As an end user, the differences between ACH, RTP or a wire transfer may not be immediately clear. Payment terminology and technology happen in the background of our daily lives and many users don’t readily know how their funds move – and that’s ok. 

However, end users do care how fast their payments get from point A to point B. Think of it like shipping a package. Usually, you can select your method of delivery (overnight, next day, ground, etc.) based on how fast you want the package to get to your recipient.  Payment methods work the same way. Transactions sent via RTP are instant and allow you to make a payment in ‘real time.’ Let’s go through some examples of how RTP can improve common payment situations and speed up delivery times.

Peer to Peer (P2P) 

Have you ever split an expense with a friend and needed to settle up? P2P transactions can be initiated by a variety of different mobile apps making sending funds to friends easy. Users can utilize RTP to instantly transfer those funds into a bank account and use money immediately, instead of waiting 1-3 business days.  

Business to Consumer 

Payroll is a great example of when a business may need to send a payment to an individual quickly. In these transactions, businesses could utilize RTP to pay their employees instantly, at a specific time of day every other Friday. Instant payments allow for more time to process commissions-based pay and bonus pay, allowing for more accurate and timely pay. Employees would know exactly when to expect their paychecks in their accounts and use those funds immediately.  

Consumer to Business 

Consumers regularly need to pay a variety of businesses, including landlords, utilities, internet/telecom providers, etc. RTP allows instant payment and settlement with businesses. These instant payments could help avoid late fees or penalties for submitting last-minute payments. 

RTP has many relevant applications, and as you can see from this handful of examples, there are countless positive implications to having quicker access to funds. For you as the end user and for the businesses that service you, RTP is here to make funds available faster. Whether it’s Bank to Bank payments, Consumer to Business, or Peer to Peer, RTP has countless advantages for you as the end user.