What Are Real-Time Payments?

Real-time payments (RTP) represent a significant shift in the way financial transactions are conducted. They are payment systems which facilitate an immediate transfer of funds 24/7, including weekends and holidays, to create a near-instant payment. With growing global commerce, and the demand for faster, more efficient payment systems has surged, and conventional banking is struggling to keep up with the pace of growth. For businesses, real-time payments present an opportunity to access funds quickly, improve their cash flow management, increase payment processing efficiency and improve customer experience. 

Fortune Business Insights valued the global real-time payments market at 24.91 billion USD in 2024, which is expected to grow by almost 10 billion USD in 2025 before reaching a predicted 284.49 billion USD by 2032. Its uncontrollable growth stems from the increasing globalisation of commerce. Businesses, regardless of size, now operate in a more interconnected world, where the ability to send and receive payments quickly across borders is paramount. This has led to the development of international real-time payment networks, enabling seamless transactions that cater to both consumers and businesses engaged in cross-border trade. As a result, the landscape of financial transactions is evolving, whether it’s improving the speed of e-commerce transactions or contract worker payouts; real-time payment systems are at the forefront of this transformation.

What are real-time payments (RTP)?

Real-time payments are near-instant transactions that are processed and settled within seconds, around the clock. Unlike traditional payment systems that may take hours or days to clear, RTP transfers funds directly from one bank account to another almost instantly. As soon as the transaction is initiated, the money is received and available for use by the recipient. It’s this immediacy that makes the payment method appealing to businesses and their customers.

Some of the most popular real-time payment networks globally include Faster Payments system in the UK, Pix in Brazil, Unified Payments Interface (UPI) in India, PayNow in Singapore and SEPA Instant in Europe.

How do real-time payment systems work?

Core characteristics of real-time payment systems include 24/7 availability, ensuring that transactions can occur at any time without delays. Additionally, these systems often provide enhanced transparency, so users to track their payments in real time. Additionally, they typically feature robust security measures to protect against fraud and ensure the integrity of transactions. For businesses operating across various commerce channels or global markets, this technology represents a significant step in innovation, transforming how transactions are traditionally managed and reducing delays to improve cash flow efficiency. 

Additionally, the integration of artificial intelligence and machine learning into payment systems has further enhanced the efficiency and security of real-time transactions. These technologies can analyse transaction patterns in real time, identifying potential fraud attempts before they occur. This not only builds trust among users but also encourages wider adoption of real-time payment systems, as individuals and businesses alike seek to leverage the benefits of speed and security in their financial dealings.

But how do real-time payments work? Here’s a quick overview:

1. Payment initiation

The real-time payment process starts when the payer sends money to a recipient. This can be done through various channels—online banking, mobile apps, or in-person—with options ranging from entering account details to scanning a QR code.

2. Verification and authorisation

Once the payment is initiated, the payer’s bank verifies their identity using security tools like biometrics, passwords, or two-factor authentication. It also checks for sufficient funds before approving the transaction.

3. Instant processing

After approval, the payment request is routed through the RTP network, typically managed by a central financial body. Unlike batch-based systems used by traditional payment systems, RTP processes each payment individually and in real time, ensuring immediate execution.

4. Confirmation

As soon as the transaction is processed, both parties receive instant confirmation via their chosen communication method, such as app alerts, text messages, or emails. This transparency improves confidence and cash flow certainty.

5. Real-time settlement

The final step is settlement. Funds are moved from the payer’s bank to the recipient’s bank within seconds, making the money instantly accessible.

Benefits of real-time payments

The benefits of real-time payments are manifold, impacting both consumers and businesses in significant ways. For consumers, the most apparent advantage is the instant access to funds. Whether paying for a service, splitting a bill with friends, or making an emergency purchase, the ability to transfer money instantly enhances convenience and efficiency.

For businesses, real-time payments can offer many benefits:

Improve cash flow management

Merchants can receive payments immediately, reducing the time spent on accounts receivable and allowing for quicker reinvestment into operations rather than waiting days for a transaction to clear. 

24/7 access

No longer hindered by differing time zones globally or banking hours, which delay transaction processing, RTPs operate 24.7, which is essential in our growingly connected world, driven by cross-border e-commerce.

Transparency and assurance

The enhanced transparency and tracking capabilities of real-time payments can streamline financial processes and reduce administrative burdens. The near-instant nature of RTPs provides confirmation of payment, assuring businesses.

Seamless customer experience

Moreover, the immediacy of real-time payments can foster stronger relationships between businesses and their customers. For instance, service providers can offer immediate confirmations of payment, which not only enhances customer satisfaction but also builds trust. 

The future of real-time payments

Looking ahead, the future of real-time payments appears promising. Innovations such as blockchain technology and artificial intelligence may further enhance the efficiency and security of these systems. Additionally, as digital currencies gain traction, real-time payments could evolve to incorporate these new forms of currency, revolutionising the way transactions are conducted. The integration of biometric authentication methods, such as fingerprint or facial recognition, could also strengthen security, making real-time payments not only faster but safer for users. As these technologies develop in line with consumer demand, the scope of real-time payments will enable new applications in areas such as international remittances and microtransactions, which have historically faced barriers due to high fees and slow processing times.

Furthermore, the use of innovations such as generative AI will further enhance efficiency and drive real-time payments to make data-driven decisions. This could bring an unseen quality of data integrity, payment efficiency and regulatory compliance.