Instant Payments Sample Processing Flow

Wespay’s Instant Payments Brief is a series of short articles designed to help members understand the key concepts of the next generation of payment services.

The defining characteristic of an Instant Payment transaction is, of course, the speed with which it clears (i.e., the movement of funds from the sender to the receiver) and settles (the exchange of funds between the sender’s and receiver’s financial institutions).

And while the two U.S. Instant Payments networks, FedNow and RTP, are relying upon new technologies to achieve this near real-time speed, the network participants and the overall payments flow of both Instant Payment networks should be recognizable to anyone familiar with the ACH or check network.

The sample processing flow outlines the key steps for both U.S. Instant Payments networks, RTP and FedNow.

Instant Payments Process Flow*

1. The sender initiates an Instant Payment via their FI’s online banking site or mobile app
2. The sender’s FI submits the IP message to the IP Service Operator (either RTP or FedNow)
3. The IP Service Operator validates the payment message
4. The IP Service Operator sends Instant Payment message with the receiver’s FI
5. The receiver’s FI accepts the Instant Payments message and confirms receipt with the IP Service Operator
6. The IP Service Operator settles the amount of the Instant Payment with the participating FIs (i.e., debits the sender’s FI and credits the receiver’s FI)
7. The IP Service Provider sends messages to both FIs to confirm settlement is complete
8. The receivers is credited and the sender is debited by their respective FIs

* All steps take place in a matter of seconds