What are Real-Time Payments?

Real Time Payments (RTP)

In this article:

Real-Time Payments offer the immediate transfer of funds between bank accounts. Unlike traditional payment methods that can take several days to process, real-time payments are completed within seconds, providing instant availability of funds to the recipient, and can take place 24/7. 

Real-time payments are particularly useful for businesses and consumers who require quick access to funds, such as for payroll, bill payments, or urgent purchases. It enhances the overall efficiency of financial transactions, contributing to smoother cash flow management and improved customer satisfaction.

Quick History of Real-Time Payments

Early Developments (1970s-1990s)

The foundation for modern real-time payments systems was laid in the 1970s with the introduction of the Automated Clearing House (ACH) network in the United States. This network allowed for batch processing of electronic payments, marking a significant step towards more efficient transaction methods. The 1990s saw further advancements with the advent of internet banking and electronic funds transfer (EFT) systems. These innovations set the stage for real-time payments by enabling faster and more convenient digital transactions.

Initial Implementations (2000s)

Japan was one of the early adopters of near real-time payment systems with the Zengin Data Telecommunication System launched in 1973. In 2004, Mexico introduced the SPEI (Interbank Electronic Payment System), enabling real-time transfers between banks. A significant milestone occurred in 2008 when the United Kingdom launched the Faster Payments Service (FPS), allowing near-instantaneous payments between bank accounts and operating 24/7.

Global Expansion (2010s)

The 2010s witnessed a global expansion of real-time payment systems. India introduced the Immediate Payment Service (IMPS) in 2010, offering real-time money transfers around the clock. Sweden followed in 2012 with the Swish system, providing instant peer-to-peer payments via mobile phones.

Australia implemented the New Payments Platform (NPP) in 2018, supporting real-time, data-rich payments. In the United States, the Clearing House launched its RTP network in 2017, marking the first new core payment system in the country in over 40 years and enabling instant settlement and messaging.

Recent Developments (2020s)

The European Union made a significant leap in 2020 with the introduction of the SEPA Instant Credit Transfer (SCT Inst) scheme, facilitating real-time euro transfers across participating countries.

Most recently, in the United States, the Federal Reserve launched their own real-time payments system called FedNow in July of 2023. It allows eligible financial institutions across the U.S. to provide instant payment services to their clients.

The early 2020s have seen many countries developing or enhancing their real-time payments systems, driven by the demand for faster payments, financial inclusion, and technological advancements.

Key Drivers for Real-Time Payment Adoption

Consumer demand for immediate access to funds and the convenience of instant payments has been a major driver for real-time payment adoption. Businesses benefit from enhanced cash flow management and operational efficiency.

Technological advancements in digital infrastructure, mobile banking, and cybersecurity have also played a crucial role. Additionally, regulatory support from governments and regulatory bodies has promoted faster payment systems to drive economic growth and financial inclusion.

Impact of Real-Time Payments

Real-time payments have transformed the financial landscape by providing faster, more reliable, and transparent payment solutions. They have facilitated the growth of digital commerce, improved financial management for both consumers and businesses, and paved the way for innovative financial services and products. As real-time payment systems continue to evolve, they are expected to play a crucial role in the future of global finance.

Availability of Real-Time Payments

Real-time payments are available in numerous countries worldwide. In the United States, The Clearing House RTP network and Federal Reserve’s FedNow offer instant payments. The United Kingdom’s Faster Payments Service provides rapid transfers.

India’s Immediate Payment Service (IMPS) supports 24/7 transactions, and Australia’s New Payments Platform (NPP) offers real-time, data-rich payments. In the European Union, the SEPA Instant Credit Transfer (SCT Inst) scheme enables immediate euro transfers across participating countries.

Other countries with RTP systems include Sweden, Mexico, and Japan, with many more developing or enhancing their own systems.

Compared to Other Payment Methods

Real-time payments offer several advantages compared to traditional payment methods:


Real-time payment transactions are completed within seconds, providing immediate fund availability, whereas traditional methods like Automated Clearing House (ACH) transfers and checks can take several days to process.


Real-time payments systems operate 24/7, including weekends and holidays. In contrast, traditional payment methods often depend on banking hours and can be delayed by weekends and public holidays.


Real-time payments provide immediate confirmation of payment status to both sender and receiver. Traditional methods may not offer instant confirmation, leading to uncertainty about the payment status.


Real-time payments deliver detailed transaction information, enhancing clarity and reducing disputes. Traditional methods might lack detailed data, making tracking and reconciliation more difficult.


Real-time payments are designed with advanced security measures to protect against fraud. While traditional methods also have security protocols, the speed and transparency of real-time payments enhance overall security.


Real-time payments reduce the need for intermediary processing, streamlining the payment process. Traditional methods, especially checks, involve more steps, such as physical delivery and manual handling, which can introduce delays and errors.

Overall, real-time payments offer a faster, more reliable, and efficient alternative to traditional payment methods, benefiting consumers and businesses with quicker access to funds and improved financial management.

Benefits of Real-Time Payments

Real-time payments offer numerous benefits for both consumers and businesses. Here are some key advantages:

Immediate Fund Availability

Real-time payments provide instant access to transferred funds, which is crucial for time-sensitive transactions and enhances cash flow management.

24/7 Availability

Real-time payment systems operate round-the-clock, including weekends and holidays, ensuring that payments can be made and received at any time.

Enhanced Cash Flow

Businesses benefit from quicker payments, improving cash flow and reducing the need for short-term financing. This leads to better financial planning and stability.

Improved Customer Satisfaction

Consumers appreciate the convenience and speed of real-time payments, which can enhance customer loyalty and satisfaction.

Increased Efficiency

Real-time payments reduce the reliance on intermediary processes, leading to faster and more streamlined transactions. This decreases administrative costs and errors.

Better Financial Management

Immediate payment confirmation and detailed transaction data help both businesses and consumers manage their finances more effectively.

Reduced Risk of Fraud

Advanced security measures and immediate transaction confirmation in real-time payment systems lower the risk of fraud and unauthorized transactions.

Enhanced Transparency

Real-time payment systems provide detailed transaction information, reducing disputes and improving clarity in financial records.

Competitive Advantage

Businesses offering real-time payments can differentiate themselves by providing faster, more reliable payment options, which can attract more customers.

Financial Inclusion

Real-time payments can promote financial inclusion by providing faster and more accessible payment options to underserved populations, including those without traditional banking services.

Overall, real-time payments transform the financial landscape by offering speed, security, and convenience, making them an attractive option for modern financial transactions.

Risks and challenges of real-time payments

Real-time payments offer many benefits but also come with certain risks and challenges. Here are some key considerations:

Fraud and Security

The speed of real-time payments can make it harder to detect and prevent fraud in real-time. Enhanced security measures are essential to protect against cyber threats and unauthorized transactions.

Implementation Costs

Setting up and maintaining a real-time payments system requires significant investment in technology and infrastructure. Financial institutions need to ensure compatibility with existing systems, which can be costly and complex.

Operational Risk

Real-time processing requires robust systems and continuous monitoring to prevent and quickly resolve technical issues. Downtime or system failures can have immediate and widespread impacts.

Regulatory Compliance

Real-time payment systems must comply with various regulatory requirements, which can vary by region. Ensuring compliance can be challenging, especially for cross-border transactions.

Increased Exposure to Errors

The instantaneous nature of real-time payments leaves little room for error correction. Mistakes in transaction details can lead to irreversible outcomes, necessitating stringent validation processes.

Financial Crime

Faster transactions can be exploited for money laundering and other financial crimes. Enhanced anti-money laundering (AML) and know your customer (KYC) measures are crucial.

Liquidity Management

Banks and financial institutions need to manage liquidity more efficiently due to the immediate settlement of funds, which can be challenging without proper planning and resources.

Consumer Education

Users need to understand the features and risks associated with real-time payments to use it safely and effectively. Lack of awareness can lead to misuse or exposure to fraud.


Ensuring seamless integration between different real-time payments systems and traditional payment methods can be complex. Interoperability issues can hinder the widespread adoption and effectiveness of real-time payments.

Privacy Concerns

The detailed transaction data provided by real-time payment systems raises concerns about data privacy and the potential misuse of personal information.

Addressing these risks and challenges requires a coordinated effort between financial institutions, regulators, and technology providers to ensure the secure and efficient operation of real-time payment systems.

Differences between real-time payments and faster payments

Real-time payments and faster payments are terms often used interchangeably, but they can refer to different aspects of payment systems. Here’s a breakdown of their differences:

Real-Time Payments

Definition: Real-time payments refers to transactions where funds are transferred and settled between bank accounts within seconds, providing immediate availability of funds to the recipient.

Key Characteristics:

  • Speed: Transactions are completed within seconds.
  • Availability: Operate 24/7, including weekends and holidays.
  • Settlement: Instant settlement of funds, ensuring that the recipient can use the funds immediately.
  • Use Cases: Often used for person-to-person (P2P) payments, business-to-business (B2B) transactions, bill payments, and other scenarios requiring immediate fund transfers.
  • Examples: The Clearing House RTP network and FedNow in the United States, India’s Immediate Payment Service (IMPS), and the New Payments Platform (NPP) in Australia.

Faster Payments

Definition: Faster payments refer to a broader category of payment systems designed to reduce the time it takes to transfer funds compared to traditional methods like ACH or checks. These systems may not always provide immediate fund availability or settlement but are significantly quicker than traditional methods.

Key Characteristics:

  • Speed: Faster than traditional methods (which can take days), but not necessarily instant. Typically, transactions complete within hours or the same day.
  • Availability: May not operate 24/7. Some faster payment systems are available only during business hours or exclude weekends and holidays.
  • Settlement: May not offer instant settlement. Some systems still rely on batch processing but with faster cycles.
  • Use Cases: Suitable for a wide range of transactions, including payroll, supplier payments, and customer refunds, where speed is important but not necessarily immediate.
  • Examples: The Faster Payments Service (FPS) in the United Kingdom, which processes payments in near real-time but may not guarantee instant availability of funds.

In summary, while both real-time payments and faster payments aim to expedite fund transfers, real-time payments ensure instantaneous transactions with immediate fund availability, whereas faster payments improve transaction speeds compared to traditional methods but may not always be instantaneous.

Share on social

In this article:

Share on social

Want to do even more with Finli?

Sign up to unlock:

Want to do even more with Finli?

Sign up to unlock: