RTGS

RTGS is available in many countries, and it is a popular choice for international transfers. Learn about its uses and benefits, all here in this blog.

Introduction

In the banking world, RTGS is a system that allows for the immediate settlement of transactions. This means that when two parties make a transaction, the money is transferred from one account to another almost instantly. RTGS is used mainly for high-value transactions, and it is considered to be one of the safest ways to transfer money electronically. In this blog post, we will discuss what RTGS is  and how it works!

What is RTGS?

Real-Time Gross Settlement is a system used by banks to transfer money. It is a real-time, gross settlement system, which means that transactions are settled as soon as they are made. RTGS is the fastest way to transfer money from one bank to another.

How does RTGS work?

RTGS works by transferring funds from one bank to another. The funds are transferred in real-time, which means that the money is transferred as soon as it is made. This allows for quick and easy transfers between banks. Gross settlement means transactions are handled and settled individually, so multiple transactions aren’t bunched or grouped together. This is the basis of a real-time gross settlement system RTGS is a safe and secure way to transfer funds, and it is often used for large transactions. RTGS is available in many countries, and it is a popular choice for international transfers. RTGS is fast, efficient, and it offers a great deal of security. If you are looking for a safe and reliable way to transfer funds, RTGS is a great option.

Why use RTGS?

RTGS is the quickest way to transfer money between banks. It is also a secure system, which makes it a safe choice for transferring money. 

RTGS vs. Bankers’ Automated Clearing Services (BACS)

BACS is a UK clearing system for payments between banks, launched in 1968. RTGS is its faster successor, introduced in 1985. Although both systems are used to process high-value payments, there are some key differences between them. RTGS payments are processed in real-time, which means they are settled as soon as they are made. This is in contrast to BACS payments, which are processed in batches during the night. RTGS payments are therefore more expensive, as banks have to staff their systems for longer hours.

Another difference is that Real-Time Gross Settlement payments are final, whereas BACS payments can be reversed if there is a mistake. This means that RTGS is typically used for time-sensitive payments, such as salaries or tax payments.

BACS is still used for a large number of low-value payments, such as direct debits and standing orders. RTGS is not suitable for these types of payments because the costs would be prohibitive.

Overall, RTGS is a more expensive, but more efficient, system than BACS. It is used for high-value payments that need to be processed quickly and with certainty.

RTGS vs SWIFT

Although RTGS and SWIFT are both used for high-value payments, they are quite different systems. RTGS is a domestic system, whereas SWIFT is an international system.

RTGS is used to process payments within the same country, whereas SWIFT is used to process payments between different countries.

Another difference is that RTGS payments are processed in real-time, while SWIFT payments are processed in batches. This means that RTGS is more expensive, as banks have to staff their systems for longer hours.

RTGS is also more reliable, as payments are processed immediately. SWIFT payments can sometimes take several hours to be processed.

Overall, RTGS is a better system than SWIFT for processing high-value domestic payments. It is more expensive and slower than SWIFT, but it is more reliable and faster than BACS.

RTGS vs. CHAPS

CHAPS is a UK clearing system for payments between banks, launched in 1984. It is similar to RTGS but is used for lower-value payments.

Real-Time Gross Settlement is used for high-value payments, whereas CHAPS is used for lower-value payments.

Another difference is that RTGS payments are processed in real-time, while CHAPS payments are processed in batches. This means that RTGS is more expensive, as banks have to staff their systems for longer hours.

RTGS is also more reliable, as payments are processed immediately. CHAPS payments can sometimes take several hours to be processed.

Conclusion

‘RTGS’ stands for Real Time Gross Settlement, which can be explained as a system where there is continuous and real-time settlement of fund-transfers, individually on a transaction by transaction basis (without netting). Online transfer of funds is a vital and essential service in the global banking industry. For India, these payment systems have revolutionised the banking sector of the country and given momentum to the growth of a digital and cashless economy.