RTP Overview: Bridging the Gap Between Consumer Experiences and Business Expectations

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1 RTP Overview: Bridging the Gap Between Consumer Experiences and Business Expectations

2 Scott Jones Bio 1

3 Mike Riggin Bio 2

4 Surveying the Current Landscape What about Generation X and Baby Boomers? Zelle Study finds growing use of digital payments across generations USE OF ONLINE OR MOBILE PAYMENTS 75% of Millennials 69% of Generation X 51% of Baby Boomers P2P IS BEING USED AT LEAST 1X A WEEK BY Top Use Cases Rent Meals Utility Bill Splitting Gifting 49% of Millennials 42% of Generation X 32% of Baby Boomers Zelle July 2018 Press Release 3

5 Introduction Real-Time Payments Ecosystem The first new US Payment Rail in 40+ Years Built from the ground up to address the deficiencies in existing payment rails The Clearing House Operates the Payments Switch Develops & Enforces Network Rules Provides Network Level Services Financial Institutions Provide Clients with Access to RTP Capabilities Fed Lead RTP Charge Established Faster Payments Task Force Third Party Processors Network Connectivity Gateway for Smaller FI s & Credit Unions 1973 Proliferation of RTP Schemes Across the Globe (Show flags) Real Time Payments Isn t New Australia 4

6 The Current Landscape Bank Adoption Live Financial Institutions 5

7 Real-Time Payments Value Proposition RTP Attributes Irrevocable Eliminate Return Risk Security Credit Push Real Time Fraud Screening Availability of Funds Immediate Availability Enriched Messaging Structured Remittance Payment Transparency 2-Way Messaging Real-Time Payments Rail Availability 24x7x365 Speed <15 seconds Payment Certainty 6

8 Emerging Payment Methods Comparison Same Day ACH epayments Real-Time Payments Network ACH Zelle RTP Network Availability Send transactions on business days up to cut-off Send transactions 1 24x7x365 Send transactions 24x7x365 Typical Funds Availability Same day Within minutes 2 Within seconds Payment Type Credit or Debit Credits only Credits only Finality Reversals and returns may be requested Disputes may result in reversals and returns Irrevocable Dollar Limit $25,000 No Limit $25,000 Messaging 9,999 addenda records 200 characters of remittance information Real-time inquiry and remittance messages Confirmation Only if returned End-to-end End-to-end Payee Information Routing # + Account # or mobile phone Routing # + Account # 1 epayments is limited to business-to-consumer (B2C) transactions. Recipients can receive payments 24x7x To receive money within minutes, the recipient s address or U.S. mobile number must already be enrolled with Zelle with an applicable DDA or Debit Card. 7

9 RTP Payment How It Works RTP provides around-the-clock payment processing and messaging between the sender and receiver. SENDER Send RTP Sending Bank Receiving Bank Receive RTP RECEIVER Automated Payment Confirmation Optional two-way messaging for Request for Information (RFI), Payment Acknowledgement and Remittance Advice 8

10 Real-Time Payments Facilitates Communication Message Types Credit Transfer Transfers funds to a receiver Provides 140 characters of remittance Currently limited to $25,000 Message Confirmation Provides confirmation to sender and receiver that the message was processed successfully Automatically system generated Payment Acknowledgement Provides confirmation to the sender that the payment was accepted Optional message to communicate account status Request for Payment (RFP) Requests payment from an individual or organization Customer can choose to send a Credit Transfer or decline the RFP Request for Information (RFI) Requests additional information from the sender to facilitate reconciliation Messages are linked so conversation history is retained Remittance Advice Sends complex data with a payment for additional remittance Linked to a credit transfer or RFP for reconciliation 9

11 Real Time Payments Use Cases B2B B2C C2B Vendor Payments (Replacing Check) Just-in-Time Payments Direct Store Delivery Contract Work (Gig Economy) Refunds Consumer Overpayments Claims Disbursements Off-Cycle Payroll Utilities Prefunding Donations Decentralized Collections High Value on Remittance High Value on Delivery Verification High Value on Speed & Certainty Payroll Funding Off-Cycle Payroll Same Day Termination Pay Donation Collections Restaurant Tip Disbursement Ride Sharing Driver Pay Healthcare Overpayments Insurance Claims Beverage Delivery Service Provider Payments Rent Collection Rent Deposit Refund Earnest Money Collection Merchant Settlement School Lunch Account Funding Gaming Winnings Loan Closing Disbursements Bill Pay Freight Payments Dues Collections

12 Security Visibility Data 24x7 Speed Real-Time Payments Value Proposition Common Challenges Solved Reimagine Your Business Address Challenges with Existing Payment Rails Slow Delivery of Funds Real Time receipt of payment confirmation to both parties and availability of funds Restricted to Banking Hours Payment rail available 24x7x365 Manual Reconciliation leads to increased overhead and delays Straight through processing streamlines reconciliation and reduces delays Payment Inquiries Increased visibility into payment status for sender & receiver Fraudulent Payment & Returns Risks Secure electronic payments allow you to safely send / receive irrevocable funds 11

13 Taking the Plunge Envisioning the Ideal Financial Ecosystem Improved Customer Experience Accelerated order processing Easily communicated order status Order status transparency Streamlined Transactions Funds available within seconds, 24/7/365 Inquiries resolved faster with messaging Confirmation sent to sender and receiver Simplified Workflow Automated receivables workflow Reduced cash and checks Messages delivered to your workstation Connected Process Quick fulfillment and transparent status could be a differentiator for businesses Remittance and payment stay linked with no reconciliation required 12

14 How Real-Time Payments Can Work For You Emergency Payroll Disbursement Employer initiates a Real- Time Payment (RTP) for emergency payroll RTP with payment details are deposited into Employee s account Immediate payment confirmation delivered to each party Integration into Bank Information Reporting for Employer s account reconciliation How You Can Benefit Meet payroll obligations where immediate distribution is required Reduce check and cash transactions through a secure electronic channel Compensate employees for expense reimbursements, commission payments, spot bonuses or termination payout 13

15 How Real-Time Payments Can Work For You B2B Bill Presentment and Payment Supplier s ERP recognizes a billable event, triggering a Request for Payment (RFP) RFP delivered and displayed in Customer s payables system Customer sends Real-Time Payment (RTP) on the scheduled pay date Immediate payment confirmation delivered to each party How You Can Benefit Accelerate billing and collection activities Optimize Just In Time inventory management and improve cash flow forecasting If Supplier notes an exception, a Request for Information (RFI) or new RFP may be submitted Supplier returns optional Payment Acknowledgement to confirm payment receipt Save time, reduce costs and provide for scalable growth with straight through processing 14

16 Make a Splash Within Your Organization The World Will Keep Spinning Even if You Don t Act Receivables Environment how will you process, recognize and reconcile an inbound RTP? Payables Environment how will you receive, process, approve and pay a RFP? Customers how will you respond to evolving customer preferences for a robust digital experience? Other The rest of the world is continuing to pursue faster payments will you begin to suffer competitively? 15

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18 Disclaimer This presentation was prepared for general information purposes only and is not intended as legal, tax or accounting advice or as a recommendation to engage in any specific transaction, including with respect to any securities of PNC, and does not purport to be comprehensive. Under no circumstances should any information contained in this presentation be used or considered as an offer or commitment, or a solicitation of an offer or commitment, to participate in any particular transaction or strategy. Any reliance upon the presentation is solely and exclusively at your own risk. Please consult your own counsel, accountant or other professional advisor regarding your specific situation. Any opinions expressed in this presentation are subject to change without notice. 17