5 min read
Key takeaways
- Real-time payments settle instantly and irrevocably, giving businesses precise control over payment timing and cash flow while delivering immediate access to funds to suppliers and customers.
- Customers’ and suppliers’ increased expectation of faster payment options has prompted financial institutions and payment providers to offer more of them, boosting businesses’ adoption of real-time payment methods.
- To remain future-ready, companies should seek vendors, financial institutions and payment solutions that support a broad range of instant payment modalities.
Real-time payments enable instant funds movement between bank accounts, giving businesses more precise control over when money leaves their account and arrives at its destination. This timing precision optimizes cash flow, strengthens working capital management and improves vendor and customer relationships through reliable, predictable payments.
What are real-time payments?
Real-time payments are funds transfers that provide near-instant money availability through payment networks that operate 24/7, year-round.
Unlike ACH transfers that typically process over several business days, real-time payments complete within seconds and operate during weekends and holidays. These payments are final and irrevocable, offering immediate confirmation to both the sender and recipient.
This speed and certainty offers several business advantages:
- Cash flow optimization: Retain funds longer while still ensuring on-time payments through precise timing control
- Stronger vendor relationships: Foster positive business connections through reliable, prompt payments and potentially negotiate better terms
- Improved receivables: Access funds immediately upon payment, enabling instant delivery of goods or services
- Streamlined operations: Reduce payment reconciliation time and strengthen financial controls through payment finality and transparency
How do real-time payments work?
Unlike batch-processing systems, real-time transactions typically complete within a few seconds through a straightforward process:
- Payment initiation: The payer sends payment through their digital banking platform such as a bank website, including recipient account details and payment amount
- Bank verification: The payer’s bank confirms transaction details and available funds
- Network processing: The payment moves through a real-time payment network operated by a financial authority or bank consortium, processing individually rather than in batches
- Instant confirmation: Both the payer and recipient receive immediate notification when the funds transfer is complete
Real-time payment networks
In the United States there are two main real-time payments networks:
- The RTP® network: Launched in 2017 by The Clearing House, a banking association owned by major commercial banks including JPMorganChase
- FedNow® Service: Introduced in 2023 by the Federal Reserve
Real-time payment systems also operate beyond the U.S., with significant networks running in Asia-Pacific, Europe and Latin America. Some of the largest real-time payment networks are India’s Unified Payments Interface (UPI), the United Kingdom’s Faster Payment System (FPS) and Brazil’s Pix. While most real-time payment networks currently serve single countries or regions (like the eurozone), development is underway for cross-border payment capabilities.
Optimize your payment processes and cash flow management with sophisticated accounts payable solutions. Our cash management expertise and industry knowledge can help.
Use cases for real-time payments:
Real-time payments serve a wide range of business and industry needs:
Business-to-business (B2B) applications
- Instant supplier payments: Address payment delays from invoice disputes, human error or processing issues with immediate resolution
- Corporate treasury: Move funds instantly between company subsidiaries for efficient cash management
- Contractor payments: Pay freelancers and service providers—including designers, photographers, delivery drivers, event planners and contingent workers—immediately upon work completion
Business-to-consumer (B2C) applications
- Emergency disbursements: Deliver disaster relief, emergency and crisis aid without traditional banking delays
- Time-sensitive payroll: Process immediate payments for employee departures, leaves and other urgent situations
- Service payments: Enable instant compensation for gig economy workers—like rideshare drivers or delivery couriers—upon service completion
- Insurance disbursements: Speed up claim settlements with policyholders with immediate payment processing
- Government assistance: Support quick distribution of tax refunds, benefits and emergency aid payments
We’re here to help
With a $17 billion annual technology budget,1 we invest in world-class2 solutions that can help you no matter where you are on your payments journey. As your cash management consultants, we can help you identify and implement solutions to efficiently manage your payables and streamline your cash application, reporting and reconciliation processes.
Learn more about our J.P. Morgan's payment solutions.
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.
