What government officials should know about real-time payments

Real-Time Payments are facilitated through the first new payment rail in 40 years and supported by the largest financial institutions. As adoption increases with businesses and customers, opportunities for public entities will increase, as well.

As businesses continue to discuss the increased operational efficiencies delivered by the use of real-time payments, it’s natural for public sector finance leaders to wonder how the latest payment technologies fit for public entities.

“Businesses in many industries are taking advantage of the RTP^® network, especially with the recent transaction increases,” says Lee Strom, senior vice president and government banking division manager for U.S. Bank Corporate and Commercial Banking. “With RTP, governments or other public entities can leverage a fast-growing payment rail that provides immediate settlement of funds with data-rich messaging and 24/7 access.” 

“For example, RTP will change the way customers interact with online bill pay via two-way, real-time communication,” says Strom. “For governments that adopt it, RTP can benefit both the biller and customer. It can enable instant constituent payments for things like tax refunds, unemployment and social program payments. It also supports cost-effective bank-to-bank account transfers.”

So, what does the public sector need to know about real-time payments right now? Here are answers to five common questions.

What is RTP?

RTP is a digital payment network that enables organizations to send, receive and request real-time payments. The RTP network is operated by The Clearing House (TCH), which is a consortium of member banks (including U.S. Bank).

The unique features of RTP not only streamline payments, but also eliminate the risk of fraud often associated with paper-based payments, batch ACH and traditional wires. RTP also allows for real-time payment confirmations, reduced reconciliation costs, faster account opening and improved cash flow.

How does RTP work?

RTP is the first new payment rail in 40 years and now payments can be sent and settled instantly.

Payments are pushed from the sender’s bank account directly to the receiver’s account, providing a more secure transaction than a typical check, card or ACH debit. RTP also includes the ability to send a digital bill (Request for Payment) to facilitate immediate payment and improve straight-through processing.

The network is always on, so you can execute payments 24/7/365, even on weekends and holidays.

Real-time research on real-time payments

New research from U.S. Bank shows the rise of real-time payments across the country and improved business results for the first wave of early adopters. Gain insights into how innovative companies are using real-time payments to accelerate their digital transformation.

See our survey of 1,000 finance leaders >

What are the benefits of Real-Time Payments?

RTP lets organizations take control over their money movement and drive transformative innovation.

• It’s immediate: Funds are immediately available to the receiver.
• It’s certain: Every payment is final, irrevocable and confirmed immediately.
• It’s easy: Initiating payment of a bill or invoice is simple.
• It’s data rich: Rich payment and remittance data reduce the need for reconciliation and improve operational efficiency.
• It’s a cash management tool: The ability to send and receive immediate payments offers more control over cash flow.
• It’s always on: Transactions can be initiated 24/7/365 from existing accounts.

What are some use cases of Real-Time Payments?

RTP can help you take control of your money movement through features like frictionless transactions, automated processing, and irrevocability of funds. Examples include:

• Immediate vendor payments
• Quick-turn bill payments
• Immediate consumer refunds or rebates
• Payroll
• Payouts for emergencies, even nights, weekends and holidays.
• Time sensitive disbursements
• Domestic bank-to-bank account transfers

How does RTP fit into the future of payments?

Quite simply, RTP can create a competitive edge for any entity with payment solutions for the modern economy. The ability to move money to and from vendors, suppliers and consumers – not to mention within the organization – can be transformative

As one of the nation’s top senders of RTP, U.S. Bank has the experience, technology and products to integrate RTP into any organization’s payment strategy.

“RTP allows for more information to be shared,” Strom notes. “Entities that have relied on more manual processes to receive and send payments are now looking for ways to leverage the potential of their ERP systems to gain efficiencies and benefit from faster payments.”

RTP is just one piece of the payment puzzle for public sector entities. Our knowledgeable team can provide guidance to help you navigate the payments landscape and expertise to help you achieve your long-term goals. For more information about our corporate and municipal services, contact us or visit our website. 

To learn more about real-time payments, visit our RTP® resource page, explore our survey of 1,000 American businesses, or schedule a call with a treasury management expert.