheme
• This functionality provides payees with an
effective method to initiate a potential • No special charge Bulk/Batch Payments
transaction, while also combatting fraud and
Payment Instruments
allowing the payer to maintain control over the • Bulk/Batch payments (e.g., payroll, etc.) are Credit transfer
payment flow supported in RTP system though it is processed in Access Channels
form of individual credit transfer payments
• Participating financial institutions disaggregate the
bulk payments order and submit them in form of Internet
Bill Payments
series of individual RTP payments Pricing Scheme
Payment Instruments • No special charge
Credit transfer, E-money
• Bill payments are supported as a use case in RTP Recurring Payments
system
Access Channels
Payment Instruments
• Request for Payment acts as a complementary
• Recurring Payments or Standing Orders are Credit transfer
service to drive the adoption of Bill Payments
Mobile Internet supported in RTP Access Channels
• TCH is collaborating with participant financial Pricing Scheme
institutions to further drive traction for this use • Users may have the option to set up a recurring
case • No special charge transaction with their respective FIs. Though user Mobile Internet
have to authorize the payment at every instance Pricing Scheme
• No special charge
Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 24
3. User Adoption

RTP Network Coverage by US Deposit Share

As of now, RTP network reaches over 56% of U.S. transaction accounts, and is on path to reach nearly all U.S. accounts by end of 2020. Zelle is the
preferred network for individual payments as it allows use of aliases. Currently, Zelle uses legacy ACH-next day settlement model. With the integration of Zelle
with RTP for the settlement service, P2P payments initiated through Zelle will also be processed using RTP network.

Source: TCH website

Note: Adoption statistics are confidential and not published by TCH World Bank Fast Payments Toolkit 25
4. Technical Details and Payment Process

Chapter sections: Chapter Summary:

4.1. Technical Details | Messaging Format and QR
Codes • RTP system is based on ISO 20022 standard as it allows global interoperability, rich
remittance data, uniform and reusable messages and paves way for system as a strategic
4.1. Technical Details | APIs and Customer platform for innovation
Authentication
• As a core payment infrastructure, RTP can support QR payments. Currently, no financial
4.2. Payment Process (Customer Registration, institutions and payment service providers are using RTP system for QR payments
Transaction Fulfilment, Liquidity Management and
Settlement) • APIs have not been enabled by TCH for RTP system. Participants are providing APIs to end
customers for transaction instructions as well as value added services

• TCH has mandated use of multi factor authentication for all RTP payments. These
standards comply with the strong customer authentication standards

• RTP does not require one-time customer registration. Any account at a participating FI can
receive RTP credit transfers without registration. The payment process includes payer-
payee transaction fulfilment and inter-participant settlement

• RTP uses real time gross settlement mechanism for final settlement between the
participants as it allows instant settlement finality

Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 26

4.1. Technical Details | Messaging Format and QR Code
RTP has adopted ISO 20022 messaging standard for allowing rich flow of information. Currently RTP is not being used for QR payments though a working
group of the US Faster Payments Council is looking at possibility of enabling QR payments using real time payments

Messaging Format QR Code

Not supported, though system has technical capability

ISO 20022
to support QR payments

• ISO 20022 was chosen as messaging standard as it enables rich and • RTP has been developed as a core payment system. It is not involved in
consistent follow of information. FIs can embrace this information to build development of end user application. Financial institutions and third-
new and innovative products by embedding extensive information not party payment service providers are responsible for developing the
available in current payment messages into RTP payment messages applications for the end users
• The quantity and quality of data carried in ISO 20022 messages can be • Technically RTP can support payments through QR codes, though currently
extended to include remittance notes and additional supplementary are currently no third-party application which is using the RTP network
information which reduces the need for custom development in specific for QR payments
geographic markets or industries to deliver to specific client needs
• The US Faster Payments Council has a working group, which is looking at
• Further, the use of the ISO 20022 standard enables multinational FIs and the possibility of enabling QR payments using real time payments, including
corporates to utilize one message standard across all payment related the RTP network
activities
• While RTP is a domestic payment system, use of ISO 20022 positions the
system to support cross-border commerce and interoperability with
other schemes as real time payments evolve in the global marketplace

Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 27

4.1. Technical Details | APIs and Customer Authentication
TCH doesn’t issue any APIs for the RTP system to the participants, though participants enables APIs for their end customers. TCH has mandated use of multi
factor authentication for RTP payments

APIs Customer Authentication

APIs provided by participants Multi factor authentication

• APIs are not enabled by TCH for the RTP system as participants connect • According to the RTP Operating Rules, participants are mandated to establish
using ISO 20022 messages with the system multifactor authentication (something you know and something you have
or something you are) to authenticate the identity of customers
• Establishing connection through ISO 20022 messages has been purposeful
due to rich nature of information provided by these standards and helps FIs • The TCH RTP system is open and flexible and supports various authentication
in developing products for end customers. While API based connection would methods depending on customer segment or channel used to initiate the
have limited this information flow transaction
• Many financial institutions offer APIs to their end customers for transaction • Participants are also obligated implement a layered security program that
instructions as well as other value-added services such as checking includes fraud detection and monitoring as well as other effective controls
transaction status, fetching transaction details, etc.

Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 28

4.2. Payment Process
RTP does not require one-time customer registration. Any account at a participating FI can receive RTP credit transfers without registration. The steps in the
payment process include payer-payee transaction fulfilment and inter-participant settlement

1 3

Customer Inter-Participant
Registration (PSP) Settlement
One-time Real time settlement
• Customer registration • Approach for settlement
• Creation of alias (if and liquidity management
applicable)
Transaction
Fulfilment
Transaction Basis

• Transaction Flow
• Connectivity between
participants

World Bank Fast Payments Toolkit 29

4.2. Payment Process | Customer Registration
Participating financial institutions are required to establish customer onboarding process in RTP system. Typical process for customer registration has been
described below

• RTP system is the core payment infrastructure to facilitate real-time payments. It is not involved in development of end user applications. TCH does not
prescribe any onboarding process. Only onboarding requirements relate to senders of Requests for Payments. Customers can make RTP
payments through existing channels like internet banking and mobile banking.

RTP does not require a customer onboarding process however participant FIs can
establish onboarding procedure for a specific service. Onboarding process for one of
the participant FIs has been described below:

Step 1: Customer downloads the mobile banking application

Step 2: Customer requests for new registration through the application

Step 3: Customer registers using the Social Security Number (or Tax ID), an existing ATM,
credit or debit card number, and associated PIN

Step 4: Bank verifies the details and send a confirmation message to the customer

To make a real-time payment, customers log on to mobile banking application or internet

banking with biometrics or through digital or physical security device

Source: HSBC Bank World Bank Fast Payments Toolkit 30

 4.2. Payment Process | Transaction Fulfilment | Illustrative for Request for Payment

Typical transaction fulfilment process which is followed for Request for Payment with Credit Transfer has been described below. Intra-bank transfer are
not supported in RTP system

Payer Payer FI Payee

Payee FI
Time Notification of
Request for Payment
1 sec Request for Payment 1
3 2
4 Payment Request
Request for Payment Request for Payment Message
0 sec Initiation
5

Authentication Payment initiated

(channel specific)
1 sec Payer Authorization
Credit transfer Credit transfer
Payer’s FI Approval
(pacs.008) (pacs.008)

6 7
2 sec Clearing

8
3 sec Receipt and Settlement
Accept/Reject
Confirmation (pacs.002) Confirmation
(email, text, etc.) (email, text, etc.)
5 sec Reconciliation
9 9
10 Accept/Reject Accept/Reject 10

(pacs.002) (pacs.002)

The payment request message is delivered in real time by the RTP core infrastructure; however, the payer determines when to initiate a credit transfer in
response to the request for payment.

Source: RTP Playbooks World Bank Fast Payments Toolkit 31

4.2. Payment Process | Liquidity Management and Settlement
Final settlement in RTP is done through Real-time Gross Settlement (RTGS) mechanism. This mechanism was used with a prefunding model to enable the
immediate finality of payments without settlement risks

Settlement Mechanism

Approach RTGS Type | Time Real time Not applicable

• Settlement in RTP system is done through Real-time Gross Settlement mechanism through a fully prefunded account, jointly owned by all the financial institutions
in the Federal Reserve. The use of a prefunded model to achieve real time settlement eliminates the settlement risk and enables immediate finality of all payments
• In 2017, Federal Reserve published regulations for creation of Joint Federal Reserve account that can be owned by multiple FIs. This joint account allows financial
institution to pool their funds and facilitate innovative payment services. RTP system uses similar joint prefunded balance account for fulfilling settlement obligations
of the participants
• The RTP system clears and settles payments on a good funds model. The RTP system verifies and reserves settlement capacity by the sending participant before
forwarding the payment to the receiving participant, eliminating the risk of settlement failure. In case the sending participant has an insufficient prefunded position
to cover a payment, the core infrastructure will reject the payment. Overdrafts or negative prefunded positions are also not permitted in the RTP system
• TCH has established a prefunded requirement for each sending participant, which must be funded and maintained by the financial institution to send payments.
Financial institutions that do not fund for themselves must have an arrangement in place with another financial institutions for fulfilling funding obligations
• RTP system continuously records net position and current prefunded position. In case of successful transfer, system records entries by decreasing net position
and current prefunded position of sending participants or funding provider, and increases net position and current prefunded position of receiving participants or its
funding provider
• Participants provide funding through Fedwire payments to the joint account. Prior to the close of Fedwire, financial institutions must ensure that there is sufficient
prefunding in place to fund the net amount of transactions until Fedwire reopens on the next business day
• If a Payment Message is cancelled, no changes are made to the Net Position or Current Prefunded Position of the Receiving Participant or the Current
Prefunded Position of the Funding Provider
• Settlement with respect to a Payment Message is complete when the RTP System has recorded both the decrease in the Sending Participant's Net Position and the
increase in the Receiving Participant’s Net Position in the joint federal reserve account

Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 32

5. Governance Framework

Chapter sections: Chapter Summary:

5.1. Legal and Regulatory Aspects
• The legal framework supporting RTP activities is comprised of comprised of RTP
5.2. Risk Management Operating Rules and RTP Participating Rules along with existing payments laws
5.3. Dispute Resolution and Customer Complaints wherever applicable

• TCH is regulated and is regularly examined by supervisory staff from the Board of
Governors of the Federal Reserve System (FRB), Office of the Comptroller of the Currency
(OCC) and the Federal Deposit Insurance Corporation (FDIC). The Federal Reserve entity
that regulates the RTP Network directly is the Federal Reserve Bank of New York, under a
regulatory framework established by the Federal Reserve Board

• TCH has established the RTP Business Committee to govern the RTP network. It is
responsible for providing input and guidance on the strategic execution of the RTP network

• RTP Operating Rules have established multiple layer of risk mitigation for the system.
Apart from this, TCH also applies a risk management framework for ensuring security,
reliability and resiliency of the system

• Settlement risk is eliminated in RTP system by using fully pre-funded real-time settlement

• No centralized guidelines has been issued by TCH for inter-bank dispute scenarios and
customer complaints resolution. US Federal regulations (Regulation E) and State laws
(UCC 4a) govern both interbank and customer disputes. Though RTP System provides a
mechanism to participants to send and respond to requests for the return of funds

Source: TCH | Primary Interviews World Bank Fast Payments Toolkit 33

5.1. Legal, Regulatory and Governance Aspects (1/2)
TCH has established RTP Participation and Operating Rules to constitute the legal framework of the system. Existing laws has been also incorporated to
complete the legal basis of the system

• RTP Participation and Operating Rules act as the legal framework for the system. These RTP Operating Rules have been drafted
Institutional and to define the rights and responsibilities of participants and TCH with respect to RTP
Governance Framework • The participation rules will address topics including, among others, general eligibility requirements; the process for connecting to
the RTP system through a third-party service provider; and requirements in the event of a change of name, form of organization, or
Legal Framework control of a participant

RTP Participation and • The operating rules will address topics including, among others:
Operating Rules along • General participant eligibility requirements and operating responsibilities
with existing relevant • Eligible payments
laws • The protection of confidential information and customer information security
• Payment notification and messaging
• Funds availability
Regulator • Errors and unauthorized transfers
• Funding and settlement
FRB, OCC and FDIC
• Risk management
• Enforcement of RTP rules
• Choice of Law
Overseer and Operator • EFTA (Electronic Fund Transfer Act) Consumer Payments (For an RTP Payment any part of which is subject to the
EFTA): the rights and obligations of a Participant and end user is governed by:
The Clearing House • the EFTA and Regulation E, to the extent applicable to the transaction
• to the extent consistent with EFTA and Regulation E as applicable to an RTP Payment, by RTP Operating Rules, and
the laws of the State of New York, excluding Article 4-A of the New York Uniform Commercial Code
• Commercial and Non-EFTA Consumer Payments (For an RTP Payment in which no part of the transaction is subject to
the EFTA): Sending Participant, Receiving Participant and other parties involved in an RTP transaction are governed by RTP
Operating Rules and by the laws of the State of New York, including Article 4-A of the New York Uniform Commercial Code

Source: RTP Operating Rules | RTP Playbooks World Bank Fast Payments Toolkit 34
5.1. Legal, Regulatory and Governance Aspects (2/3)
Federal Reserve is not actively engaged in the oversight of the RTP system. Although Federal Reserve has supervisory authority over its operator TCH
because of its operation of CHIPS that has been designated under the USA Law

Institutional and • Due to the important nature of the Clearing House’s role in the USA financial system, it is regulated and is regularly examined by
Governance Framework supervisory staff from the Board of Governors of the Federal Reserve System (FRB), Office of the Comptroller of the
Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)
Legal Framework
• The Federal Reserve entity that regulates the RTP Network directly is the Federal Reserve Bank of New York, under a regulatory
RTP Participation and framework established by the Federal Reserve Board
Operating Rules along
with existing relevant • Under the Bank Service Company Act, the Clearing House, and all of the payments systems it operates including the RTP
laws network, are subject to regulation and examination to the same extent, as if the services being provided were being performed by a
depository institution that is subject to FRB, OCC or FDIC supervision itself.

• Through an arrangement among the federal financial regulatory agencies through the Federal Financial Institutions
Examination Council, the FRB acts as the lead examiner of TCH for examinations conducted under the Bank Service Company
Regulator
Act
FRB, OCC and FDIC
• The Clearing House has also been designated by the Financial Stability Oversight Council as a Systemically Important Financial
Market Utility (SIFMU) under Title VIII of the Dodd-Frank Act and is subject to a regulatory and supervisory regime

• While TCH’s regulation and supervision under Title VIII relate specifically to its role as the operator of CHIPS, TCH operates as a
Overseer and Operator single entity in the operation of its payments systems and, therefore, many of the requirements of Title VIII may affect its broader
operations such as RTP system
The Clearing House
• Federal Reserve is not actively engaged in the oversight of the RTP system. Federal Reserve and other federal agencies regulate
TCH payment systems, including the RTP network, as a Technology Service Provider. Also, there is a separate examination process
for the regulation of the CHIPS (high value payment network) as a SIFMU

• TCH has constituted RTP business committee in order to perform overseeing activities for RTP system

Source: RTP Operating Rules | RTP Playbooks World Bank Fast Payments Toolkit 35
5.1. Legal, Regulatory and Governance Aspects (3/3)
TCH has established RTP Business Committee to govern the RTP network. comprised of representatives from TCH owner banks and representatives from
non-member financial institutions

Institutional and
Governance Framework
• The principal governance arrangements for the RTP system has been set forth in the limited liability company agreement.
Legal Framework Management of TCH is under the direction of two boards of directors: the Supervisory Board and the Managing Board

RTP Participation and • According to the LLC Agreement, Supervisory Board has overall responsibility for the business of TCH, while the Managing Board,
Operating Rules along which reports to the Supervisory Board, is responsible for oversight of TCH’s business and financial performance and for setting
with existing relevant TCH’s strategic agenda
laws
• TCH has established the RTP Business Committee to govern the RTP network. It is responsible for providing input and guidance
on the strategic execution of the RTP network

• The Business Committee is also responsible for ensuring prudent risk management practices, promoting the design, operation,
Regulator and management of the system, and establishing or amending the rules for the RTP network
FRB, OCC and FDIC
• The RTP Business Committee is comprised of representatives from TCH owner banks and representatives from non-member
financial institutions. The participation of non-member financial institutions ensures that non-member financial institutions have
an active voice in the governance of the RTP network

Owner and Operator • In addition, the RTP system is also managed and supported by executives, officers, and employees of TCH, including product,
operations, technology, customer relations, risk-management, audit, and legal staff
The Clearing House

Source: RTP Operating Rules | RTP Playbooks World Bank Fast Payments Toolkit 36
5.2. Risk Management
TCH applies a risk management framework for operation of the RTP system for ensuring security, reliability and resiliency of the system. RTP Operating
Rules have also established multiple layers of risk mitigation

High The RTP network has multiple layers of risk mitigation. Some key ones have been mentioned below:

Participating FIs that… • All participants are required to meet information security requirements including multi-factor authentication of
originators and data center security standards
• The RTP network is configured for multi-site, multi-node, high availability operation. The multi-site operation is
… support 3rd party services active/active for continuous operation
• All data transmissions are encrypted and require digital signatures at sign-on. All messages are encrypted and
digitally signed
• Administrative access by participants, processors and operators are subject to privilege-based access controls
Potential Risk

Risk Controls

… support request for payments secured by individual tokens

• RTP operating rules also require that sending participants employ multi-factor authentication and processes to
detect and prevent unauthorized payment initiation. The RTP network does not support debit transactions, only
credit transfers. All payments must be authorized by the sender to their financial institution

… both send and receive payments • All message exchanges are based on an assured delivery model. The receiving participant must send a confirming
message, or the transaction is cancelled. The network sends final confirming messages to both the sending and
receiving participant. The message flows are designed to ensure a “fail safe” outcome in all operational failure
scenarios.
• Participants are required to report all incidents of fraud to RTP network administration for tracking and analysis
… are receiving participants
• Based in incidents reported by participants or analysis of network activity, Network administration can request an
that a participant investigated suspicious activity on any of its accounts
Low • RTP network administration also monitors the operational performance of participants and processors, and will
require remediation of any situation that may adversely affect network performance or the operations of other
participants

TCH also applies a risk management framework for operation of the RTP system. This framework exists outside of the RTP Operating Rules, and includes significant
resources devoted to system reliability and resiliency, security (e.g., physical, operational, network security), incident response, overall risk management, and
comprehensive business continuity plans

Source: RTP Playbooks | Primary interviews World Bank Fast Payments Toolkit 37
5.2. Risk Management
Settlement risk is eliminated in RTP system by using fully pre-funded real-time settlement. TCH has established several guidelines for participants for
maintaining their pre-determined pre-funded positions. TCH has also issued guidelines for mitigating fraud risks

• TCH has a sole discretion to determine the prefunding requirement for:

• Sending participant that is a funding participant in the system
• Sending participant that is a non-funding participant but has a current prefunded position (participants with a funding obligation)
• Each Funding Provider
• During Fedwire operating hours, participant with funding obligations and funding providers are required to monitor their current prefunded position
and provide supplemental funding to the Prefunded Balance Account if current prefunded position falls below their prefunded requirements
Credit and • Supplemental funding for maintaining current prefunded position based on prefunded requirement should occur:
Liquidity • No later than the next opening of Fedwire, if the current Prefunded Position falls below the Prefunded Requirement during hours when Fedwire
Risks Funds is closed
• Before the next close of Fedwire, if the Current Prefunded Position falls below the Prefunded Requirement during hours when Fedwire is open
• During Non-Fedwire hours, supplemental funding is provided in advance of the close of Fedwire to ensure that the funding provider or participant’s
current prefunded position is sufficient to cover its anticipated payment origination activity when Fedwire is closed
• Funding providers and participants with funding obligations can also have arrangements with each other to transfer liquidity through RTP Payments
in case their current prefunded position becomes low during Non-Fedwire hours. Such liquidity transfers must be reported to TCH within ten banking
days using procedures specified by TCH

• TCH has established a tiered approach to fraud prevention and mitigation as not all financial institutions participate in real-time payments at the same
level
• All participating financial institutions are required to:
• Comply with Federal Financial Institutions Examination Council (FFIEC) guidelines as applied through prudential regulator examination
Fraud • Report fraudulent behavior to The Clearing House and/or sending financial institutions
Risks
• React to alerts from centralized activity monitoring utility
• Apart from these, there are additional compliance requirements for FIs that support request for payments and permit third party payments
• In addition to the centralized fraud monitoring, TCH has ability to limit the RTP activities of participating FIs that violate system rules and risk
management requirements

Source: RTP Operating Rules | RTP Playbooks World Bank Fast Payments Toolkit 38
5.2.1. Cyber Resilience and Data Management
As per the RTP Operating Rules and RTP Customer Information Security Standards and Requirements, TCH has established guiding principles for
ensuring the cyber resilience and data privacy. It has also obligated participants to follow certain guidelines for safeguarding the sensitive information

• TCH monitors its system and its procedures for security breaches, violations, and suspicious activity, including suspicious external activity
(unauthorized probes, scans, or break-in attempts) and suspicious internal activity (unauthorized system administrator access, unauthorized changes to
its system or network, system or network misuse, or theft or mishandling of customer information)
• Industry-standard information channels are monitored by TCH for newly identified system vulnerabilities regarding the technologies and services
(including application software, databases, servers, firewalls, routers and switches, hubs, etc.) and fix or patch any identified security problem as soon
as commercially reasonable, based on TCH’s determination of the severity level of the security problem
• TCH maintains and implements appropriate plans to assure its continued operation. These plans shall include the following: recovery strategy,
Cyber documented recovery plans covering all areas of operations necessary to delivering services as required by the RTP Operating Rules, vital records
Resilience protection, and testing plans
• The plans shall provide for backup of critical data files, customer information, application software, documentation, forms and supplies. The recovery
strategy shall provide for recovery after both short- and long-term disruptions in facilities, environmental support, and data processing equipment
• TCH shall continue to provide service to a participant if the participant activates its contingency plan or moves to an interim site to conduct its business,
including during tests of the Participant’s contingency operations plans
• TCH’s contingency plans for disruptions in facilities, environmental support, and data processing equipment provides the ability to bring any impacted
operations that are necessary to delivering services as required by the RTP Operating Rules up to full capacity at its back-up site within 60 minutes of
a declared disaster

• RTP Operating Rules include provisions regarding the treatment of confidential information by TCH and participating FIs including encryption
requirements for the storage and transmission of RTP message data
• Participating FIs holding customers’ accounts are subject to existing consumer privacy laws regarding the proper use of consumer data and
Data restrictions on disclosure of such information to third parties. Participating FIs are subject to the Gramm-Leach-Bliley Act, which governs the
Manange- treatment of nonpublic personal information about consumers by financial institutions and requires financial institutions to safeguard the security and
ment confidentiality of customer information
• Additionally, the PSP compliance criteria require PSPs that access the RTP system through banks to develop and implement administrative, technical,
and physical safeguards to protect the security, confidentiality, and integrity of customer information, as well as to ensure the proper disposal of
customer information

Source: RTP Operating Rules | RTP Playbooks World Bank Fast Payments Toolkit 39
5.3. Dispute Resolution and Customer Complaints
No centralized guidelines has been issued by TCH for inter-bank dispute scenarios and customer complaints resolution. Though RTP System provides a
mechanism to participants to send and respond to requests for the return of funds

Inter-bank Dispute Resolution Customer complaints

• RTP Operating Rules incorporate existing laws (i.e., EFTA, Regulation E • There are no centralized guidelines for resolution of customer complaints
and UCC 4A) that sets forth a well-established framework regarding banks’
liability for unauthorized transactions from their customers’ accounts, as well • Though RTP Operating Rules obligates the sending financial institutions to
as specific requirements regarding the resolution of errors from consumer put in place policies and procedures for handling customer claims for
accounts unauthorized transfers and funds sent in error

• This structure simplifies the account-holding financial institution’s dispute • Disputes and exception scenarios are addressed by additional messages
investigation processes and minimize the need for a detailed set of such as request for information and request for return of funds.
interbank dispute resolution rule Currently, number of disputes and exception scenarios are low in RTP

• RTP System provides a mechanism to participants to send and respond to • Receiving FIs must have policies and procedures to respond to requests to
requests for the return of funds for any reason, including unauthorized or reclaim funds sent in error
erroneous RTP Payments

• TCH shall not be a party to any dispute between Participants regarding

liability for erroneous or unauthorized RTP Payments. Such determination is
left to the participants, including through any available dispute resolution
and/or judicial process

• TCH shall only be liable for RTP Payments if such RTP Payments are
unauthorized and the RTP Payments were caused by dishonest or
fraudulent acts of TCH or its representatives

Source: TCH | RTP Operating Rules World Bank Fast Payments Toolkit 40
6. Annexure

Chapter sections:
6.1. Key Features

World Bank Fast Payments Toolkit 41

6.1. Key Features
Features

Key Highlights Payment Types & Use Cases/Services

Operating hours • 24*7 including weekends and bank holidays

Payment Speed • Real time Individual Business Government

Transaction limit • $100,000

Merchant Bulk / Batch
Payments Payment
Alias • No aliases supported by the core infrastructure

Channel • Branch, ATM, Internet banking and Mobile banking

Cross-border
payments Request to Pay
• At participants’ discretion to charge customers for
User Charges
RTP payments

Infrastructure Setup • New system

Recurring
payments Bill payments
Messaging format • ISO 20022

Use of Open APIs • Open APIs not available Settlement

Approach Distributed
Hub RTGS
Authentication clearing
• Multifactor authentication
Type | Time Real time Not applicable

Source: The ClearingHouse | ACI Report | FIS Report

World Bank Fast Payments Toolkit 42