What Are Real-Time Payments (RTP)? How They Work

Real-time payments (RTP) are electronic transfers that clear and settle between banks in seconds, 24/7/365, including weekends and holidays. Once sent, the funds are final. In the US, two networks carry them: The Clearing House’s RTP® network (launched 2017) and the Federal Reserve’s FedNow® Service (launched 2023). Businesses use them for urgent payments to vendors, payroll, and payees.

Definition: Real-time Payments

Real-time payments (RTP) are irrevocable account-to-account transfers that clear and settle in seconds, any time of day.

How do real-time payments work?

Real-time payments aren’t new. Japan’s Zengin System, launched in 1973, is the world’s oldest. The US got its first real-time payment rail in 2017, when The Clearing House launched the RTP network. Worldwide, real-time systems processed 266.2 billion transactions in 2023 (ACI Worldwide, 2024). Early adoption came from consumer peer-to-peer (P2P) payment apps.

More consumers now use real-time payments instead of paper checks for their monthly payments because they eliminate the lag time between an online payment and the clearing of the funds. That lag time can create liquidity problems for consumers living paycheck to paycheck. With real time payments, the payee’s account is credited immediately, and the payer is instantly notified about the status. With a paper check, however, a payee could delay cashing it, leaving the payer with an unreliable cash balance and the potential for writing bounced checks. Real-time payments eliminate that.

From Consumers to Business

Recently, businesses have realized the advantages of RTPs. Here are several:

• Instant access to funds
• Immediate confirmation
• Irrevocable/final settlement transaction: Once an RTP is made, the sender can’t cancel it.
• Real-time transmission of more data about individual transactions
• Better management of individual capital requirements to help with forecasting
• Eliminates the danger of liquidity problems just as it does for consumers

How secure are real-time payments? Networks can use tokenization to shield account numbers, but because payments are final, fraud is harder to recover from.

Tokenization is the process of converting plaintext into a token value that does not reveal the sensitive data being tokenized. It creates unique party identifiers that shield account numbers within the system. The token is of the same length and format as the plaintext. Both plaintext and token are stored in a secure token vault.

RTP vs. FedNow vs. ACH vs. wire: what’s the difference?

Why is real-time payment adoption growing?

Smartphones have been a catalyst for RTP, enabling anyone to move money without going to a bank or making a phone call. Start-up companies, spin-offs and partnerships have appeared to support this trend.  

Then came Covid, where a world in quarantine created the need for rapid cash transfers and bill payments. Add to that the increase in global commerce, and people expect to have access to their funds anywhere in the world.

According to a report from Deloitte Consulting LLP, technology innovation, globalization and regulatory pressures have been key to driving RTP momentum. In addition, the report cites these additional tipping points:

Common Customer Expectations

• #paynow
• Friends immediately
• Deposits same day
• Bill pay same day
• Pay with anything (miles, points, etc.)
• No late fees if same-day payments
• Low-fee transfers

Common Merchant Expectations

• Get real time payments
• Better use of cash flow
• Reduce fraud
• Provide incremental value to customers 

When should businesses use real-time payments?

Consumers, especially younger generations, use RTP for anything from paying monthly bills like mortgages, rent, utilities and phone bills to one-time payments like gifts to friends and relatives or medical bills.

But what are businesses using them for?

Primarily to meet consumer demand. While consumers have been using RTP for P2P transactions, those transactions use The Clearing House’s RTP network when they send money from an app like Venmo to a bank account.

Banks and fintechs* began dipping their toes in the RTP waters through those P2P apps. Now they’re swimming in them, and B2B (business-to-business) users agree that real-time payments improve customer service.

RTP perks for B2B and B2C (business-to-consumer) use include:

• Insights into client needs
• Better control over payment timing
• Liquidity management
• Instant bill payment
• Stronger cash flows
• Better budgeting
• Seamless integration with systems like invoicing and bill payment
• Reduced costs through increased efficiency (e.g., automation)
• Opportunity to grow revenue (e.g., transaction fees, fees for new service or product offerings)
• Reduced interbank settlement risk

*The term “fintech” combines its key components: finance and technology. It refers to any business that uses technology to enhance or automate financial services, transactions and processes.

How do you send a real-time payment?

1. Confirm that your bank and the payee’s bank are on RTP or FedNow.
2. Collect the payee’s account and routing numbers.
3. Start the payment from your bank portal, an API or your payables platform.
4. Funds settle in seconds, and both sides get a confirmation.
5. Reconcile using the ISO 20022 remittance data that comes with the payment.

What is The Clearing House RTP network?

In the U.S. the most prominent example of a real-time payment rail is The Clearing House’s (TCH) RTP network. It allows third-party service providers to connect to its RTP network and offer real-time payments to their customers.

Launched in 2017, it now delivers real time payments for:

• Business-to-business (B2B) real-time transactions
• Peer-to-peer (P2P) real-time transactions
• Payroll
• Request for payment (RfP)

All federally insured U.S. depository institutions are eligible to use TCH RTP. The RTP pricing schedule, operating and participation rules, message specifications, security requirements and related information are publicly available on the TCH website.

Businesses that want to tap into TCH RTP platform typically use third-party service providers. They include Sherpa Technologies, ACI Worldwide and Alacriti, which offer streamlined processes for connecting to the platform.

Sherpa Technologies, a credit union service organization for Corporate One Federal Credit Union, was the first fintech to receive certification with TCH RTP. As of September 2026, the RTP network has more than 1,378 participating financial institutions.

The RTP network and the Federal Reserve’s FedNow Service are the two real-time payment rails in the US. Some banks connect to both.

What is FedNow?

The Federal Reserve announced FedNow in 2019, ran a pilot starting in 2021, and launched the service on July 20, 2023. Like RTP, it settles payments in seconds, 24/7/365. FedNow has more than 1,500 participating financial institutions. Since November 12, 2025, it allows payments up to $10 million, and each bank can set a lower limit. FedNow supports request for payment (RfP) and ISO 20022 remittance data.

What are the benefits and risks of real-time payments?

Consumers and businesses benefit from the payment flexibility RTP offers in the following ways:

The main risk is that payments are final. If money goes to the wrong account or to a fraudster, the sender can ask the receiving bank to return it, but the payee doesn’t have to agree. Verify payee bank details before you send, and set approval limits for high-value payments.

How Tipalti helps

Tipalti pays suppliers and payees in 196 countries and 120 currencies from one workflow, using ACH, global ACH, wire, PayPal and more. It validates payee bank details before payment, which matters most when payments can’t be reversed. It also gives payees real-time visibility into payment status.