What Are Real-Time Payments? A Comprehensive Guide

Understanding Real-Time Payments

Real-time payments refer to financial transactions that are processed and settled instantly, 24/7, 365 days a year. Unlike traditional payment systems, which may take days to process, real-time payments allow money to move from the sender’s account to the receiver’s account within seconds. This speed and availability are key benefits, making real-time payments ideal for various use cases, from consumer transactions to business payments.

How Real-Time Payments Work

Real-time payments operate through a secure, digital infrastructure that connects banks, payment service providers, and end-users. When a payment is initiated, the funds are verified, transferred, and settled in near real-time, ensuring the recipient has immediate access to the money.

Key Features:

• Immediate Settlement: Funds are transferred instantly, and the transaction is settled in real-time.
• 24/7 Availability: Real-time payments can be made at any time, including weekends and holidays.
• Irrevocability: Once a real-time payment is made, it cannot be reversed, providing finality and certainty to both parties.

The RTP Network vs. Generic Real-Time Payments

It’s essential to differentiate between real-time payments as a generic term and the specific RTP® network in the United States.

Generic Real-Time Payments: This term refers to the overall concept of payments being processed instantly, without any specific reference to a particular system or network. These systems can vary widely in implementation, rules, and features, depending on the country or region.

The RTP® Network: The RTP network is a specific real-time payment system developed by The Clearing House in the United States. Launched in 2017, it was the first new core payments infrastructure in the U.S. in over 40 years. The RTP network offers not just real-time payments but also additional capabilities like messaging and request-for-payment features, making it a comprehensive solution for modern payment needs.

U.S. Examples of Real-Time Payments

The RTP® Network

The RTP® network in the United States is a prime example of a real-time payment system tailored to meet the demands of today’s digital economy. It enables immediate, round-the-clock payments for individuals and businesses, with additional features such as:

• Request for Payment (RfP): Allows a payee to request payment from a payer, streamlining invoicing and bill payments.
• Payment Confirmation: Provides both sender and receiver with immediate confirmation that the payment has been made.

With major banks and financial institutions participating, the RTP network has significantly impacted the speed and efficiency of payments across the U.S.

FedNow

FedNow is another real-time payment system in the United States, launched by the Federal Reserve in 2023. Like the RTP network, FedNow provides instant payment services, allowing consumers and businesses to send and receive money in real-time, 24/7. However, FedNow operates as a separate system, offering an alternative to the RTP network for financial institutions across the country.

• Broad Access: FedNow is designed to provide real-time payment capabilities to financial institutions of all sizes, promoting inclusivity across the U.S. financial system.
• Flexibility: Financial institutions can choose to participate in FedNow, RTP, or both, depending on their needs and customer base.

Visa Direct

Visa Direct is a real-time payment solution provided by Visa, enabling instant transfers across card networks. Unlike RTP and FedNow, which are primarily focused on bank accounts, Visa Direct leverages Visa’s global card network to move money instantly.

• Global Reach: Visa Direct allows for instant payments not just within the U.S., but across international borders, making it a versatile solution for businesses and consumers alike.
• Versatility: Visa Direct supports various use cases, from person-to-person payments to business disbursements, such as gig worker payouts, insurance claims, and more.

International Examples of Real-Time Payments

Real-time payment systems are not limited to the United States. Several countries around the world have implemented their own real-time payment networks, each with unique features and capabilities.

1. Faster Payments (UK):
Launched in 2008, the Faster Payments Service (FPS) in the United Kingdom is one of the world’s first real-time payment systems. It allows individuals and businesses to send and receive payments in seconds, supporting both person-to-person and business transactions.

2. PIX (Brazil):
Introduced by the Central Bank of Brazil in 2020, PIX is a real-time payment system that has quickly gained popularity. It allows instant payments 24/7, using various identifiers like phone numbers, email addresses, or QR codes to facilitate transactions.

3. IMPS (India):
The Immediate Payment Service (IMPS) in India is a real-time payment system that enables instant bank transfers through mobile devices, ATMs, and online banking. Operated by the National Payments Corporation of India (NPCI), IMPS is widely used for both small and large transactions.

4. NPP (Australia):
Australia’s New Payments Platform (NPP) is a real-time payment infrastructure launched in 2018. It supports instant payments between participating banks and financial institutions, with additional features like PayID, which allows users to link their account to an easy-to-remember identifier, such as a mobile number or email address.

Getting Started with Real-Time Payments: How Astra Can Help

Real-time payments are rapidly becoming the standard for fast, secure financial transactions. Whether you’re a business looking to offer instant payouts or a financial institution aiming to upgrade your payment infrastructure, Astra can help you get started with real-time payments.

Astra is a leading provider of payment solutions that can integrate with the RTP® network, FedNow, and Visa Direct to offer comprehensive real-time payment capabilities. Here’s how Astra can support your real-time payment needs:

• Seamless Integration: Astra’s platform is designed to integrate easily with existing systems, providing a smooth transition to real-time payments.
• Multi-Network Support: Whether you need to connect to the RTP network, FedNow, or Visa Direct, Astra can provide access to multiple real-time payment networks, ensuring broad coverage and flexibility.
• Custom Solutions: Astra offers tailored solutions to meet the specific needs of your business, whether you’re a marketplace, gig economy platform, or financial institution.
• Global Reach: With support for Visa Direct, Astra enables real-time payments not just in the U.S., but also across international borders.

Conclusion: The Future of Real-Time Payments

Real-time payments are transforming the global payments landscape, offering unprecedented speed, convenience, and security. Whether through generic real-time payment systems or specific networks like the RTP® network, FedNow, and Visa Direct in the U.S., the ability to move money instantly is becoming the new standard in financial transactions.

Astra stands ready to help you navigate this evolving landscape, providing the tools and support needed to harness the power of real-time payments for your business. As more countries adopt real-time payment systems and existing networks continue to evolve, the future of payments looks faster and more efficient than ever before.