Real-Time Payments Gain Traction With New RTP Networks and Cross-Border Initiatives

The demand for instant payments—particularly in cross-border transactions—continues to reshape the financial services industry. In the US, The Clearing House—a banking association owned by some of the largest banks in the country—recently rolled out its real-time payments (RTP) network, which has now facilitated over a billion transactions. By contrast, traditional automated clearing house (ACH) payments can take up to three business days.

The latest milestone exemplifies the rapid shift toward faster and cheaper payments and transactions, with almost all US financial institutions planning to integrate RTP capabilities soon. After all, RTP has become a vital competitive differentiator, with customers demanding things like instant payroll and faster gig economy payouts. Investments in RTP infrastructures are also underway in other countries, with some projections suggesting that real-time payments could account for around a quarter of all digital payments globally by 2028.

Unsurprisingly, fintechs continue to play a vital role in driving this industry-wide global transformation. However, convergence between robust domestic RTP systems and dedicated cross-border solutions is not without challenges. These include achieving interoperability between diverse national systems, navigating highly variable regulatory environments, and managing currency conversation cheaply and efficiently. Legacy banking infrastructure, particularly among traditional financial institutions such as central banks, also remains a common barrier to faster innovation.

Capitalizing on the rise of real-time payments

Overcoming the hurdles will require further standardization but, for fintechs, the time to act is now, while they still have time to capitalize on the shift towards RTP—even if it involves operating at a loss for a short time. Staying competitive both now and in the foreseeable future requires integrating with domestic RTP capabilities as soon as possible. In the US, these include solutions like the Clearing House RTP network and the Federal Reserve’s FedNow service, as well as similar systems in other regions or jurisdictions.

To truly stay ahead, fintechs might also consider developing additional use cases for instant payments. For example, there’s growing customer demand for things like instant insurance claim payouts—and many customers are willing to pay higher premiums for the convenience. Other potential use cases include real-time supplier payments in B2B, immediate access to earned wages for employees, or fast funding for loans and investments. While all these use cases are very much still in their infancy, RTP promises to radically change the financial landscape for good.