Utilities and Faster Payments New Options to Transform the ......SA/NV, operating in Ireland through...

Utilities and Faster

Payments – New Options to

Transform the Industry

Utility Payment Conference

Ryan McHugh

Vice President, Immediate Payments Product

Management

September 16, 2019

BNY Mellon Treasury Services

2 Information Classification: Public2 Information Classification: Public

Real-Time Payments

• History and Launch

• Attributes

• Industry Update

• Request for Payment

Tokenized Payments

Q&A

Agenda


RTP®: History and Launch

4 Information Classification: Public

Since the ACH network began in the early 1970s, there have been many

advances in technology while core payment systems have been slow to

catch up. Until now!

The First New U.S. Payment System Since ACH

1600 2017

1950

Credit

Cards

1792

U.S.

Dollar

1930

Lockbox

2017

RTP®

&

Zelle®

2004

Check 21

Electronic

Check

Conversion

1974

ACH

1966

Debit

Card

1916

Fed

Electronic

Transfer

1911

Checks/ABA

1698

Steam

Engine

1911

Electric

Auto

Starter

1914

Panama

Canal

1950

Polaroid

Camera

1969

Moon

Landing

1981

Space

Shuttle

1983

Internet

1990

Hubble

Telescope

1997

Wi-Fi

1999

GPS

Enabled

Consumer

Products

2004

Google’s IPO,

Facebook

Launches

2005

YouTube

2006

Nintendo

Wii®

2007

Apple

iPhone®

2008

Tesla

Roadster

Ad

van

ces i

n T

ech

no

log

yA

dv

an

ces i

n P

aym

en

ts

2015

Apple

Watch®


First New Core Payments System in the U.S. in More Than 40 Years

• Launched on November 13, 2017.

• Represents the first new payment rail for the U.S. since the ACH network was introduced in 1974.

• Designed and built through the collaborative effort of TCH’s 25 owner banks and meets the objectives of

the Federal Reserve Faster Payments Task Force.

• Open to all U.S. depository institutions, with a goal of reaching ubiquity by 2020.

• Allows businesses to send and receive funds in real time directly from their bank accounts without

creating accounts on other services, 24/7/365.

The Clearing House (TCH) Launches RTP Network


RTP: Attributes


TCH’s RTP

*Expectation is to increase transaction limit to at least $100K in 2020, subject to change.

RTP provides businesses and consumers the ability to send and receive

funds immediately 24/7/365 directly from their bank account

Features

• Credit push only ($25K limit currently*)

• Irrevocable and final

• USD domestic U.S. payments

• Real-time messaging

• Immediate notification and funds availability

• 24/7/365 with precision execution (date, time)

• Directory services (e.g., Zelle)

• ISO 20022 formatting

Real-Time Payments in the U.S.

Request for Payment:

“You owe $XX.xx”

Credit Transfer

Remittance Advice

Acknowledgement:

“Payment Received”

Request for Information:

“Incorrect Amount”

Response

Request for Return of Funds:

“Duplicate Payment”

Response

Messaging


Real-Time Payments Use Cases

Business to Business

Urgent Payments

Conditional Payments

Payments After Hours

Contingency Option

Business to Consumer

Refunds & Rebates

Insurance Claims

Emergency Payroll

Investment Distributions

Disaster Relief

Loan Distributions

Consumer to Business

Late/Due Bill Pay

Premium Payments

Ecommerce/ POS

Investment Acct Funding

Utility Payments

General Services

Person to Person

Friends & Family

Informal Services

Account to Account Transfers

To/From Government

Tax Payments

Government Distributions


• Send and receive all RTP message types

• Utilization of full ISO message functionality

• Online origination and reporting via NEXEN, TreasuryEdge® and EnternetBank® applications

• Secure API services for origination, status updates, transaction inquiries and value-added services

• ISO 20022, ANSI X12 and proprietary formats

• SWIFT messaging and formats, inbound and outbound conversion

• Automated rerouting to nonparticipant banks

• 24/7/365 send and receive capabilities

• Private label solutions for banks and payment service providers

– Proprietary RTP Operations Dashboard

– Liquidity Monitoring and Funding Agent Services

– Custom Fraud Monitoring and Management

– API connectivity to multiple internal systems

Real-Time Payments Benefits


RTP: Industry Update


Goal: Reach Ubiquity in the U.S. by 2020

Source: The Clearing House Payments Company

Real-Time Payments Path to Ubiquity

Projection based on target dates provided by TCH Banks, discussions

with potential Direct FIs and estimated Channel ramp-up capacity

RTP Projected Reach

Percent of DDA Deposits Eligible to Receive RTP

TCH Banks

Other Direct

Channel andNetwork

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4


Domestic RTP sets the stage for Global RTP Clearing

Real-Time Payments: A Global Trend

LivePlanning/

Development

Global Standards

such as ISO 20022

formatting provide the

foundation for

domestic real-time

payment networks to

interoperate.

This will enable select

countries to achieve a

global real-time

payments experience.


RTP: Request for Payment


Capabilities Support Request for Information Messages and

Acknowledgements, Enhancing B2B Commerce

The new capabilities enhance RTP messaging capabilities by:

• Supporting complex digital commerce services with integrated messaging that allows issuing and paying

of e-invoices and e-bills with rich remittance data.

• Simplifies reconcilement by integrating A/P, A/R and invoicing into one solution.

• Requests payment from the receiver of the RFP message.

Request for Payment (RFP) Messaging Capabilities on the

TCH RTP Network

The Clearing House

RTP Network

RFP Initiated and Presented to Receiver

Real-Time Payment Sent to Requestor upon Approval

AUG 21, 2019

Bill for July 2019

SEPT 22, 2019

Bank


Revolutionizes Collections: Messaging and Collection in a Single Channel

• RTP Request for Payment – A real-time message requesting payment from the receiver of the message.

– Does not transfer value

– Requires the receiver of the message to approve the request for their financial institution to return an

RTP credit transfer in response

– Allows for 140 characters of information and you may input a desired due date for the message

– Example: “Please pay your bill that has a current balance of $124.25 by 12/01.” The receiver of this

message will get an “approve or reject” decision from their bank.

• Remittance Advice (Optional) – An optional message type sent along with an RTP RFP to provide

additional details regarding the request (e.g., invoice information, etc.).

• Response to Request for Payment – The receiver of an RFP may accept or reject.

– Acceptance will result in an RTP Credit Transfer receipt using the same Instruction ID as the original

request.

– Rejection will provide standard or custom reasons. The receiver is not obligated to reply or approve an

RFP.

Real-Time Payments: Request for Payment Message


Tokenized Payments


• The Zelle Network, is owned by Early Warning Services, LLC.

• Early Warning Services, LLC is, in turn, owned by a group of U.S.

financial institutions.

• Zelle acts as a real-time messaging platform between U.S. financial

institutions and does not itself settle transactions.

• The transactions that settle as part of this service are processed through

the ACH network (ACH credit) or the debit card networks through Visa®

or Mastercard®.

What is Zelle and How Does it Work?


Provide quick notification and fast payments to consumer and small

business accounts at almost any U.S. financial institution.

* Transactions typically occur in minutes when the recipient’s email address or U.S. mobile number is already enrolled with Zelle.

Originate B2C and B2SB payments:

• Without needing consumer or small business banking information

• To almost any consumer or small business who has an account with a U.S. financial institution

• With quick notification and consumers are typically credited within minutes*

Tokenized Payments Overview

Payment initiation (email or a

U.S. mobile phone number)

Validates

registration One-time

registration

Funding

typically

received

within

minutes* for

consumers

already

enrolled

with Zelle.

Payment

confirmation

Tokenized Payments


Modernize Disbursements to Consumers and Small Businesses

Insurance

Claim Payments

Workers’ Compensation

Annuities

Disability

Human Resource

Disbursements

Healthcare

Refunds

Rebates

Wellness Incentives

Test Study Participants

Corporate

Rebates

Account Refunds

Human Resource

Disbursements

Broker Dealer

Distribution Payments

Client Requested

Funds

Asset Managers

Redemption Payments to

Investors

Tokenized Payments Use Cases


Utilize the Zelle Network for Disbursements via API, File and Online

Key attributes

• Pay almost any U.S. consumer or small business using their email address or mobile phone number

• Zelle has reach to over 94 million users via the mobile apps and online banking of participating banks

• Payment will settle electronically via either ACH or through the debit card networks

• API, file and online UI-based origination services

• Daily reports providing visibility and transparency of payment status

• Email/text messaging services to facilitate sign-up of unregistered users

• Optional automatic default to check issuance for receivers who do not register

Client Benefits

• Migrates your disbursements to electronic payments without collecting or storing consumer or small

business banking information

• Modernizes the payments process via tokenized payment solutions

• Reduces costs, improves disbursement processing, automates reconcilement and matching

• Deters fraud associated with checks

• Eliminates escheatment process and costs

• Enhances customer satisfaction

Key Attributes and Client Benefits


For More Information, please contact:

Ryan McHugh

Vice President, Immediate Payments Product Management

BNY Mellon Treasury Services

[email protected]

412 234 9100

Q & A


BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may be used as a generic term to reference the corporation as a whole and/or its various subsidiaries

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organized pursuant to the laws of the State of New York, and operating in England through its branch at One Canada Square, London E14 5AL UK, registered in England and Wales with

numbers FC005522 and BR000818. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the US Federal Reserve and

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Disclosure


The information contained in this material is intended for use by wholesale/professional clients or the equivalent only and is not intended for use by retail clients. If distributed in the UK, this

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liquidity funds are offered by BNY Mellon Capital Markets, LLC.

The terms of any products or services provided by BNY Mellon to a client, including without limitation any administrative, valuation, trade execution or other services shall be solely

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BNY Mellon (including its broker-dealer affiliates) may have long or short positions in any currency, derivative or instrument discussed herein. BNY Mellon has included data in this material

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All references to dollars are in US dollars unless specified otherwise. Prior results do not guarantee a similar outcome. The financial products (other than deposit products) mentioned are

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©2019 The Bank of New York Mellon Corporation. All rights reserved.

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