U.S. Bank is expanding real-time payments (RTPs) to auto dealers, accelerating funding time and allowing dealers to access loan funds outside of normal business hours.

Both large-scale dealer groups and single-store dealer locations have taken advantage of the bank’s RTP funding, John Hyatt, president of dealer services, told Bank Automation News’ sister publication Auto Finance News. RTPs are also available for recreational vehicle dealers, with about 50 receiving the payments since the program launched, he added.

“The response has been overwhelmingly positive,” Hyatt said. “As you can imagine, it is a major pain point for dealers when it takes multiple days to receive the funds — especially when the sales are made on holidays.”

RTPs can be sent from the bank to dealers any day of the year, including weekends and holidays, giving dealers more control over cash flow, according to a Tuesday bank release.

U.S. Bank has been working to launch RTPs for dealers since October 2021, Hyatt told AFN. Following a June pilot with 20 dealers, the bank has already expanded the offering to more than 800 dealer partners across the country.

“With the traditional ACH payment method, after completion of the retail installment contract, it can take multiple days for the funds to land in the dealer’s account from the bank,” Hyatt said. However, “with real-time payments, the funds can be available in the dealer’s account moments after the contract is finalized by U.S. Bank.”

The process for dealers to obtain RTPs requires little work on the dealer side. While building the tech solution took time, “the process for dealers now is simple,” he said. “As long as our dealer utilizes an RTP-eligible financial institution, all they need to do is update one form via their account manager. No further action is required by U.S. Bank.”

Lithia Motors’ digital retailing arm, Driveway, was the first U.S. Bank dealer partner to use RTPs in April. Driveway offered RTPs to sellers to speed funding time, sparking dealership interest, Hyatt said.

“Since we started sharing information about the auto loan funding real-time payment solution, we enabled more than 800 dealers in just six weeks,” he said. “Based on the interest we’re seeing from our clients, we’re confident that real-time payments will be a major part of auto finance going forward.”

Editor’s Note: This is an edited version of an article first published on Bank Automation News’ sister site, Auto Finance News.

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