A crash course in faster payments

September 15, 2022 by Tiffany Taylor, Christian Hibbard, and Alison Arthur, Alacriti

The popularity of faster payments in the U.S. is growing at an accelerated pace. Not only are customers expecting their goods and services on-demand, but they’re also relying on digital, social distancing-friendly solutions to do so. With the use of cash being discouraged, people are looking for alternatives that offer the same speed and finality of payment. Faster payment offerings fill that need. They are designed to significantly expedite the actual movement of funds, with settlement completed anywhere from the same day to a few seconds after the payment is initiated.

“Faster payments” is an umbrella term for different payment systems that various entities have launched in support of quicker on-demand payments. In this blog post, we’ll outline four of the major systems that have evolved in support of faster payments.

Real-Time Payments: RTP^® from The Clearing House & FedNow

First, we’ll tackle the newest payment rail: real-time payments. Real-time payments (RTP—not to be confused with The Clearing House’s brand name RTP^®) is a generic industry term for a payment network or “rail” that allows businesses and consumers to send, clear, and settle payments instantly. Globally there are more than 50 real-time payments networks. All differ slightly but have a few common characteristics.