What Are Real-Time Payments and How Do They Work?

Real-Time Payments are a new payment method treasury and finance professionals can use to send secure payments 24/7 with instant settlement and confirmation through integrated information flows. The Clearing House has announced you can send up to $1M on the RTP® network, enabling your organization to send instant payments between businesses, such as supplier payments, loan payments, joint-venture and partnership arrangements, and research obligations.

How Do Real-Time Payments Work?

The Clearing House established the RTP Network in November 2017, enabling businesses to send payments securely and nearly instantaneously. Organizations can directly initiate RTP through third-party providers, banks, and credit unions. While RTP still isn’t available at every financial institution worldwide, many are continuing to adopt RTP as a payment method for their clients as time goes on.

According to the Clearing House Payment Company, “[RTP] is currently accessible to financial institutions that hold 75% of U.S. demand deposit accounts (DDAs), and the network currently reaches 61% of U.S. DDAs.”

What separates RTP from other payment methods is its two-way communication between payer and payee. With other payment methods, payment details would only flow one way: from payer to payee, guaranteeing lag times as communication often takes place outside of the payment system in order for settlement to occur. RTP instead sends critical data within payments directly via setting up a two-way communication channel, enabling both the payer to its bank and from its bank to the payee’s bank to communicate with each other.

With this bidirectional communication flow, RTP empowers:

  • Payment Confirmation: When a payment is sent, businesses are informed that funds have reached the payee’s bank account

  • Request for Payment: Vendors will be able to send a Request for Payment within an RTP in the future

Real-Time Payments Benefits

  • Available 24/7: Compared to checks and ACH, which can take up to 1-2 business days to process and become available, payments made through RTP are available immediately to the payee

  • Send Up to $1M Instantly and Securely: Your organization can now send up to $1M on the RTP NetworkⓇ, giving you the ability to send funds with instant availability and confirmation to vendors or other businesses quickly

  • Send Payment Details Between Payer and Payee Directly Within RTP: With bidirectional communication possible via the RTP Network, your organization can send payment and beneficiary information directly within a RTP, enabling payment confirmation, and in the future, request for payment capabilities

  • Obtain More Control Over Cash Flow: Instead of having to wait several business days for payments to transfer and become available to vendors, you can send payments the day they are due with RTP with minimal fees

How to Gain Access to Real-Time Payments

The Trovata Payments App enables you to initiate and track real-time payments, ACH, book transfers, and wires in one platform. Currently available to Trovata clients who bank with Bank of America, J.P. Morgan, Silicon Valley Bank, and Wells Fargo, you can take advantage of RTP in order to send payments up to $1M with instant settlement and fund availability. 

Trovata Payments App Benefits

  • Initiate and Track Payments In One Platform: Utilize one UX to initiate and track payments across all your banks

  • Access RTP Payments: Send secure payments 24/7 with instantaneous settlement, confirmation, and fund availability. Limit raised to $1M

  • Implement Custom Workflows: Create custom, templatized payment workflows to ensure payments adhere to treasury policy and internal controls

  • Utilize Advanced User Permissions: Assign users different roles such as preparer, reviewer, approver, and releaser, and utilize a dual approval process to require two admins to approve edits to workflows, templates, or accounts

As RTP becomes steadily adopted, it has several use cases that could change how businesses initiate and process payments. For businesses or individuals who need to make quick, time-sensitive payments either business-to-business, peer-to-peer, or from employer-to-employee via payroll, RTP can revolutionize and streamline the timeline people expect to be paid and receive cash. The less time you spend waiting for cash payments, the quicker that cash can be utilized to grow your business. 

Take advantage of real-time payments by signing up for a Trovata account today or schedule a demo!

Subscribe to Our Newsletter