The Clearing House has implemented revised rules for “on-behalf-of” payments on its Real Time Payments network. 

On-behalf-of (OBO) payments are payments on the Real Time Payments (RTP) network. These transactions are originated by a sender to make a payment on behalf of another person. 

“The new rules apply to all intermediated RTP activity, introducing a consistent framework focused on payment transparency, due diligence, risk management and fraud reporting obligations,” a spokesperson from The Clearing House (TCH) told Bank Automation News.  

The new rules, which became effective June 16, require banks initiating payments on behalf of clients to meet stricter transparency standards, according to financial solutions provider Finzly.  

Under the requirements, OBO payments must include: 

• Identification — the payer and the initiating customer must be identified; 

• Use of name field — legal names must be used; 

• Message integrity — the payment message cannot be altered; and 

• Prohibition of nested payments — the payment cannot include additional payers or payees. 

“The Clearing House has added new definitions and made some clarifying revisions to others in the RTP operating rules to more clearly define the roles of parties involved in OBO payments,” the spokesperson said. 

OBO adoption

Under the rules, banks are adopting the new OBO payment system. 

The $77.6 billion Comerica Bank, for one, was one of the first banks to initiate OBO payments under the revised rules for its client, payments provider Monex USA, Allysun Fleming, executive director of payments at Comerica Bank, told BAN.  

“One of the things that Monex has been thinking about is: How do they delight their customers with real-time money movement. … But they couldn’t do that with the way the RTP network was designed,” Fleming said.  

Monex could move money for itself, but it couldn’t move money on behalf of its end customer, she said.  

Now, Monex — the initiating customer — is sending instructions to Comerica — the sending participant — to move money on behalf of its end customer, Fleming said.  

“The Clearing House had to build that framework and build those standards so that every single bank had enough information to make sure [banks] were both safeguarding our customer … and the network,” Fleming said. 

Comerica charges a fee per transaction for OBO payments as it does for all RTP, ACH and wire payments it facilitates. 

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