1. What are real time payments?
RTP is a digital payment network that enables organizations to send and receive instant payments. There are two operators for instant payments in the U.S., the Federal Reserve Bank (FedNow) and The Clearing House (RTP) - M&T Bank clears instant payments via RTP. With features designed to streamline payments, reduce fraud risks, and provide real-time confirmations, RTP offers benefits such as lower reconciliation costs, faster account opening, and improved cash flow.
As FedNow evolves, M&T will plan to leverage both networks.
2. How does RTP work?
RTP introduces a groundbreaking payment system, allowing for instantaneous sending and settling of payments. Unlike traditional methods like checks, cards, or ACH, it securely pushes funds directly from the sender’s bank account to the receiver’s account. Future features include the ability to facilitate instant payments and enhance straight-through processing for payment requests. The network is always accessible, enabling payments to be executed 24/7/365, including weekends and holidays.
3. What are the benefits of real-time payments?
RTP empowers organizations with control over their money movement and fosters transformative innovation. Key benefits include immediate availability of funds to the receiver, ensuring final and irrevocable payments, simplified payment initiation for bills and invoices, enhanced operational efficiency thanks to rich payment and remittance data, better cash flow management, and the capacity to initiate transactions at any time from existing accounts.
4. What are some use cases of Real-Time Payments?
RTP allows for a wide range of use cases, such as immediate vendor payments, quick-turn bill payments, instant consumer refunds or rebates, efficient payroll processing, emergency payouts (even outside regular business hours), time-sensitive disbursements, and simple domestic bank-to-bank account transfers. An evolving and important use case is Earned Wage Access, allowing workers daily access to funds.