The Clearing House’s Real Time Payments network and The Federal Reserve’s FedNow network are prepared to tackle interoperability eventually — but for now, its value remains minimal. 

The Real Time Payments (RTP) network has completed 750 million transactions since its launch in 2017, although network growth didn’t start to tick up until 2021, Jim Colassano, senior vice president of product development at The Clearing House (TCH), told Bank Automation News.  

With FedNow less than a year old, the value of interoperability between the payments rails, including reach of institutions, is not strong enough to begin tech lifts, Colassano said.

The Federal Reserve does not share data on transaction volume at this time, a Federal Reserve spokesperson told BAN.

Most banks are operating on both the FedNow and RTP networks, Colassano said, noting that FedNow is still growing. 

“Similar to what we did for the first five years of our existence, we needed to build out the reach of the network and really focus on the core operations of the network,” he said. 

The rails

RTP and FedNow operate on the ISO 20022 standard for payments, Rusiru Gunasena, senior vice president of RTP product management at TCH, told BAN.  

RTP shared the technical specifications of its network with FedNow from the start in order to “keep their design aligned with ours,” Colassano said.  

“We envisioned that at some point the networks would have to work with each other, so we’ve tried to keep the message specifications as closely linked as possible,” he said. 

In fact, when RTP makes enhancements, it shares that information with FedNow, he said.  

“We are being very, very conscious that at some point, the two networks are going to have to harmonize,” he said. With that communication open, “when we are ready to do that technical connectivity … we’ll have as few technical limitations as possible.” 

Atomic settlements

Both networks operate in real time, settling and clearing transactions in seconds, TCH’s Colassano said. That same instantaneous clearing, known in the finance industry as “atomic settlement,” is more difficult to achieve between RTP and FedNow and could introduce latency. 

“You’ve got to be able to support both networks in real time,” he said. “These are all technical issues that we are going to have to work through, and we will over time.” 

“As we start to see more value as we branch out and increase reach across both networks, and as we start to deal with some of the technical intricacies of that atomic settlement … I think you will see interoperability become a reality,” Colassano said.