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Real-Time Payments for Beginners

Real-time payments are a growing necessity in the world. As more transactions take place online, whether they’re employee payroll payments, consumer purchases, etc., people demand that their money is transferred as quickly as possible.

So, let’s learn more about them.

What are Real-Time Payments?

A real-time payment is when you’re making a digital transaction, whether that’s online or in-person with a card or another method that does not include directly handing another person fiat currency. In the past, those types of transactions would take a considerable amount of time to process. The money would come out of the paying account, but the receiver might have ended up waiting for hours, or even days, to get receive the money in a usable form.

That isn’t ideal for either the payee or the receiver of the funds as the payee would often have to wait until the payment is processed completely before receiving whatever good or service they were paying for, and the receiver obviously had to deal with waiting for much-needed funds.

Real-time payments solve this problem by almost completely removing any waiting period during a transfer of funds.

Using a complex payment rail system, a payee’s funds are almost instantly transferred to the receiver. Not on that, but the processing period is completed within seconds, or sometimes minutes, meaning that, upon completing a transaction, the receiver can immediately access their funds.

You might still see the older payment types in establishments that have upgraded to more reliable payment systems, but many businesses are adopting real-time payments for a multitude of purposes due to their speed and reliability.

What is RTP in Banking?

Real-time payments aren’t just for consumer purposes or similar transactions. The RTP rail system has actually been an integral part of banking since 2017.

In the banking sector, RTP is the driving force behind being able to send, receive, or transfer the placement of funds as needed. Like with commercial payments, banking often required downtime to process withdrawals, deposits, and even simple processes such as moving funds to a savings account instead of a checking account. This affected everything from the average small-scale payment transfers most people make almost daily, all the way up to larger money transfers within companies or between corporate entities.

By implementing real-time payments into the banking sector, those processes became instantaneous, allowing for 24/7/365 banking without delays.

Because of the system’s extreme efficiency and unmatched practicality, banks around the globe have now transitioned over 60% of their activity to the RTP system.

Real-Time Payment Network:

Of course, making real-time payments a reality isn’t as simple as speeding up existing infrastructure. It requires an entirely new real-time payment network to facilitate such quick financial processes.

This is done via a real-time payment network. A real-time payment network is a specially designed system that connects financial institutions, vendors, service providers, and customers across a multitude of interoperable channels all at once.

Depending on the type of transfer being made, the real-time payment network will choose an appropriate channel to transfer the funds with, communicate the transfer of funds from one account to another, and then process the transaction, all within a matter of seconds.

The complex network needed to make such varied connections possible without slowdowns is integrated separately from any existing infrastructure, and it is most often offered as a service rather than a one-time hookup. The positive side of this is that the various “nodes” in the network, or the companies and financial institutions connected to it, can experience ongoing service 24/7/365 without downtime via the software as a service business model.

Examples of Real-Time Payments

Real-time payments are now being used for more than half of the digital transactions made around the globe. If fiat isn’t directly changing hands in the form of circulatory currency, it is very likely that a real-time payment network is being used.

What are some real-life examples of real-time payments? Well, you’ll probably be surprised by just how many real-time payments you make on a daily basis. Here’s a list of some of the most common ones.

Bank Transactions:

Most notably, The Automated Clearing House launched the largest real-time payments platform available to facilitate its banking processes both internally and externally. Cryptocurrency also provides the ability for real-time payments to be sent and confirmed between parties.

In the case of retail banking, if you’ve made a deposit or a withdrawal, or if you’ve transferred money between accounts with financial institutions backed by the Automated Clearing House. It’s very likely that you’ve made a real-time payment using their financial network.

ACH’s RTP network also facilitates all federally-insured transactions as of the time of this writing.

Tap and Pay

Various other countries have established their own RTP networks similar to this. Switzerland and Turkey are just a couple of examples.

Gig Economy Disbursements:

Do you work for Uber, or do you ever order food with DoorDash? Maybe you work as a freelancer on a gig platform? All of those use real-time payment networks to get money from customers to workers instantly. After all, a DoorDash worker wouldn’t want to do their job if they had to wait three days just to see if every customer’s payment cleared.

Fast Food Purchases:

If you’ve gone to one of the major fast-food establishments lately, you’ve likely experienced a real-time payment. The larger food chains have switched over to these speedy systems to ensure payments are clear as soon as customers get their food. In most cases, the money has been transferred from your account to the establishment’s financial institution before you even left the pickup window.


Using your card at a big box store almost guarantees you’ve used a real-time payment system. As soon as you insert your card, put in your PIN, and the scanner says “Approved”, the money has transferred hands. This can be crucial during larger shopping trips where the money used to take a long period to transfer, and you might have spent more than you actually had without noticing it.


PayPal functions on a real-time payment system. Whenever you transfer funds to your PayPal account, or a customer pays you via PayPal, you’ve probably noticed that any withdrawals you make to your actual bank account reach your account before you can even access your online banking platform. That’s one of the most immediately noticeable examples of a real-time payment.  

The usage of RTP in today’s economy continues to grow with more banks and merchants utilizing the services. As consumers become more accustomed to and reliant on faster payments, the frequency of Real-Time Payments will continue to increase. This will remain a large part of the future of payments.