// GLOSSARY -- PAYMENTS & FINTECH

What is Real-Time Gross Settlement (RTGS)?

1 min read Updated

Real-Time Gross Settlement (RTGS) is a payment system that settles transactions individually and immediately — the backbone of central bank payment systems and a property that blockchain achieves natively.

WHY IT MATTERS

RTGS systems (Fedwire in the US, CHAPS in the UK) settle high-value payments in real-time between banks. Each transaction is settled individually and immediately — no netting, no batching, no delay.

Blockchain is inherently RTGS: every transaction settles individually on confirmation. This property, which costs billions to maintain in traditional finance, comes for free on blockchain.

The significance: blockchain provides RTGS-grade settlement to anyone, not just banks. A freelancer in Lagos receiving payment from a client in London gets the same settlement finality as an interbank transfer.

FREQUENTLY ASKED QUESTIONS

How is blockchain similar to RTGS?
Both settle transactions individually and in real-time. Traditional RTGS is limited to participating banks during business hours. Blockchain RTGS works 24/7 for anyone globally.
Is blockchain RTGS better?
For most purposes, yes: 24/7 availability, global access, lower cost, and programmable. Traditional RTGS has advantages in legal finality frameworks and regulatory certainty.
What is payment netting?
Offsetting multiple payments between parties to settle only the net difference. Reduces settlement volume but introduces delay. RTGS (and blockchain) avoids this by settling each payment individually.

FURTHER READING

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