RTP - Real-time payments

Real-time payments are the newest payment rail in the us introduced by The Clearing House’s “RTP Network” in 2017.

  • RTP payments are initiated and settled nearly instantl (2-3 seconds)
  • Provide 24x7x365 access (incl. weekends & holidays)
  • Supports “Push” payments only (a crediting transaction to the receiver)
  • Transactions are irrefutable - they can not be reversed by sender
  • Provide bilateral communication allowing payment confirmation to both parties
    • Particularly useful for many B2B use cases…even removing credit risk from the equation…
  • Uses ISO 20022 payments messaging standard
    • Moves payment data along with the funds => game-changer for getting payment data into ERP systems
  • Used predominantly for P2P & B2C (gig workers) transactions ….B2B use is starting to tick up, esp since begin of pandemic
  • The payer is always in control - up to them when and if they want to pay - this helps to reduce fraud and errors

Quick Stats as of 2020

  • 130+ FI’s in process of implementing RTP’s
  • 88% of US banks view RTP as essential part of payments offering
  • Over half of demand deposits in the US are connected to TCH’s RTP Network
  • 56 countries have live RTP rail, up from 14 countries six years ago

B2B Benefits of RTP

  • Certainty of payment
  • Improved Cashflow
  • Ease of managing finances

RTP Network

Supported message types:

  • Credit Transfer: the only way funds can be transferred on TCH RTP, a credit push
  • Request for Payment: prompts a user to send a credit transfer
  • Payment Acknowledgement
  • Request for Information and Response to RFI
  • Stand-Alone Remittance Advice

Payment flow example:

  • A consumer authenticates themselves through their bank app/website and initiates a payment. (ex. to make hospital payment)
  • The payer’s bank creates a message and sends it to the RTP network which is validated by the network and forwards to the receiving FI (the hospital’s bank).
  • The receiving institution either accepts or rejects the message. (ex. wrong account number)
  • If the receiving institution accepts the message, it immediately sends a message back to the sending institution saying the payment has been accepted.

As that process happens, in the background, The Clearing House settles the transaction in real time, using a joint account at the Federal Reserve in New York that participating banks must prefund and keep above a certain minimum.

  • Each real-time credit transfer costs the sending institution 4.5 cents

P2P Payment Apps

P2P payment apps have gradually integrated with the RTP Network

  • Paypal - 2019 - Partnered with JP Morgan (using JP Morgan’s RTP Network access) to transfer funds from a paypal balance to a bank.
  • Venmo - Aug 2019 - capable of routing instant transfers through TCH’s RTP Network
  • Zelle - Integrated on network early 2021


  • In pilot stage (more than 200 FI’s involved), launch expected ~2023
  • 2019 Announcement
  • To be operated solely by the Federal Reserve Banks
  • Distinguishing feature from RTP Network is FedNow will utilize the FedLine Network which provides payment and information services to over 10K FI’s
  • Modernizing Our Payments System - Speech by CEO of Federal Reserve Bank of Cleveland
  • Goals of 2nd RTP system:
    • Systemic resiliency
    • Drive competition in price & ease of use
    • Encourage adoption

The payments flow should look like:

  1. A consumer initiates a payment.
  2. The sender’s bank screens the payment.
  3. The sender’s bank submits a payment message to the FedNow Service.
  4. FedNow validates the payment message.
  5. FedNow sends the contents of the payment message to the receiver’s bank.
  6. The receiver’s bank confirms or denies that it maintains the specified account.
  7. If approved, the FedNow Service debits and credits the appropriate master accounts.
  8. FedNow sends advice of credit to the receiver’s bank and an acknowledgment of completed settlement to the sender’s bank.
  9. The receiver’s bank immediately credits the receiver’s account.

Will not include alias-based payments (directories) at launch …but may be included later.