US Instant payments

Real-time payments (RTP) are financial transactions that are settled almost instantaneously. They use separate digital network “rails” to process payments 24/7 every day of the year. Real-time payments are fast, which is helpful to companies and individuals that either want to pay or receive funds on a moment’s notice.

Instant Payments

Instant payments, also called faster payments are all the rage these days, with consumers from business to corporates to Miriam at the bar all wanting to get paid fast – 24x7.

How do they differ?

Instant payments differ from the existing types of payments in that they are made available to the recipients instantly and are available 24x7x365.


Unlike ACH payments which do not settle in real time and are many times handled as Bulk payments (files).


Unlike Wire payments which are real time but generally focus on higher dollar value, and are expensive.


And interestingly different then private sector offerings like Zelle and Visa direct, which while seem “instant” the mechanics behind the scenes mean that the money is not actually settling and moving between financial institutions – leaving the risk to the credit posture of FI’s rather open and keeping the dollar limits rather low on these type of payments.

Making the move

The US market has been a bit behind others in the world but are now moving full speed ahead with the infrastructure needed to support instant payments in the US.  With TCH RTP that came into the market in 2016 and FedNow getting ready to launch in 2023, the US is firmly making the move to real-time.

So how does a faster payment work?

An instant payment in the US today is between 2 parties and cannot include intermediary financial institutions in the chain.  This means that the sender FI and the receiver FI must be sending or receiving the payment on behalf of their end user and not on behalf of another financial institution.  The reason is to ensure the payments are truly going from one end user to another in the fastest possible time. So the easiest example is a person at the bar looking to split the bill with their friend and agreeing to send their portion to their friend instantly using a faster payment.


Miriam uses her mobile app to initiate a payment from her bank account at bank x to Jeremy at his bank account at bank y.


Miriam’s bank sends (directly or via a provider) a pacs.008 ISO message to the operator (RTP or FedNow).


The operator after completing validations sends the pacs.008 message to Jeremey’s bank and asks the bank if they will accept the payment.


Jeremey’s bank responds yes.


The operator settles the money between the two banks, debiting Miriam’s bank and Crediting Jeremey’s bank and notifies both banks.


Jeremey’s bank notifies Jeremy and moves the money into Jeremy’s bank account.


Miriam’s bank notifies Miriam that Jeremy received the funds.


Miriam and Jeremy part ways happily confident that while Jeremy paid the bill at the Bar, Miriam already paid him back – Instant money movement.

What banks need to know

In order to provide this service to customers, banks have to follow the rules set by the schemes. Some of those rules mean:


being available 24x7 or close to.


following ISO standards for messaging.


making funds available to users in real time.


conducting sanction screenings.


payments being irrevocable – which means they are final and done upon the completion of the payment.

How we can help

Form3 connects to both instant payments gateways – RTP and FedNow – and can take much of the burden off of the Financial institutions with its always available 24x7 service offering and simple seemless API’s that can be used – whilst Form3 will handle the ISO formatting and messaging with the schemes themselves.