Ellen Cibula
Written by Ellen Cibula Payments, Finance, and AI Expert: Learn More

Are you a business owner looking to learn more about real-time payments and ACH?

As someone who worked at a payment processor, I can tell you that understanding the differences between real-time payments and ACH is essential for businesses in 2024. Real-time payments are faster than traditional bank transfers, offer many security features such as authentication measures or fraud prevention services. They also give customers peace of mind when making transactions because they know it’s secure.

Learning about the differences between these two types of payment methods will help your business ensure its success this year. You will have access to greater security features, increased efficiency, and improved customer satisfaction by choosing the right type of payment method.

Check out my blog post on “Real-Time Payments vs ACH: Essential Guide for Your Business in 2024” now! It provides an in-depth analysis of both types of payment systems so that you can make an informed decision on what would be best for your company.


Real-time payments, as the name suggests, process transactions immediately – 24/7, 365 days a year. In contrast to traditional banking systems, real-time payments offer immediate processing of transactions.

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What are Real-Time Payments?

As a business proprietor, it’s essential to know about the different payment techniques and different payment rails. One such method is real-time payments, an innovative system that allows for the instant transfer of funds between banks.

Real-time payments, as the name suggests, process transactions immediately – 24/7, 365 days a year. In contrast to traditional banking systems, real-time payments offer immediate processing of transactions.

The Mechanism Behind Real-Time Payments

The real-time payment mechanism works by connecting payer and payee bank accounts directly, without any intermediaries. Instantly, the payer’s account is debited, and the payee’s account is credited in real-time. In the US, The Clearing House offers the RTP (R) Network. The Federal Reserve is implementing the FedNow Service, which should be available in mid-2023.

Trends Driving Adoption of Real-Time Payments

RTP payments have increased by 5% growth and 8% value from 4Q22 to 1Q23. Over 52 million transactions were processed through the RTP Network in 1Q23, with a total value of over $25 billion.

Why the increase?

  • Digitalization: Businesses increasingly moving online
  • Fintech Innovation: The rise of fintech companies offering seamless digital financial service
  • Rising Customer Expectations: Customers today expect immediate access to funds after completing transactions

These trends are driving more businesses toward adopting real-time payment solutions.

Understanding Real-Time Payments vs. ACH

Real-time payments and Automated Clearing House (ACH) transactions are two distinct methods of transferring funds. Understanding the differences is crucial for your business.

Speed of Transaction

The primary difference lies in their speed of transaction.

In a traditional ACH payment, transactions are batch-processed, usually overnight. When using these ACH payments, funds may take a few days to move from one account to another.

In contrast, RTP payments, as suggested by their name, process almost instantaneously — within seconds or minutes — regardless of the time or day. They offer an immediate and irrevocable transfer of funds between accounts at different financial institutions.

Differences in Cost

While ACH payments tend to be low-cost or even free for businesses, real-time payments often come with higher fees due to their expedited nature. Therefore, you must weigh the benefits against the costs when deciding which method suits best for your scenarios.

Risk Factors Involved

An inherent risk in using ACH payments stems from its slower processing times; if a mistake occurs while inputting data, such as incorrect bank details, rectifying it may take days, causing potential disruption in cash flow.

On the other hand, while RTPs reduce this delay-related risk, they are irreversible. Once initiated, you cannot stop or reverse a transaction. Hence, accuracy becomes paramount when dealing with real-time payment systems.

key takeaway

Real-time payments and ACH transactions are two different ways to transfer funds, with RTPs being faster but more expensive. ACH transfers are low-cost or free for businesses. Still, they can take several days to process, while real-time payments process almost instantly within seconds or minutes.

Benefits of Real-Time Payments

RTP is rapidly becoming a popular choice among businesses and financial institutions.

RTP provides several key benefits:

  • Real-time payments are exactly what they sound like – instantaneous (actually, near real-time). This speed makes them ideal for time-sensitive transactions.
  • RTP also improves cash flow management by allowing businesses to receive funds immediately.
  • Real-time payments offer enhanced transparency compared with other payment methods. Each transaction comes with rich data capabilities that allow businesses to track each payment in detail – from invoice information to delivery confirmation – making reconciliation easier.
  • RTP offers an edge in customer service as well. Customers enjoy the convenience of instant bill payments directly from their bank accounts.
  • A major benefit often overlooked is the security measures inherent in the RTP system design itself. Every single transaction on the RTP network is individually authenticated before it’s processed, ensuring safer transactions.
key takeaway

RTP payments are becoming increasingly popular among businesses and financial institutions because of:

  • immediate money transfer capabilities
  • improved cash flow management
  • enhanced transparency
  • better customer experience
  • added security measures
  • supported by the Federal Reserve for nationwide access

These make it a reliable solution in the evolving payment processing landscape.

Challenges of ACH Payments

While ACH payments have been a reliable method for businesses to handle transactions, they come with their own set of challenges.

  • Increased Risk of Fraud: Fraudsters can potentially manipulate ACH transactions due to slower processing times. This delay allows them ample time to initiate unauthorized transfers or even reverse completed ones before detection. To combat this, you need robust security measures when using ACH payments.
  • Processing TimeA crucial drawback with ACH payments is their slow pace compared to real-time payment systems. It usually takes one business day for same-day ACH transactions to clear if submitted by a certain cut-off time during banking hours. Regular ACH payments take 3 to 5 business days or longer on weekends and holidays.
  • Limited Operating Hours: In contrast with real-time payment methods that operate 24/7, ACH operates only during specific banking hours, limiting its accessibility for urgent transactions outside those periods.
  • Potential Errors: Data entry errors are another concern as manual input increases the chance for mistakes which can cause delays or incorrect transfers. Real-time payment systems mitigate this risk through automation and instant validation checks.
  • Cancellation Difficulties: If you need to cancel an ACH payment after initiation but before completion, it may be challenging because banks typically require cancellation requests at least three days before the scheduled transfer date. But in real-time payment platforms, cancellations can occur instantly before execution.

Are Wire Transfers the Same as Real-Time Payments?

Digital transactions can often be confusing, with various terms and technologies used interchangeably. One common question is whether wire transfers are the same as RTP transactions.

The short answer is no; they are not identical.

An electronic exchange of money between two entities, generally involving banks or other fiscal establishments, is referred to as a wire transfer. Wire transfers may be reliable, but they are not always quick. It could take several hours or even a day for a wire transfer to complete.

In contrast, RTPs are exactly what their name suggests – instant money transfers between accounts in real-time.

Differences Between Wire Transfers and Real-Time Payments

  • Electronic payment rail: Wire transfers are sent via the FedWire Funds Service, CHIPS, or Swift, while RTPs are sent via the RTP Network from The Clearing House.
  • Speed: While both methods involve electronic fund transfers, RTPs offer immediate transaction processing, whereas wire transfers may take longer.
  • Fees: Typically, there might be fees associated with sending a wire transfer which vary depending on your bank’s policies. In contrast, some platforms offering real-time payment services do not charge any transaction fees.
  • User Experience: The process involved in initiating a wire transfer can sometimes be more complex than making a simple tap-and-go payment using a mobile app supporting real-time payments.
Comparison table for RTPs vs ACH vs wire transfer
key takeaway

Wire transfers and real-time payments are different. Wire transfers can take several hours or even a day to complete, while real-time payments offer instant transactions.

Which Should I Use for My Business: Real-Time Payments or ACH?

Choosing between ACH payments and real-time payments can be a challenging decision.

  • Evaluating Your Business Needs: Your transaction volume, frequency, and urgency significantly determine which payment method suits you best. Real-time payments might be ideal if you deal with high-volume transactions requiring immediate settlement.
  • Nature of Transactions: If most of your transactions are time-sensitive (e.g., urgent bill payments), then real-time payments offer an advantage due to their instant processing capability. On the other hand, if you have regular and predictable transactions like payroll or recurring bills, ACH could serve better.
  • Customer Preferences: Your customers’ comfort level with different payment methods also matters. Some may prefer instant transfers offered by real-time payments. In contrast, others might feel more comfortable with traditional ACH transfers they’re familiar with.

Making The Decision: Real-Time Payments vs ACH?

Many businesses often find value in using both systems – using ACH for large batch processes such as payroll while taking advantage of RTPs speed for one-off immediate requirements. However, this isn’t a one-size-fits-all solution, so it’s crucial to evaluate all factors before making a decision.

A consultation with financial advisors or experts can provide insights tailored specifically to your business scenario.

Remember that whichever option you choose should align not only with current but also future goals – ensuring scalability as well as sustainability.


Real-time payments and ACH are both viable options for businesses when making digital payments. It’s important to weigh all factors before deciding which system best suits your needs – like cost, speed, scale, and security.

Consulting with financial advisors or experts can provide valuable advice tailored specifically to your business scenario.


Real-Time Payments are not necessarily intended to replace ACH payments but rather to coexist and provide an alternative option.

The RTP network is a separate and new infrastructure built for the digital age with payments that clear and settle individually in real-time with immediate finality. On the other hand, ACH payments are cleared in batches and finally settled after the payments clear.

While RTP offers a unique opportunity to consolidate payment functionality dispersed between various interbank and closed-loop systems, it doesn’t mean it will replace legacy systems like ACH or card networks. Instead, these systems might evolve and adapt to the changing financial landscape, each serving specific needs of different transactions.

Zelle has historically used the Automated Clearing House (ACH) network for its transactions, which allowed users to send money to one another in batches.

However, Zelle has teamed up with The Clearing House to clear and settle some Zelle transactions on the RTP network. This move towards RTP suggests an effort by Zelle to enable instant settlement and simpler back-office processing for its transactions.

Therefore, Zelle uses both ACH and RTP, depending on the specific transaction.

Quick answer? It depends, but yes, RTP is generally more expensive than ACH.

Real-Time Payments (RTP): RTP fees can range from a few cents to two dollars per transaction, depending on the provider. The exact cost can depend on factors such as the size of the transaction and the specific policies of the bank or financial institution.

Automated Clearing House (ACH): ACH costs are usually lower than RTP, with fees typically ranging from $0.20 to $1.50 per transaction. However, the cost can be higher for same-day ACH payments, which provide faster processing times similar to RTP, ranging from $1 to $5 per transaction.

It’s important to note that while RTP transactions may have slightly higher fees, they offer the benefit of immediate payment clearance and settlement, which can be a significant advantage for businesses that require real-time transactions.

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