What is Real-Time Gross Settlement (RTGS)?
Real-Time Gross Settlement (RTGS) is a system for electronic payments between two banks, where the transactions process and settle in real time rather than being batched. By processing transactions without batching, transactions are able to process and settle, as the name suggests, in real-time.
What is Real-Time Gross Settlement (RTGS)?
Unlike ACH payments which rely on batch processing, when a customer requests a RTGS transaction be sent from their bank, that transaction is instantly sent to and settled at the receiving bank.

RTGS systems are managed on a nation-wide level by a given nation’s central bank, and transactions are limited to those who bank within that central bank’s country. While some RTGS systems may be available 24 hours a day year-round, each system and its operating hours are different.
RTGS is generally better-suited for larger transaction amounts where funds need to be moved quickly and as securely as possible. RTGS can help minimize the potential for fraud against large dollar amount payments by allowing a smaller window of time in which the critical information about a high-value payment is vulnerable.
Notable real-time gross settlement systems include:
- RTGS offered through the Reserve Bank of India
- TARGET2 in the EU (including their TIPS system)
- The UK’s CHAPS
- Fedwire’s Funds Service and FedNow (launching in 2023) in the USA
How Does Real-Time Gross Settlement (RTGS) Work?
There is no physical exchange of funds with a real-time gross settlement system. Rather, the central bank can simply adjust the account balances of both accounts involved in any given transaction. For example, if Dominga Davis sends Randal Whitley $1,000,000 the central bank can adjust their accounts accordingly: reducing Dominga’s and increasing Randal’s by $1 million.
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Back Office
These are the broader payment concepts that underpin payment operations.
- 1Payment Operations
- 2Banking API
- 3Flow of Funds
- 4Bank Reconciliation
- 5Continuous Accounting
- 6What is Money Transmission?
- 7What is Cash Management?
- 8What is Treasury Management?
- 9What are Incoming Payment Details?
- 10Payment Processor vs. Payments Gateway
- 11What is Cash Forecasting?
- 12What is Cash Pooling?
- 13What is Liquidity Management?
- 14What is an Agent of the Payee Exemption?
- 15What is Real-Time Gross Settlement (RTGS)?
- 16What is Batch Processing?
- 17What are Payment Controls?
- 18What is Idempotency?
- 19Settlement (Net vs. Gross)
- 20What is Asset Risk Management?
- 21What is A2A Banking?
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