What is RTP? Understanding The Clearing House Real-Time Payments Network

RTP is the real-time payments solution from The Clearing House.

Launched in July 2017, the RTP network brought real-time payments to the United States. Today, the RTP network reaches 70% of U.S. demand deposit accounts (DDAs). As of Q3 2024, the network now averages over 1 million payments per day and continues to set new volume records.

According to The Clearing House, “The RTP network represents a new phase in the evolution of the U.S. payments industry and is providing financial institutions with a modern platform for product innovation. Financial institutions can leverage a wide variety of features – enhanced speed, security, continuous operation, payment status transparency and messaging capabilities – to create unique offerings for their retail and corporate customers.”

Consumers and businesses demand safer and faster payments. With RTP, banks and credit unions can innovate to create or enhance digital services for their customers/members.

RTP’s double-digit volume growth each quarter demonstrates consumers’ and businesses’ increasing demand for real-time payments. The banks and credit unions that make payments available in real time with RTP gain a competitive advantage and deliver outstanding customer/member experiences.

In addition, RTP offers the potential for financial institutions to create value‑added services through APIs for embedded banking.

The RTP network is designed to address faster, more secure payments needs across all customer/member segments and use cases. The top use cases that have emerged to date include:

• account-to account transfers (A2A)
• brokerage account funding
• digital wallet defunding to DDAs
• earned wage access and emergency payroll
• instant wage access (for gig economy workers)
• merchant disbursements
• real estate closing payments/title insurance payments
• consumer loan funding

The current transaction limit for the RTP network is $1 million for each of these use cases.

Both RTP and FedNow are real-time payments systems; however, The Clearing House provides RTP, and the Federal Reserve supports FedNow. Both systems offer credit-push payments, immediate funds availability, settlement within seconds, and payments are irrevocable.

These systems are not interoperable, but provider partners support a seamless experience via payment hubs. Banks and credit unions can choose to offer one or both real-time payment solutions. They can choose to start with one and add another or drop one and add another. This becomes easy with a payment hub, which simplifies switching between rails.

The RTP Participation and Operating Rules help to govern transactions on the RTP network and point to applicable regulations. The Clearing House offers rules interpretations as warranted, and the rules are modified on a continuous basis to accommodate new areas of opportunity and questions that arise.

By partnering with a provider who has a depth of knowledge of these rules and regulations, you can ensure you remain in compliance.

For banks and credit unions, fraud is always a top consideration, and The Clearing House continues to innovate to strengthen fraud protections. For instance, the RTP network now offers the TCH Token Service as an optional capability to issue tokens to stand in for real account numbers when sending or receiving payments. It’s a way to reduce the potential for theft and fraud.

But banks and credit unions should not rely on the network alone for their fraud protections. When exploring partners for RTP, FIs should seek out a provider who leverages integrated real-time fraud monitoring and/or provides APIs to help you incorporate your existing fraud solution.

In addition, you should look for a partner that can help manage operational risk. Select a provider partner who offers smart routing capabilities to mitigate the risk of payment failures or delays by automatically rerouting transactions when necessary.

Banks and credit unions interested in utilizing RTP may link up with a partner provider. To find the right partner:

1. Identify a service provider who will ensure smooth onboarding with a ready-to-go solution. Target one that will integrate with your internal systems and your core. For a timelier experience, don’t wait on layered solutions from legacy providers; instead, identify reliable pre-wired, certified and tested connections so you can go to market faster.
2. Ensure your chosen partner offers solutions to meet today’s needs and tomorrow’s potential. For example, look for a provider that offers a payments hub. By using a unified API, payment hubs make it easy to integrate new payments. This not only simplifies orchestration but also allows FIs to customize workflows for seamless integration. Also confirm the provider offers a platform that’s constantly updated to meet new standards, regulations, industry innovation and customer expectations.
3. Collaborate with your selected provider to determine if you want to launch as receive-only or if you want to send as well. Many banks have chosen to start leveraging RTP by receiving payments, and then add the functionality of sending payments when the time’s right.
4. Create a to-go-market plan that aligns with informed implementation timing. Work with your partner to consider any third-party integrations you may need to create for customer/member-facing products or to manage risk. In addition, build in time to support internal training to confirm staff is ready to answer any questions on RTP.

For general information on RTP, visit The Clearing House website. To explore more about launching RTP with Finzly,  speak with one of our payment experts.