RTP
Real-Time Payments (RTP) Systems: Understanding the Concept
In this series of posts, we will explore the world of Real-Time Payment (RTP) systems and gain insights through real examples.
What Are Real-Time Payments?
Real-time payments (RTP) refer to payments that are initiated and settled nearly instantaneously. A real-time payments rail serves as the digital infrastructure facilitating such payments. Ideally, real-time payment networks provide 24x7 access, operating online even on weekends and holidays. In the United States, The Clearing House's TCH network is a prominent example of a real-time payments network.
Why Do We Need RTP?
The growth of e-commerce has led to changes in people's spending patterns. Shopping is no longer confined to regular business hours, presenting new challenges for funds transfers. Additionally, merchants require faster and more reliable money transfer systems to meet consumer demands. Traditional electronic payments, such as bank transfers that take several business days to complete, no longer align with user expectations. It is predicted that instant payments will become the standard for electronic fund transfers, allowing customers to access their funds digitally and manage them efficiently.
Understanding TCH RTP
The Clearing House (TCH) Real-time Payments (RTP) is an Immediate Payments clearing system in the USA. The RTP network, developed by The Clearing House, represents the first new core payments infrastructure in the U.S. in over 40 years. Currently, it is accessible to financial institutions holding 70% of U.S. demand deposit accounts (DDAs) and reaches 56% of U.S. DDAs. All federally insured U.S. depository institutions have access to the RTP network. Through the RTP network, individuals and businesses can conveniently send payments directly from their accounts at federally insured depository institutions, 24x7. Funds sent over the RTP network are immediately accessible. Financial institutions utilizing the RTP network for faster payments benefit from real-time final interbank settlement. This new phase of evolution within the U.S. payments industry enables product innovation, allowing financial institutions to offer unique features, enhanced speed, security, and messaging capabilities to their retail and corporate customers. For a full list of TCH RTP members, please refer to the link.
TCH RTP enforces a 5-second SLA (Service Level Agreement) for accepting or rejecting incoming requests and a 10-second SLA for end-to-end RTP payment transactions. In the next post, we will delve into the detailed flow of TCH RTP.
Stay tuned for more insightful content on real-time payments!
Keywords: Real-Time Payments, RTP, TCH network, funds transfers, e-commerce, instant payments, The Clearing House, financial institutions, core payments infrastructure, payment innovation, SLA.
