RTGS payment refers to a type of electronic fund transfer where funds are moved from one bank to another in real time. RTGS stands for Real Time Gross Settlement, and the term "RTGS payment" specifically denotes a transaction processed using this system.
In an RTGS payment:
Real-time processing: The transfer of funds occurs instantly, as soon as the payment instruction is submitted and verified. There's no waiting period or batch processing; it's processed individually and immediately.
Gross Settlement: Each transaction is settled on a gross basis, meaning it's handled individually without being netted against other transactions. This ensures that each payment is settled independently and not offset by any other transactions.
RTGS payments are typically used for high-value transactions that require immediate and irrevocable settlement, such as large business payments, real estate transactions, securities trading, or interbank transfers. This system is reliable and secure, ensuring that funds are transferred in real time and are considered final once completed.
These payments are often subject to specific operating hours set by the central banks or financial institutions that manage the RTGS system. Users are charged a fee for initiating an RTGS transaction due to the immediate and final nature of the service, as well as the infrastructure required to enable real-time transfers between financial institutions.
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