---
title: "Real-time payments in 1,000 words"
author: "Matt Brown"
canonical_url: "https://notes.mtb.xyz/p/real-time-payments-1000-words"
source: "notes.mtb.xyz (Substack)"
year: "2024"
primary_topic: "payments"
tags: ["payments", "fintech"]
series: "1000-words"
fetched_at: "2026-05-14"
note: "Markdown twin of the canonical Substack post. The canonical URL above is authoritative; this file may lag if the original is edited."
---

*This is the third installment of the “X in 1,000 words” series. These are intended to introduce critical but mis- or under-understood topics—like [interchange](https://notes.mtb.xyz/p/interchange-in-1000-words) and [payfacs](https://notes.mtb.xyz/p/payfac-1000-words) —to fintech founders and operators. These aren’t exhaustive guides, but brief introductions I wish I had when I started in fintech. Questions and feedback are always welcome!*

---

“Real-time payments” (RTP) [^1] is a simple term for a complex topic. The “ *what”* is straightforward: RTP allow users to send and receive funds in seconds, any time of day and day of the year. *How* it works and *why* it’s a relatively recent phenomenon is another story.

There are 70+ real-time payment networks (RTPN) globally. Most launched in the last decade. Collectively they’ve reached impressive scale (266 billion transactions in 2023) and sustained impressive growth (42% y/y). This note explains how RTP work, what catalyzed their recent growth, and why some RTPN are more successful than others.

![Long-exposure black-and-white night photograph of a curving multi-lane highway, with car headlights and taillights smeared into bright white and silver light trails that sweep across the dark roadway — a visual metaphor for the speed and continuous motion of real-time payment rails.](https://substackcdn.com/image/fetch/$s_!4x4P!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Faeff0127-3c09-43d6-b7d0-50d7f7895842_6000x4000.jpeg)

## A brief intro to payment schemes and networks

To understand RTP, it helps to understand why most payments *weren’t* real-time. That requires a quick recap of payment schemes and networks— terms often used interchangeably but with subtle and important differences.

A **payment scheme** is a bundle of technology, rules, and regulations that moves money. Payment schemes have limited value in isolation. That’s because payments have network effects. The more buyers and sellers use a payment method, the more valuable it becomes. Payment schemes – which can be run by for-profit companies like Visa, government entities like central banks, or hybrids – often rely on third-party intermediaries like banks.

![Hand-drawn schematic separating "Scheme" from "Network". At the top, a Venn diagram of three overlapping circles (Tech, Regulation, Rules and Standards) forms the highlighted "Scheme" core. Below, an arrow leads down to a horizontal stack: "Buyers" on the far left, "Intermediaries" (banks), the green Scheme node in the middle, more "Intermediaries", and "Sellers" on the far right — the whole row labeled as the "Network".](https://substackcdn.com/image/fetch/$s_!tcZO!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F75d1e2ad-2585-4329-a123-f6116ceb49b7_1600x1277.png)

A **payment network** combines a payment scheme with the intermediaries (often banks and other financial institutions) required to onboard and support end users (i.e., buyers and sellers). Take card payments, for example. Visa operates a card payment scheme that supports the Visa network. Buyers and sellers rarely interact directly with Visa; instead, the bank interacts with the scheme on their behalf.

![Concrete instantiation of the scheme-versus-network diagram for card payments. The horizontal row reads, left to right: Cardholders, Platform (Invoice2go), BaaS (Unit), Issuer (Chase), Scheme (Visa, highlighted in green), Acquirer (Wells Fargo), Payfac (Rainforest), Platform (Shopify), and Merchants. "Scheme" floats above the network, "Network" labels the full row.](https://substackcdn.com/image/fetch/$s_!0QqU!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F895b30d2-5fa4-434c-9c11-02b778f2bdda_1600x655.png)

The important takeaway is that **payments are more than tech, rules, and regulations (i.e., the scheme) that move money, but require intermediaries to connect end users to and through the scheme (i.e., the network)**.

## Non-real-time payments: efficient but slow

Most payment networks started in the pre-digital era of the mid-20th century. Everything from the first card networks to the check system and equivalents were paper-based, human-powered, and manual.

![Mid-20th-century black-and-white photo of a sprawling open office full of clerks and accountants working at rows of desks, each crowded with mechanical adding machines, typewriters, paper ledgers, and filing cabinets. A young woman walks down the central aisle. The scene depicts manual, paper-based payment processing of the era.](https://substackcdn.com/image/fetch/$s_!0qh4!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fe545ebb8-3be0-4aca-94a4-0004eb02ddf3_1364x883.png)

Cutting-edge payment technology, circa 1950

**Early payment networks used** ***batch processing*** **to remain efficient.** Rather than processing payments individually, networks broke them into tasks, let the tasks accumulate at various steps, and moved them through the steps in batches.

Imagine a postal system. You drop a letter in a mailbox, which is picked up every few hours. At pickup, all mail goes to a central post office, accumulating until it’s sorted. Then, once daily, the mail truck delivers the sorted mail.

![Visual analogy for batch payment processing using the postal system. Across the top, icons trace the journey: a hand drops a letter into a USPS mailbox, which is collected, taken to a post office, loaded onto a USPS mail truck, and delivered to a home mailbox. Below, a grid tracks the arrival and movement of different-colored envelopes from 6am to 6pm — letters dropped at 6am, 9am, and 12pm pile up in batches before being transported and finally delivered later in the day, demonstrating how batching introduces delay even though individual handoffs are fast.](https://substackcdn.com/image/fetch/$s_!KKwV!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fc3eed1f1-c8e5-45d7-a0dd-aa570e24579f_1600x1385.png)

This is inefficient for individual letters. For example, in the diagram, the yellow envelope is dropped off shortly after the blue envelope. But it’s delivered much later— it doesn’t even make it onto the truck on the same day. However, this batch system is much more efficient for the average and majority of letters and makes the system’s cost manageable.

In payments, the processes needed to keep the system efficient, safe, and trustworthy coalesced roughly around the ones many would recognize today, in initiation, authorization, processing and clearing, and settlement:

![Hand-drawn five-column swimlane (Buyer, Intermediary, Scheme, Intermediary, Seller) with Time flowing down the y-axis. Green-labeled arrows mark the payment stages as they hop across lanes at different points in time: Initiation (buyer to first intermediary), Auth (first intermediary forward), Clearing & processing (across scheme to second intermediary), and Settlement (second intermediary to seller). Blue and orange dots scattered in each lane show payments accumulating in batches between stages.](https://substackcdn.com/image/fetch/$s_!q2dI!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Ff7bacf4a-c458-42bd-9e36-d53c0b2a9a34_1310x808.png)

Even after batch processing wasn’t technically necessary, the *networks* found it difficult to change because they had built so much of their businesses and processes around it (managing fraud and risk, staffing and customer support, liquidity, etc).

This led to some interesting historical quirks. For example, even into the 1990s, the Federal Reserve paid $35 million+ annually for a fleet of 47 airplanes to fly physical checks nationwide each night.

![Vintage 1962 illustration from the Federal Reserve Bank of St Louis Review titled "The Flow of Checks". On the left, three "sources" boxes labeled Member Banks, Other Federal Reserve Banks, and Government Agencies feed checks into a central drawing of the Federal Reserve Bank of St. Louis. From that hub, an airplane, a truck, and a train fan out to "destinations": Commercial Banks, Other Federal Reserve Banks, United States Treasury, and St. Louis Post Office.](https://substackcdn.com/image/fetch/$s_!z6_k!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fbb5b1610-70c8-4281-803d-884c36ce187f_720x450.png)

A diagram of the flow of checks, from the Federal Reserve Bank of St Louis Review, February 1962. ( Source )

**To recap, the 20th-century payment networks (card, ACH, wire, etc.) relied on intermediaries for scale and batch processing for efficiency at the expense of speed. Digital tech was necessary but not sufficient for RTP. Schemes moved as fast as the networks allowed, and the networks were often locked into the assumptions of batch processing.**

## Real-time payments: efficient and fast

RTP, then, are a scheme-plus-network purpose-built for real-time (i.e., *parallel*) processing rather than *batch* processing. Payments still follow the same broad auth, clearing, and settlement steps—enabled by the scheme and, critically, supported by the network.

![Same Buyer-Intermediary-Scheme-Intermediary-Seller swimlane chart from earlier, but the green-labeled arrows for Initiation, Auth, Clearing & processing, and Settlement now run as a single horizontal sequence across the top — illustrating that in real-time payments the stages execute in parallel and in seconds, instead of stacked vertically over time as in batch processing.](https://substackcdn.com/image/fetch/$s_!4nT-!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F60b8c597-174f-4582-8de3-aa09b97b01cc_1756x946.png)

Once new technology enabled it, several factors catalyzed real-time payment networks (RTPN). One is consumer demand. When consumers began to *see* their money 24/7 on the internet, they began demanding to be able to *move* it 24/7 too.

Governments were another big catalyst. Especially in less developed economies like Brazil and India, governments promoted RTPN to help citizens access financial services for the first time. RTPN and increasing digitization had the added benefit of making more transactions visible to and taxable by governments.

Today there are 70+ RTPN. Some countries have one; some have multiple. Some are decades old, but most launched in the last few years.

![Dotted-style world map color-coding the global state of real-time payment schemes. Most landmasses (Americas, much of Africa, India, Southeast Asia, Australia) are teal for "Live", a swath of central and northern Asia (Russia, parts of Eastern Europe, the Middle East, and a few African countries) is gold for "Live*" (with caveats), a few small regions show planned schemes, and white indicates no scheme in place. A footnote notes some countries are excluded from the report.](https://substackcdn.com/image/fetch/$s_!sBvL!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20dc8927-3c62-4f5f-b148-da06a17832d7_1177x691.png)

[Source](https://www.aciworldwide.com/real-time-payments-report)

The global growth is impressive – 266 billion transactions and 42% y/y growth in 2023. However, 80% of real-time transactions occur in a handful of countries:

![Hand-drawn comparison table titled "The world's largest real time payment networks, by transactions (2023)". Six green bars rank the networks by 2023 transaction volume in billions: India's UPI at 129, Brazil's PIX at 37, Thailand's PromptPay at 20, China's IPBS at 17, South Korea's EBS at 9, and the US's Zelle at 3. Underneath, additional rows show each network's launch year (UPI 2016, PIX 2020, PromptPay 2016, IPBS 2010, EBS 2001, Zelle 2017), year-over-year growth (44.6%, 77.9%, 37.5%, 3.8%, 11.4%, 28%), the catalyst (Government for the first five, Private for Zelle), and whether adoption was government-mandated (Yes for the first five, No for Zelle).](https://substackcdn.com/image/fetch/$s_!43mJ!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Feee8f6c8-6769-4e48-a52e-c5537d866671_1600x1222.png)

Two interesting points jump out from the chart. First, 4 of 6 networks are less than a decade old. Second and related, 5 of 6 networks were created by governments, which also mandated private financial institutions' adoption.

This explains why RTPN took so long to launch but saw rapid adoption once launched. The bottleneck wasn’t technology or demand but the coordination to jumpstart a network. In most cases, only a government mandate could provide such a catalyst. Regions with a market-driven approach or a government-sponsored but not mandated approach typically have lower adoption.

The government-mandated approach to RTPN is a double-edged sword: it allows rapid domestic adoption but focuses the networks domestically, unlike the more international focus of market-driven networks, such as in card payments. The next few years will see much interesting work stitching together domestic RTPN to support cross-border RTP.

A few last thoughts on the implications of RTPN:

First, tech wasn’t sufficient for RTPN, but many networks leverage their modern tech to enable powerful and/or novel features not found in traditional payment networks, such as Pix’s [multiple portable aliases](https://www.bcb.gov.br/en/financialstability/pix_en) or RTP’s [messaging](https://www.theclearinghouse.org/payment-systems/rtp/technical-documentation). These open new areas for startups to innovate in.

Second, the market clearly prefers fast payments. So many non-real-time networks have launched real-time features to compete, like Visa’s push-to-card or SEPA Instant. Speed will go from a differentiator to a commodity—something consumers expect for low or no cost.

RTP is an exciting global phenomenon for consumers, fintechs, and financial institutions alike. It’s also an interesting lesson in how technology enables new behaviors, shifts consumer expectations, and forces areas like financial services to respond to those shifts.

---

*My name is **[Matt Brown](http://mtb.xyz/)**. I’m a partner at **[Matrix](http://matrix.vc/)**, where I invest in and help early-stage fintech and vertical software startups. Matrix is an early-stage VC that leads pre-seed to Series As from an $800M fund across AI, developer tools and infra, fintech, B2B software, healthcare, and more. If you're building something interesting in fintech or vertical software, I'd love to chat: [mb@matrix.vc](mailto:mb@matrix.vc)*

![Matrix Partners logo: the word "matrix" in heavy black sans-serif with a white asterisk inset into the "i", on a white background.](https://substackcdn.com/image/fetch/$s_!ml4D!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F5fbb4e09-82e1-4670-8ea6-5bcbd49b05aa_1658x480.png)

[^1]: “Real-time payments” (lower case) refers to the broader category of payments where settlement is measured in seconds. “Real Time Payments” (capitalized, or RTP) is a specific implementation of this payment type in the US by The Clearing House. For simplicity, in this article, I’ll use RTP to refer to the broader concept of real-time payments rather than the specific US network known as RTP.