Real-Time Payments are facilitated through the first new payment rail in 40 years and supported by the largest financial institutions. As adoption increases with businesses and customers, opportunities for public entities will increase, as well.
As businesses continue to discuss the increased operational efficiencies delivered by the use of real-time payments, it’s natural for public sector finance leaders to wonder how the latest payment technologies fit for public entities.
“Businesses in many industries are taking advantage of the RTP® network, especially with the recent transaction increases,” says Lee Strom, senior vice president and government banking division manager for U.S. Bank Corporate and Commercial Banking. “With RTP, governments or other public entities can leverage a fast-growing payment rail that provides immediate settlement of funds with data-rich messaging and 24/7 access.”
“For example, RTP will change the way customers interact with online bill pay via two-way, real-time communication,” says Strom. “For governments that adopt it, RTP can benefit both the biller and customer. It can enable instant constituent payments for things like tax refunds, unemployment and social program payments. It also supports cost-effective bank-to-bank account transfers.”
So, what does the public sector need to know about real-time payments right now? Here are answers to five common questions.
What is RTP?
RTP is a digital payment network that enables organizations to send, receive and request real-time payments. The RTP network is operated by The Clearing House (TCH), which is a consortium of member banks (including U.S. Bank).
The unique features of RTP not only streamline payments, but also eliminate the risk of fraud often associated with paper-based payments, batch ACH and traditional wires. RTP also allows for real-time payment confirmations, reduced reconciliation costs, faster account opening and improved cash flow.
How does RTP work?
RTP is the first new payment rail in 40 years and now payments can be sent and settled instantly.
Payments are pushed from the sender’s bank account directly to the receiver’s account, providing a more secure transaction than a typical check, card or ACH debit. RTP also includes the ability to send a digital bill (Request for Payment) to facilitate immediate payment and improve straight-through processing.
The network is always on, so you can execute payments 24/7/365, even on weekends and holidays.