Corporate Trade Payment (CTP)

What Was Corporate Trade Payment (CTP)?

The corporate trade payment (CTP) was a form of transferring funds electronically that is as of now not being used today. The CTP system was used by corporate and administrative elements to pay creditors utilizing the automated clearing house (ACH) system. The CTP payment network became obsolete due to its lack of flexibility and since been replaced by additional modern systems.

Figuring out Corporate Trade Payment

The corporate trade payment (CTP) system was acquainted in 1983 with address the limitations of the automated clearing house (ACH) system, which had been in place starting around 1974. The ACH system utilized a 94-character format to encode payment data in electronic form. Data encoded in this format commonly incorporated the institutions and account numbers of both payor and payee, as well as the pertinent dates, payment amounts and processing codes.

The ACH system passed on 30 to 34 of the 94 accessible characters for messages, which was found to be lacking. Further problems with the ACH system incorporated the lack of standardized rules or procedures for giving any included messages to the beneficiary of the transaction. Nor were there any standardized procedures for encoding message data or processing it.

At the point when the CTP system was presented, it expanded the message attachment capacity of an electronic payment to up to 4,999 extra 94-character messages. In theory, this permitted the payor to incorporate with their payment information any essential payment advice, or information that effectively recognized the justification for a payment and make sense of the amount of the payment.

Benefits of the CTP system for both payor and payee incorporated the elimination of shipping costs and the reduction of bank fees. Nonetheless, the costs of the CTP system implied that it was not great for sending or getting simple, single-receipt payments, however was better fit to additional complex settlements.

Disappointment of CTP

The CTP system was phased out with the section of the Debt Collection Improvement Act of 1996. The corporate trade exchange (CTX) system replaced the CTP system, with highlights that looked to amend its ancestor's blemishes.

The CTP system failed in part as a result of the requirements of its format, which made it challenging to package payment counsel information into the addenda records. The CTP system likewise lacked a data content standard that would have made it more straightforward for corporations to computerize accounts receivable information.

The CTX system accommodates simpler tracking of payments, and takes into account the expansion of greater and adequate payment exhortation records with each payment. The CTX system likewise revises the problem of a data content standard that tormented the CTP, utilizing X12 to robotize the receipt of payments.

Features

• Corporate trade payment (CTP) was an early form of commercial payments network that was based on top of the automated clearing house (ACH) system.
• CTP was replaced by the corporate trade exchange (CTX) system for electronic payments, which is still being used today.
• Sent off in 1983, it failed to keep up with mechanical progress and electronic transaction demand.