Financial

Ultimate Guide to Real-Time Gross Settlement (RTGS)

Finance
Written by Mike Parsons

In today’s fast-paced, highly tech-driven world, many are lost in the complex world of banking. However, whether you are a business owner or you simply transfer money frequently, being on the lookout for the most suitable transaction methods is probably on your agenda. In case real-time gross settlement is one of the options that you have come across, you may be wondering what its benefits are and whether it’s for you. To help you out, this guide will demystify RTGS for you.

What is RTGS?

RTGS, or real-time gross settlement, as the name suggests, refers to a transaction system that allows for real-time inter-bank transactions of money or securities within a country. As opposed to regular transfers, “real-time” in this case means that the transaction instructions are processed immediately, as they are received by the system, with minimal delay (i.e. same day). The transaction is settled as soon as your bank has transferred the money to the receiving bank, and thereby it becomes irrevocable. “Gross settlement,” on the other hand, means that these payments are being handled individually instead of being bundled together with other transactions.

What is RTGS used for?

RTGS is typically used for important, higher-value transactions that shouldn’t wait. Nevertheless, this option is available to businesses, organizations, and individuals alike. RTGS systems are usually a major payment system in a country and are run by central banks. In fact, more and more central banks are employing this system to improve the security of important transactions. So, if you are looking for a reliable way of completing larger transactions fast, looking into RTGS systems may be a good idea.

How to use RTGS?

In order to make an RTGS payment, first, you will need the details of your beneficiary. Depending on your bank, you may need to first add a beneficiary to your account in order to make a payment, which may take a little bit of time. However, you might also be able to proceed immediately. In fact, making an RTGS payment will not be much different from making a regular one. Fill in the form with the appropriate details, enter the amount you want to transfer, and you will be good to go.

What are the benefits of RTGS?

As we briefly mentioned, one of the biggest advantages of using RTGS for transactions is the inherent security of this transfer method. As transactions are carried out immediately, there is a smaller time frame that leaves vulnerability for cyberattacks in the process. Since we’re talking about high-value transactions here, if you want to be sure, it is a solid idea to turn to a company like Cuscal Payments for extra security and a more streamlined process.

Another notable benefit of RTGS is its convenience. In today’s digital age, where most business is already done online, it is incredibly important that you are not held back by traditional institutions. Since RTGS transactions can be executed online, they offer a high level of convenience—both to you and to the other party involved. You don’t have to wait for the next morning and for the bank to open; you can complete RTGS payments at any time. Offering RTGS payments will therefore appeal to possible clients and partners as it will not cause any delays in business.

Are there any limitations to RTGS?

Before you make your decision, you may be wondering whether there are any hidden pitfalls to RTGS. Questions about additional fees, time limitations, and other constrictions are more than normal, as they are usually a part of any money transfer system. However, you will be happy to hear that you don’t have to worry about hidden fees in the case of RTGS. Regardless of which bank you use, an RTGS transfer should come with no additional charge. Check with your bank to get the most accurate information regarding transaction fees, though.

As for possible time limitations, they are of no concern since, as we previously mentioned, RTGS can be done online, through online banking nowadays. Finally, the only limitation you may run into concerns the amount of money transferred. Since RTGS is primarily for higher-value transactions, it is only to be expected that in some countries, there is a minimum amount for RTGS transfers. Once again, check with your bank.

For someone who makes transactions on a regular basis, RTGS systems can provide a convenient and secure environment for smooth business. Inquire about your options at your bank about and you may find RTGS to be a game-changer.

Mike is an Australian business consulting specialist. He’s working with companies that outsource their IT maintenance. He often writes about technology, business and marketing and is a regular contributor on several websites.

About the author

Mike Parsons

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