Request for Payment API

Using Request for Payment (RfP) APIs for ACH, FedNow, and Real-Time Payments (RTP) can streamline how businesses handle payments. Instead of manually uploading files, APIs allow direct integration with your systems (like ERP or accounting software) to initiate and manage payment requests in real time. Here’s how you can understand and implement APIs for each payment method:

1. Request for Payment (RfP) API Overview

An RfP API enables businesses to send or receive payment requests electronically. These APIs are useful for real-time transaction processes and offer benefits such as:

• Automation of payment requests and reconciliation processes.
• Real-time status updates and immediate payment confirmation.
• Reduced human errors since the process is automated.

Each payment method (ACH, FedNow, RTP) uses specific APIs, often provided by financial institutions or third-party payment processors.

2. ACH Request for Payment (RfP) API

The ACH (Automated Clearing House) system allows businesses to request payments via bank transfers. While ACH payments are not real-time like FedNow or RTP, they remain an essential method for scheduled or recurring payments.

Key Features of ACH RfP API:

• Bank Account and Routing Numbers: The API will require these details from the payer.
• Scheduled Payments: ACH RfPs can be set up for future payments, allowing for batch processing.
• Status Tracking: The API will return statuses like initiated, pending, and completed.

Example Workflow for ACH RfP API:

1. Create Payment Request: The API will generate an ACH RfP including the amount, payer details, and schedule.
2. Send RfP: The RfP is sent to the customer for authorization.
3. Process Payment: Once the customer authorizes the payment, the transaction is processed in the ACH network.
4. Receive Status Update: You can track the payment status (e.g., successful, rejected) via the API.

API Providers:

• Plaid: Offers ACH API integration for requesting payments.
• Dwolla: Provides ACH APIs with capabilities for creating RfP workflows.
• Nacha: Although not an API provider, Nacha offers specifications on how ACH transactions should be handled.

3. FedNow Request for Payment (RfP) API

FedNow is a real-time payments network operated by the Federal Reserve. FedNow RfP APIs allow businesses to request payments that are processed instantly, improving cash flow and providing faster payment reconciliation.

Key Features of FedNow RfP API:

• Real-Time Processing: Payments are processed in seconds, offering immediate funds availability.
• Instant Notifications: The API provides real-time notifications on the status of payments.
• ISO 20022 Compliance: The API requires payments to be submitted in the ISO 20022 XML format, the global standard for financial messages.

Example Workflow for FedNow RfP API:

1. Send RfP: The API sends an ISO 20022-compliant payment request to the payer, including all relevant payment details.
2. Receive Authorization: The payer authorizes the payment through their bank or app.
3. Process Payment: Once authorized, the payment is processed in real time, and the payer's bank transfers the funds instantly.
4. Receive Payment Status: The API provides real-time status updates for the payment, ensuring you know when the funds are available.

API Providers:

• The Federal Reserve: Provides the FedNow API for banks and financial institutions to integrate with the FedNow service.
• Third-Party Providers: Several payment gateways and processors are working to provide access to FedNow APIs, including fintech companies offering integration services.

4. Real-Time Payments (RTP) Request for Payment API

The RTP network is operated by The Clearing House and facilitates real-time payments for businesses and consumers. The RTP RfP API allows businesses to send payment requests that are instantly processed upon approval.

Key Features of RTP RfP API:

• Instant Payments: Similar to FedNow, RTP payments are processed instantly, with funds immediately available.
• Detailed Remittance: The API allows you to attach remittance information with the payment request, simplifying reconciliation.
• ISO 20022 XML Format: The RTP API follows the ISO 20022 messaging standard.
• Real-Time Status Updates: The API provides immediate updates on payment status (paid, rejected, etc.).

Example Workflow for RTP RfP API:

1. Create and Send RfP: The API sends a request with details such as the amount, due date, and remittance information.
2. Customer Authorization: The customer approves the payment through their bank or mobile app.
3. Payment Processed: The payment is processed in real time, and the API confirms the payment completion.
4. Receive Status: You receive real-time payment updates through the API, allowing you to monitor when the funds are available.

API Providers:

• The Clearing House: The operator of the RTP network provides API access for businesses, financial institutions, and service providers.
• Third-Party Fintech Providers: Companies like FIS, Finastra, and Volante Technologies offer API integration for RTP payments.

5. How to Implement an RfP API Integration for ACH, FedNow, and RTP

Step 1: Choose Your Payment API Provider

• Determine whether you will integrate directly with your bank’s API, a clearinghouse, or a third-party API provider (e.g., Plaid, Dwolla, FIS).

Step 2: Obtain API Documentation

• Get access to the API documentation from the provider, which includes:
  • API endpoints for creating and managing RfP transactions.
  • Authentication and security protocols (API keys, OAuth tokens).
  • Required parameters and file formats (e.g., ISO 20022 for FedNow/RTP, NACHA for ACH).

Step 3: Set Up and Test Your API Integration

• Use a sandbox environment provided by the API provider to test sending and receiving RfPs.
• Ensure that your requests are compliant with the required formats (ISO 20022 or NACHA).
• Test real-time payment functionality and status tracking for FedNow and RTP APIs.

Step 4: Go Live

• Once testing is successful, deploy the API integration into your production environment.
• Monitor real-time payment activity, and ensure your accounting or ERP system is updated with payment statuses.

Step 5: Monitor and Optimize

• Use real-time data from the API to monitor your payment processing.
• Continuously optimize API usage to ensure scalability, security, and accuracy in processing payments.

Key Considerations:

• Security: Ensure your integration complies with strong encryption and authentication protocols (e.g., OAuth, API keys) to protect payment data.
• ISO 20022 XML Standards: For FedNow and RTP payments, familiarize yourself with the ISO 20022 XML structure to ensure compliance.
• Bank or Third-Party Provider: Depending on your needs, you may either choose to work with your bank directly or through a fintech provider offering easy integration with multiple payment rails.

Conclusion:

APIs for ACH, FedNow, and Real-Time Payments (RTP) enable businesses to automate their payment requests, improve cash flow, and reduce manual processes. By integrating these APIs with your existing systems, you can easily send and manage RfPs, track payments in real-time, and ensure fast, secure payment processing for your business.