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What do real-time payments mean for merchants?

What do real-time payments mean for merchants?

Jul 7, 2023

As new payment technology emerges, the way consumers, businesses, and individuals are moving money around is evolving fast.

In fact, the only thing that’s moving quicker than the industry is the speed of the payments themselves – and here’s where real-time payments come in.

Below, we’re breaking down what real-time payments are and how they differ from ACH and wire transfers. We’ll explain how real-time payments work, where they’re used, and – most importantly – how they stand to change the game for merchants going forward.

What are real-time payments?

Real-time payments (also known as immediate payments or instant payments) are any transfer of funds between two parties that makes the money received immediately available to the recipient. The funds will show up instantly in the payee’s balance; and, likewise, be instantly deducted from the payer’s bank account.

Real-time payments are available 24/7, 365 days a year – enabling in-the-moment transactions regardless of holidays, weekends, or periods of bank inactivity.

So – do ACH transfers, wire transfers, and mobile payments all count as real-time payments?

No. While these all remain popular and effective ways for businesses, consumers, and private individuals to pay, the networks they’re processed through, the parties involved, and the length of time they all take to process mean they aren’t the same as real-time payments.

  • ACH transfers, for instance, are not instant: they can take up to five business days to process, and even same-day ACH payments (provided they’re sent before the cut-off date) still take several hours to reflect in the payee’s bank balance.
  • Wire transfers occur between two banks rather than through an RTP network –  and because banks operate at a slower pace, payments made through wire transfers can take up to 48 hours to arrive in their recipient’s account.
  • Mobile payments still require a settlement period, and funds received by a merchant through a customer’s digital wallet – such as using Google Pay, Apple Pay, or Samsung Pay from their mobile phone – don’t appear immediately in the business’s account.

Crucial to remember is that, because real-time payments go through instantly, they’re irreversible. Both parties – the payer and payee – will be unable to deauthorize the transfer once it’s gone through.

Learn more: What is FedNow?

How do real-time payments work?

A real-time payment involves five different parties:

  • The payer
  • The payer’s financial institution
  • The payee
  • The payee’s financial institution
  • The RTP network

When a merchant initiates a payment, a unique identifier – which contains the transaction details and the amount to be paid – is sent to the customer’s device.

Then, the customer simply confirms those details to finalize the payment on their end from the app or service they’re using to make the real-time payment. From there, the app works with both the merchant’s and the customer’s bank to shore up the final details – and authorize the payment.

The RTP network acts as a kind of mediator – a crucial ‘middleman’ that validates the transaction and verifies there are sufficient funds in the payer’s bank account before accepting (or rejecting) the payment. It’s this network, which is much faster than traditional banks working directly together, that enables real-time payments to actually be in real-time – and neatly sidestep the hours, and days, ACH and wire transfers require.

Learn more: Open loop payments

Where are real-time payments used?

There are so many payment situations that can benefit from real-time payments. These could include:

  • Business to business (B2B): making refunds, offering adjustments, and paying suppliers.
  • Consumer to business (C2B): paying bills and for goods and services at the POS (point of sale).
  • Person to person (P2P): sending money to friends or family.
  • Business to government (B2G): paying rates, taxes, and business registration fees.

In the financial services and retail sectors, real-time payments stand to make a particularly big splash. Challenger banks will be able to use real-time payments to continue to set themselves apart from the clunky, inflexible approaches of some of the big, traditional banks – and appeal, in particular, to Gen Z buyers craving speed and convenience. While in the retail sector, real-time payments can transform the way goods are bought, sold, and returned.

Benefits of using real-time payments

Whether it’s seamlessly repaying a friend for dinner or paying instantly for goods or services at the point of sale, the benefits of real-time payments for consumers are clear.

So how do real-time payments make merchants’ lives easier, too?


Real-time payments – as the name suggests – are fast.

For merchants, this allows you to banish inefficiencies in your back office: reducing processing delays and cutting out the time and financial costs of having to manually intervene when a (non-RTP) transaction fails to clear.

Cash flow

When you receive payments for goods and services instantly – not several working days later –  you’ll naturally have a clearer picture of your business’s cash flow situation. This enables you to accurately forecast for the future, and make better decisions – ones informed not by hunches, but by your business’s actual financial circumstances.

Cut costs

By harnessing real-time payments, you’ll benefit from lower operational costs, too.

Because real-time payments don’t involve a card intermediary (such as Visa and Mastercard), you won’t pay any interchange fees as a merchant. Interchange fees can be up to 4% of each credit card transaction you accept – so, cumulatively, avoiding them represents big savings.

Open up a new world of business

With many emerging consumers ‘frozen out’ by the infrastructure of traditional banking – unable to apply for a debit or credit card due to age or credit score, for example – concerns around financial inclusion are as rife as ever.

This, of course, is a dilemma real-time payments can solve: and it’s good news for merchants, too. By enabling access to cashless payments to a whole new generation of shoppers, real-time payments can bring more consumers – hungry for the products and services you provide – to your business’s door.

A frictionless returns experience

According to Shopify, 20% of all items bought online are returned (compared to 9% for brick-and-mortar stores). So, for e-commerce businesses in particular, a solid returns policy – and process – is a must.

Real-time payments offer just that. You can refund a customer for unwanted or damaged goods in an instant – and seeing their funds returned to their bank account alleviate any anxiety or uncertainty on their end. Ultimately, this will boost their trust in and loyalty towards your brand – making it more likely they’ll buy from you again.

Payment options with

Real-time payments are an exciting, expanding new element of the payments space.

That said, they may not be the right fit for all merchants. Because of their irrevocable nature, you may, for example, still opt for ACH instead when it comes to paying staff or making supplier payments.

What is the best approach? Setting your business up to accept multiple payment methods.

This allows you to remain flexible and modular and offer your customers (across different regions, countries, and markets) the ability to pay in the way they’re most comfortable with.

Here at, we empower you to accept payments through the methods and currencies your customers know and love. That includes ACH, American Express, Apple Pay, Google Pay, Paypal, Trustly, WeChat Pay – and plenty more options to suit the needs of your business, and customers, to a tee.

Explore the full range of digital wallets, international card schemes, and alternative payment methods supports – and browse our complete payment methods directory.

And get in touch with our sales team to find out how can work for you.

Unlock your payments potential today

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July 7, 2023 9:12
July 7, 2023 9:16