Real-time payments can put a fork in cash and checks

Real-time payments, the superfast new standard in U.S. billing and payment processing, represent the most sweeping change to the U.S. payments system since the Automated Clearing House launched approximately 45 years ago.

For businesses, RTP has the potential to end cash and check payments, ushering in a new period of instant transactions while vastly improving their cash flow.

According to new research from Citizens Commercial Banking, 90% of companies expect RTP to dramatically transform the way business is done. Clearly, these companies see real-time payments as a crucial opportunity to modernize their payment operations. There are tremendous advantages in terms of speed and certainty of payments. Cash flow predictability and payment reconciliation can also be greatly improved.

Under the current payment model, it usually takes a day or more for checks to clear and money to move from one account to another. In contrast, payments can be made electronically by a payee through the RTP network and the funds instantly move from one account to another. Information about the transaction also travels with the funds, so recipients know where the money is coming from and why.

As the new standard in U.S. billing and payment processing, RTP uses modern technology and messaging standards designed to meet the requirements of the modern digital economy. The ultimate payoff? Over time, real-time payments could become the predominant payment type while virtually eliminating cash and checks.

Already, the RTP network is gaining momentum, with Citizens’ Real-Time Payments Outlook reporting 41% of companies are currently discussing it with their banks or implementing it. In addition to replacing check and cash payments, 60% said the new network would improve collection activity and 59% said it would help them manage cash flow more effectively.

Eighty-two percent of companies said RTP solves for many of the problems with current payment options, such as the gap in time between making or receiving a payment and when the funds clear. They also noted the RTP network’s ability to reduce fraud, include payment data with the payment and automate payments more efficiently.

Companies are seeing this technology as a once-in-a-generation opportunity to overhaul their payment practices, and fully embrace the conveniences ushered in by today’s digital economy. Allowing payments to move instantly—24 hours a day, seven days a week, 365 days a year—will give companies the ability to operate their businesses with more ease and efficiency.

Real-time payment represents a historic shift in technology and commerce, and will eventually reshape how American companies do business.