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Understanding Real-Time Payments

  • Payroll
  • Article
  • 6 min. Read
  • Last Updated: 06/23/2020

Women on her phone receiving her real-time payment

Table of Contents

"With the introduction of real-time payments, Paychex customers can now pay their employees in a matter of seconds, which can be a critically important capability for employees facing financial hardships as a result of the pandemic," notes Martin Mucci, Paychex president and CEO in a recent press release.

Gradually, states are beginning to reopen, with at least some businesses sure to follow. This in turn means employees are starting to return to work.

When employers use relief funds (such as the Paycheck Protection Program) to pay both retained and rehired workers, "they need solutions to efficiently and effectively manage their cashflow, while also ensuring employees can access earned wages when they need them most," Mucci adds.

With RTP, businesses can offer workers immediate access to their earned wages, while also waiving employee transaction fees.

What is the real-time payment network?

The RTP® network from The Clearing House is a real-time payments platform available to all federally insured U.S. depository institutions for use in payments processing.

Leveraging The Clearing House RTP network, businesses now have an efficient system with which to immediately pay employees for time worked. This real-time payment system significantly enhances the level of flexibility employers need when they want to make payments due to time-sensitive or emergency situations.

What are the main aspects of real-time payments?

Generally speaking, real-time payment platforms include instantaneous, around-the-clock electronic fund transfer services and the ability to access these systems through the full range of smart devices (phones, tablets, digital wallets).

Aspects include:

  • Authorization (the means to certify accurate payment)
  • Posting (making funds immediately available)
  • Notification (alerting both a business and an employee with confirmation that the transaction has taken place)

As noted, the speed of the system is among its most appealing and efficient aspects.

Benefits of using RTP payments

In a time when traditional payments have been adversely affected by the effects of the pandemic, real-time payments make life much easier for employees who must balance the need to return to work with many other concerns. RTP payment benefits include:

  • The fastest way to pay employees
  • System availability 365 days a year (including weekends and holidays), as opposed to ACH, which is available only on Mondays-Fridays, during certain hours and not on bank holidays
  • The ability to run payroll on the check date (instead of ahead of their check date), thus ensuring companies will have payroll funds collected from them later

Employers may also expect to see enhanced management of daily operations with improved liquidity, as a result of using RTP.

Risks of using real-time payments for employers

As with any innovative payment system, some risks are involved. In some cases, a receiving bank won't accept RTP because they don't belong to the RTP network. This means that the check will be processed by the next available direct deposit transaction window (be it same-day ACH or next-day ACH).

Other key concerns revolve around the potential for fraud with respect to RTP, simply because of the speed of the process:

  • Quicker transactions reduce time to monitor potential fraudulent transactions
  • Any large-scale transaction that takes place within the digital realm leaves open the possibility of cybertheft and other digital crimes.

These concerns highlight the need for businesses to engage the services of reputable providers (such as Paychex and The Clearing House), who follow industry standards for sound security and authentication protocols.

Access real-time payments with Paychex

There is nothing more critical to business recovery than successful efforts to put valuable employees back to work. Of course, these employees need to be paid, and due to the crisis, the sooner, the better.

Learn more about Paychex and the real-time payment option, to help your business in the recovery period ahead.


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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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