Real-time payments (RTP) are money transfers that are initiated and settled almost immediately. The digital infrastructure that allows real-time payments is called real-time payments rail. Real-time payment networks should generally have 24/7 accessibility, which implies they are always available to make transfers, including on weekends and holidays.
It’s important to remember that the terms real-time payments and faster payments shouldn’t be used interchangeably. Despite their similarities, there are also significant differences. Faster does not necessarily mean instant; faster payment systems post and clear payments more quickly than conventional payment rails.
Real-time payments provide instant access that might be a game changer for individuals or businesses who need the money right away. End-to-end communication is another benefit of real-time payment rails. The flow of communication is always from the payer to the payee. The two parties’ information-sharing must occur outside of the payments system. Real-time payments integrate the payment and payment data in a single transaction.