Payments - Introduction / Learning brief
US Real-Time Payments (RTP)
Your notes
In simple terms / 01
What this means in plain language
The RTP network from The Clearing House is a US instant-payment rail that runs around the clock, uses ISO 20022 messages, and settles with immediate finality against a prefunded account at the Federal Reserve.
The Real-Time Payments (RTP) network, launched by The Clearing House in 2017, was the first new core payment rail in the United States in decades. It moves money between banks in seconds, at any hour, on any day of the year. Payments are credit-push, meaning the payer's bank sends the funds and the receiver's bank confirms almost instantly, so both sides know the payment is complete right away. It carries structured ISO 20022 messages, which allows richer information to travel with each payment, and it settles against money that banks have set aside in advance so that finality is immediate.
Complete lesson / 02
Understand the full idea, step by step
The ACH lesson ended with a gap: what about the payment that cannot wait for a window? A plumber finishing a job on Sunday evening, a supplier who releases goods only on confirmed payment, wages earned today and needed today. For decades the US answer was "Monday's batch". In 2017 The Clearing House launched a rail that closed the gap: RTP.
RTP at a glance
- Operator
- The Clearing House (private, bank-owned) — live since 2017
- Availability
- 24 hours a day, every day of the year
- Direction
- Credit-push only — no mechanism to pull funds from another account
- Messages
- ISO 20022 — structured data travels with each payment
- Settlement
- Immediate finality against a prefunded joint account at the Federal Reserve
Where the finality comes from
RTP's settlement design is worth slowing down for. Participating banks jointly prefund a single account held at the Federal Reserve, each owning a position within it. When Riya's payment clears, RTP moves value from Bank Alfa's position to Cassia Bank's position inside that account. Because the money was set aside in advance, in central-bank money, there is nothing left to settle later and nothing that can fail later: the payment is final the moment it completes. Compare the neighbours: Fedwire settles each payment across the banks' own Federal Reserve accounts; the ACH defers and nets; RTP prepositions the money so that finality is instant even at 21:15 on a Sunday, when Fedwire itself is closed.
Seconds, step by step
- INSTRUCTION
Riya confirms USD 640.00 to Arjun in her app. Bank Alfa's clock starts — the network expects an answer in seconds.
- VALIDATION
Bank Alfa validates and screens in real time: balance, format, sanctions. On an always-on rail there is no overnight batch for a slow check to hide in.
- MESSAGE
Bank Alfa sends the ISO 20022 credit-transfer message into the RTP network, which passes it to Cassia Bank.
- VALIDATION
Cassia Bank must answer promptly: can it credit Arjun? It checks the account and accepts.
- SETTLEMENT
On acceptance, RTP shifts USD 640.00 from Bank Alfa's position to Cassia Bank's position in the prefunded joint account at the Federal Reserve. Final — nothing settles later.
- LEDGER
Bank Alfa finalises the debit to Riya's account; Cassia Bank credits Arjun's account.
- NOTIFICATION
Confirmations flow back through the network. Riya sees success; Arjun sees money he can spend at once — and both banks know the same thing at the same time.
If RTP is push-only, how does a business collect money — send an invoice and hope?
With a Request for Payment: an ISO 20022 message in which the payee asks to be paid, carrying the amount and references. The payer sees the request in their banking app and decides — approve, and their bank pushes an ordinary RTP credit; ignore or decline, and nothing moves. It gives billers a collection flow without ever letting anyone reach into an account. That is the deliberate contrast with an ACH debit, where an authorised pull does draw the funds. On RTP, the payer's finger is always on the button.
| RTP | FedNow | |
|---|---|---|
| Operator | The Clearing House (private) | Federal Reserve (central bank) |
| Model | Instant credit-push, 24/7/365, ISO 20022 | Instant credit-push, 24/7/365, ISO 20022 |
| Settlement | Positions in a prefunded joint account at the Federal Reserve | Directly across banks' own Federal Reserve account balances |
| Network | Its own participants and connections | Its own participants and connections — the two rails do not interconnect |
| A bank may join | RTP only, FedNow only, or both | RTP only, FedNow only, or both |
How the two rails coexist
RTP and FedNow are separate systems chasing the same goal, and they do not exchange payments with each other. A sending bank can only reach a receiving bank on a network both have joined. So routing an instant payment starts with a reachability question: is the beneficiary's bank on RTP, on FedNow, on both — or on neither, in which case the payment falls back to ACH or a wire? Banks that join both rails route payment by payment. For a beginner the durable point is simple: the United States chose to have two instant rails rather than one, and reachability, not preference, decides which one a given payment rides.
COMMON CONFUSION
“Instant surely means instantly reversible — if Riya mistypes and pays the wrong person, the bank can just pull the payment back.”
The opposite: instant settlement is instant finality. A completed RTP payment cannot be unwound by the sender or the network. What exists is a request-for-return process — Bank Alfa asks Cassia Bank, which asks its customer, and the money comes back only as a new, voluntary payment. This is why instant rails put so much weight on checks before the send: confirming the payee, screening in real time, and pausing suspicious instructions while they are still instructions.
STRICTLY SPEAKING
Strictly speaking, RTP's transaction limits, participation requirements, prefunding mechanics, and message specifications are set by The Clearing House and revised over time — quote the operator's current documentation, not a remembered figure. FedNow's equivalents are set by the Federal Reserve. Both networks reach an account holder only through a participating institution.
FOR NOW, REMEMBER
- RTP, run by The Clearing House since 2017, moves US payments in seconds, around the clock, every day of the year.
- Every payment is credit-push; Request for Payment lets a payee invite a payment without any ability to pull funds.
- Settlement is immediately final against a prefunded joint account at the Federal Reserve — the money was set aside before the payment was sent.
- FedNow is a separate instant rail run by the Federal Reserve; the two do not interconnect, so reachability decides which rail a payment rides.
TRY IT YOURSELF
A supplier asks Asha Traders' US office for an instant payment on a Saturday. Bank Alfa participates in both RTP and FedNow; the supplier's bank participates only in FedNow. What happens to the payment?
You have now seen the full US toolkit — gross wires, netted wires, batch ACH, and two instant rails. The topic behind this lesson sets those national choices side by side with how other countries assembled theirs.
KEEP GOINGKey takeaways / 03
Three things to remember
- 01
RTP is a 24/7/365 instant rail: payments can be sent and completed at any time, including nights, weekends, and holidays.
- 02
It is credit-push and settles against a prefunded joint account at the Federal Reserve, so each payment is final the moment it clears.
- 03
Messages follow the ISO 20022 standard, and Request for Payment lets a party ask to be paid without pulling funds directly.
Practical use cases / 04
Where you would use this
A business paying a supplier immediately on delivery so the supplier can confirm receipt before releasing goods.
A person receiving earned wages the same day they are calculated, rather than waiting for a batch cycle.
A biller sending a Request for Payment so a customer can review and approve the exact amount before it is pushed.
Worked example / 05
Put the idea into a real situation
Illustrative example: Rivera Plumbing finishes a job at 9 p.m. on a Sunday and sends a Request for Payment for 640 US dollars through the RTP network. The customer, Dana, approves it in her banking app. Dana's bank checks funds and pushes an ISO 20022 credit message; Rivera's bank confirms receipt within a couple of seconds. Because the two banks settle against a prefunded joint account at the Federal Reserve, the payment is final immediately and cannot be reversed by clawback.
Operational sequence / 06
Follow the message and decision path
This compact sequence is a learning model. Exact routing and rulebook behavior can vary by scheme, participant, and implementation.
Read the steps as text
- 01MessageRiya instructs Bank Alfa to pay ArjunRiya (sender) → Bank Alfa (sender bank)
Riya tells her bank to send USD 250.00 to Arjun right now, at night. RTP is push-only: money only moves because the sender chooses to send it — you cannot pull funds from someone else's account.
- 02MessageBank Alfa submits the credit transfer to RTPBank Alfa (sender bank) → RTP (The Clearing House)
Bank Alfa screens and validates the payment, then submits an RTP credit transfer to the network. RTP is open 24/7/365, so there is no cut-off to wait for — the request is processed the moment it arrives.
- 03MessageRTP checks the position and asks Nordbank to confirmRTP (The Clearing House) → Nordbank (receiver bank)
RTP uses Bank Alfa's balance in the prefunded joint account at the Federal Reserve Bank of New York and asks Nordbank whether it will make the funds available to Arjun. Banks must keep that prefunded balance topped up for this to work.
- 04MessageNordbank confirms it will make funds availableNordbank (receiver bank) → RTP (The Clearing House)
Nordbank answers that it will credit Arjun immediately. A receiving institution on RTP must make the money available to the recipient right away, not hold it for later.
- 05SettlementRTP settles in the prefunded joint account at the Fed NYBank Alfa (sender bank) → Nordbank (receiver bank)
On the positive confirmation, RTP settles by adjusting the two banks' positions inside the prefunded joint master account that participants hold at the Federal Reserve Bank of New York. This settlement is final and irrevocable.
- DR Bank Alfa position in the RTP prefunded joint account (Fed NY) — USD 250.00
- CR Nordbank position in the RTP prefunded joint account (Fed NY) — USD 250.00
- 06PostingBank Alfa debits RiyaBank Alfa (sender bank)
Bank Alfa books the debit on its own ledger against Riya's account. The interbank money already moved in the prefunded joint account; this posting reflects it on the customer's balance.
- DR Riya's account at Bank Alfa — USD 250.00
- 07PostingNordbank credits Arjun immediatelyNordbank (receiver bank)
Nordbank makes the USD 250.00 available to Arjun straight away, so he can spend it that same night. Because settlement was final and irrevocable, this payment cannot be recalled by Riya or Bank Alfa.
- CR Arjun's account at Nordbank — USD 250.00
Evidence & review / 07
Evidence & review
RTP network (The Clearing House) and, for the coexistence comparison, the FedNow Service; United States, US dollar payments
What this brief simplifies: Prefunding mechanics, transaction limits, and timeout parameters are described qualitatively and left to the operators' current documentation. The step sequence compresses network-level acknowledgement details into a single confirmation step. No volume or participation counts are quoted.
Sources for this brief4
- Scheme-specific rule
CHIPS ↗ — The Clearing House · The Clearing House — RTP network rules and prefunded settlement
CHIPS migrated to ISO 20022 messaging in April 2024; participant rules are not fully public.
- Official requirement
Fedwire Funds Service ↗ — Federal Reserve Financial Services · FedNow Service
The Fedwire Funds Service completed its ISO 20022 implementation on 14 July 2025.
- Market practice
Fast payments - enhancing the speed and availability of retail payments ↗ — CPMI, Bank for International Settlements · Design features of fast payment systems: credit-push, finality, prefunding
Predates several major instant payment launches; this site uses it for concepts, not current statistics.
- Simplified educational illustration
Payments Signal editorial teaching models — Payments Signal · Riya/Arjun and Asha Traders scenarios
Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.