DEFINITION
Real-Time Payments (RTP)
Real-time payments refer to digital payment systems that are operational 24/7 all year round. These systems allow for instantaneous transfers of funds between parties, improving cash flow. RTP is commonly used for peer-to-peer (P2P) transfers, bill payments and business-to-business (B2B) settlements.
Synonyms
Instant payments
Acronyms
RTP
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Synonyms
Instant payments
Acronyms
RTP
Examples
A freelancer completes a project for their client and sends an invoice. Instead of going through a traditional bank and waiting for the payment to be processed, the client uses a RTP system and transfers the payment directly to the freelancer’s bank account. The freelancer receives the funds right away, concluding the transaction.
FAQ
How are real-time payments different from traditional payment methods?
Payment methods such as ACH (Automated Clearing House) or wire-transfers typically take 1-3 business days to be processed. RTPs on the other hand are processed immediately.
What are the benefits of real-time payments?
Real-time payments are a lot more convenient for the consumer as they lower the need for cash, make it easier to make payments on time, and offer faster access to funds. This is also beneficial for businesses as it improves cash flow and enhances customer satisfaction.
What are the risks and challenges of implementing RTP systems?
Real-time payment systems face a few key challenges. For one, ensuring robust security systems that can perform the needed compliance checks instantly without sacrificing accuracy. This is especially challenging for banks that rely on old legacy systems. Furthermore, since RTP are instant and non-reversable, errors are harder to catch and remedify, which can lead to customer frustration.
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worldwide trust Atfinity to drive their digital transformation.
Book your demo today and see why leading financial institutions worldwide trust Atfinity to drive their digital transformation.