Bank of America Says Real-Time Payments Connect Businesses to Working Capital

The Clearing House’s RTP network launched in 2017. The FedNow Service, the central bank’s foray into real-time payments, debuted in the summer 2023. And yet real-time payments — while getting some serious global traction — still have a lot of runway left for consumers and businesses. Daniel Stanton, managing director and global head of Transactional FX at Bank of America, told PYMNTS in a recent interview that as banks move onto the real-time payment networks, bringing faster payments capabilities to corporate clients will be a long-term project.

“It’s a journey that we’re undertaking,” he said, “and not only from the standpoint of a financial institution but in the FinTech arena as well. It’s a joint journey toward building out our capabilities and enhancing or even redesigning our infrastructures … to get out of the thought process of ‘9 to 5’ and to operate on a 24/7 wavelength.”

Looking at the Long Term

Over the long term, he said, real-time payments will become commonplace, reflecting the ways in which we exchange information — and the ever speedier ways in which we live.

For enterprises working with Bank of America, said Stanton, the benefits of real-time payments lie in greater control over when their beneficiary is paid — and how they’re paid, which in turn means that the sender can better manage their working capital.

Along with the growth in pay-to-card and pay-by-bank use cases, Stanton was quick to note that “RTP is not a solution looking for a problem,” which is a mindset the bank seeks to bring to its clients, especially when they examine the ways and means that they are going to have to reconfigure their workflows and back-end processes, with artificial intelligence (AI) in the mix to provide additional lines of defense in anti-money laundering (AML) and transaction monitoring.

“The workflow,” he said, “is going to need to be modified not only to transact and to send information simultaneously, but also to receive and digest the information that is being provided in order to truly benefit from RTP’s transparency and speed.”

Choosing Among the Use Cases

There must also be the recognition that not all transactions need to be real time, he said, and partnering with a financial institution — such as Bank of America — can help firms determine the applicability of real-time payments for some use cases, but not others. Pay by bank, to name but one “type” of real-time payment, can be embedded at the point of sale or within an eCommerce experience, said Stanton, and pay to card can improve B2C interactions such as with the gig economy.

“From a cross-border standpoint,” he said, payments “are inundated with friction. What we’re seeing in the global economy is that the user experience is paramount, and the RTP paves the way for additional value.” The same is true for cross-border commercial payments, where costs are streamlined and all parties know exactly where and when payments have been sent — and when they’ll arrive and settle.

That level of transparency fosters loyalty between buyers and suppliers and helps them navigate foreign exchange (FX) volatility, said Stanton. Bank of America, for its part, has integrated its FX solutions into the real-time payments value chain to help improve supply chain dynamics. Real-time payments are already transforming tech, media and telecom companies, remittance providers and eCommerce as they digitize payouts.

“There’s a level of instant gratification,” he said, that is desired by the bank’s clients and their own end customers, “and so we have to be there to meet that demand.”