Debit cards, P2P apps, digital payments, or credit cards seem to be real-time. But they are NOT! The funds don’t actually get transferred using these payment methods right away. It normally takes up to 72 hours to clear and settle when processing through a credit or debit card. These online transactions are still processed through ACH (Automated Clearing House). Let us explain!

Though the ACH system processes the payment on the same day, payments are generally cleared in batches. This means that the funds won’t be available until the settlement process has been completed and the payment is cleared.

So, what exactly are real-time payments? It is a system that enables instantaneous money transfer between banking systems and banks. These payments have very tight SLAs (roughly 20/15/10 seconds) to complete the entire processing. This new term leverages liquidity, speed, reliability, customer satisfaction, and, doesn’t cost a cent to the payer or the payee.

In 2001, the real-time payment system was born in South Korea. By the end of the decade, this new technology was used throughout the U.K. and other parts of Asia. One can receive payment around the clock, 24/7/365, without any delay. In short, no sign of ”float.”