4 Trending Use Cases For Real-Time Payments

Every business has vendors who need to be paid, invoices that need to be sent and refunds that will need to be issued. What we’re doing at Dwolla is automating many of the processes involved in payments, making these transactions faster, easier and more cost-effective.

Today, the Dwolla Platform offers the flexibility of various payment options. We conquered our quest to add a real-time payment capability to the Dwolla Platform and now are amplifying the use cases of real-time payments to illustrate their value.

What to Know About Real-Time Payments & Dwolla

The RTP® Network is a credit-push system created by The Clearing House in 2017. Financial institutions opt in to participate in the network, currently reaching over 60% of U.S demand deposit accounts. RTP transfers initiated through the Dwolla Platform are performed by Cross River Bank.

When building real-time payments (RTP) into Dwolla’s Platform, we were intentional about making the integration process for an RTP API quite simple for businesses. What can seem not so simple is translating the benefits and use cases for real-time payments to your customers. We are here to help.

Before we get into use cases for real-time payments, it’s important to understand the context behind these examples. RTP transfers on the Dwolla Platform are funded by the sender’s Dwolla Balance, the wallet-like functionality built within the Dwolla Platform. Understanding the Dwolla Balance is essential to properly setting up your real-time payments solution with Dwolla.

Any funds available in your Dwolla Balance can be sent in real time to an RTP-eligible account. Once you initiate an RTP transfer, those funds are immediately unavailable in your Dwolla Balance.

A business can pool funds in their balance before initiating a transaction and sending those funds to a destination bank account. Before initiating an RTP transfer, you must load funds into the Dwolla Balance using an ACH transaction (to speed this process up, we also offer Same Day ACH, or our Next Day feature) or through a wire transfer, if you have that feature enabled.

Remember: We can’t use RTP to debit accounts since it’s a credit push system.

Now that you have that level of understanding, let’s discuss a few real-time payment use cases.

Payroll Disbursements: Keep Your Money Longer

With RTP, a Dwolla client can build real-time payroll. In just one day, payroll disbursements could start in the employer’s bank account, stop in the employer’s Dwolla Balance and settle in an employee’s bank account.

The gig economy is a great example of how real-time payments can deliver serious value through some simple changes.

Workers are being paid using RTP transactions — and those workers see faster payments as a valuable benefit. After every day of work, funds can be sent to their existing bank account nearly instantaneously — no matter the time of day — as long as that bank account is RTP-enabled.

Rather than offer branded debit cards that require establishing a new bank account, Dwolla’s RTP solution allows your end users to attach their existing bank account to receive funds. If that bank account is RTP-enabled, they are eligible to receive their payouts in real-time.

How could your business take advantage of faster payments? Would you charge more for RTP transactions or simply use faster payments as a differentiator in a crowded industry?

By adding remittance data to an RTP transaction, your customers receive additional context within their bank statement or online banking tool to know exactly what the payment was for.

Adding this additional context to a payment can help both sides of the transaction.

Financial Applications Make Deposits 24/7

What makes the RTP® Network so appealing is that usual banking hours no longer apply. Funds are sent upon the transaction being initiated and the funds are settled near instantaneously.

Because RTP transfers are irrevocable, a business can treat them as final once sent, without needing to wait days to be sure they aren’t returned.

Real Estate Payments Improve Real Fast

Knowing that the RTP® Network is a credit-push system, property managers and landlords could benefit from the capital management aspect of real-time payments — in addition to the faster transactions. Operations become more efficient when cash is not held up by a banks’ funds validation processes.

The days of planning for three to five days of waiting for an earnest money payment to clear are over. Money is sent and received in real-time.

Reimbursing Policyholders in Real-Time

Because of its disbursement use case, insurance companies potentially stand to benefit the most from real-time payments. By sending reimbursements in real time to policyholders, checks are eliminated — along with the waiting period for the check to be mailed and eventually deposited.

The speed and 24/7 availability of the RTP® Network gives control back to insurance companies over their payments. Schedule a payment when your policyholder needs it and remove uncontrolled variables from the equation. Your money stays where you want it to, until you are ready to send it out.

Creating Your Own Use Case for Real-Time Payments

Healthcare providers can make payments to vendors, pharmacies or employees in real time.

Staffing platforms that connect employers with employees looking for work can facilitate payments in real time.

We are at the beginning of a real-time payment movement in the United States. Ready to get started?