From the very name the Real-Time Payments (RTP) are payments that are initiated and settled almost instantly.
It provides the consumers and businesses with the ability to conveniently send and receive immediate fund transfers directly from/to their accounts with bank or any financial institute anytime 24 hours a day seven days a week.
By combining speed, data, and communication, it is expected to resolve the existing limitations different stakeholders in the ecosystem are currently facing. Moreover, it can also facilitate bringing under banked populations and underserved merchants into the coverage of a more reliable ecosystem.
The term RTP may sound similar to RTGS (Real-Time Gross Settlement), however, there are some basic differences between them. An RTGS is typically reserved for low-volume, high-value transactions, while the RTP is ideal for high-volume, low-value (e.g., send money to a family member or friend, online purchase, or pay rent, or pay small amount to a merchant) transactions.
Beside this, an RTP network is also designed to address the customer needs across all customer segments (e.g., B2B, B2C, C2B, P2P, A2A, G2C).
Since an RTP network is always online and processes the transfers round the clock – from the central banks and governments to billers, FinTech organizations and individuals – everybody can be benefited from the RTP infrastructure in some way.
Be it sending funds to other people, or disbursing welfare and aid, or financial institutions transacting among themselves, experiences are vastly improved by frictionless interaction by RTP.
Japan developed the first RTP system in 1970s. By 2010, other countries including the UK, China, and India had their own RTP networks. Even in the USA, for the first time in 40 years, the Clearing House (TCH) and 25 partnering banks launched the first new core payments structure with support of RTP in November 2017.Down the line, an increasing number of banks, other financial institutions and their customers are expected to be engaging in the real-time payments.
In last couple of years, it has been observed that the real-time payments surged during the COVID-19 pandemic. In fact, the results of the 7thannual FIS global RTP trends report shows that the adoption of real-time payments accelerated during the pandemic. The report includes meta-analysis of global payments data research conducted in April and May of 2020.
Some significant findings of this report include that 56 countries had a live RTP network, up from 14 countries just six years ago; and our neighboring country India had the largest RTP market by volume, with 41 million payments per day.
Wondering about what future the RTP holds, the global implementations and acceptance are moving at a rate faster than anticipated. We hope the same will eventually and inevitably enhance and enrich our local FinTech industry in Bangladesh too.
With adoption of such innovative technology, all different stakeholders – banks, financial institutions, merchants, and consumers will experience better, faster, transparent and quality services out of this movement.
The writer works in the Payment Lab at Kona Software Lab Ltd