In today’s digital world, payment rails are one of the most important aspects of money movement. They’re so integrated into our lifestyle that we barely notice them. 

By 2024, 80% of payments are estimated to be done electronically.

How do you prepare your business to be ready for an inevitable trend of digital payments?

If you’re ready to position your business to grow and thrive in a world of real-time expectations, read on. 


What we cover:

What payment rails are

Popular types of payment rails

The importance of payment rails

Which payment rail is best for your company's payment rail API


What Are Payment Rails? 

Payment rails are the systems that empower the flow of data to make electronic financial transactions possible. They enhance the transfer of money from one user to the other(s). This transfer can be between different currencies and countries.

For example, you can receive funds from your business partner in Japan while you’re in New York. Your partner would pay in Japanese Yen while you get your money in US Dollars.

Payment rails make both simple and complex transactions possible. They are like the “central nervous system” of the global financial industry. Without them, financial transactions will end abruptly.

Just as rail tracks make it possible for trains to move from one point to another, payment rails help money move from an origin to its destination.


Most Popular Types of Payment Rails 

There are several types of payment rails, each with distinct features. Altogether they help us achieve a common goal of moving money digitally from one currency, account type, region, or country to another.

Learn about the following payment rails and how they enable individuals and businesses to send or receive money.

Automated Clearing House (ACH) and Same-Day ACH

Automated Clearing House is a type of digital money transfer that works between U.S. accounts only. ACH is widely used in the US, it processed transactions worth over $72 Trillion in 2021 alone.

Under normal operations, funds transferred with ACH are compiled and directed to a clearing house. These funds are then cleared in batches before being posted to the different recipients. This is why ACH takes 2 to 3 working days from when you initiate a transfer to when the receiver gets the funds.

In September 2016, Nacha, the organization backing the ACH since the 1970s introduced same-day ACH. Banks and financial institutions adopted same-day ACH, unlocking new financial possibilities for customers. 

For example, if your bank or financial service provider uses same-day ACH API, you can send or receive money in a single day on the ACH network. It benefits savings account owners the most, as they can now make same-day electronic payments without cards.


How ACH Works 

You can learn how ACH works in this comprehensive guide, but here’s a quick summary:

  • You initiate a transaction

  • Your bank or financial service provider processes it and submits it to the clearinghouse

  • If the transaction is valid, the clearinghouse processes and delivers it to the receiving bank

  • The receiving bank then notifies the receiver of the transaction

Real-Time Payments (RTP)

Real-Time Payment rails facilitates real-time payment for individuals and businesses.

RTP boasts improved speed in the transfer of funds and payment settlement. Unlike ACH, it’s available on all days including weekends and federal holidays.

RTP enables anyone to push credit instantly – RTP does not support pull payments. However, one must also note that payments cannot be reversed once settled.


How RTP Works 

  • To use RTP, you’ll have to open an account with a bank or any other financial institution insured by FDIC that’s connected to the RTP network.

  • RTP settles payments instantly. As you transfer funds, it is posted to the receiver within seconds.

Card Rail

In the US, Mastercard, Visa, American Express, and Discover are the major giants of the card rails system. Cards facilitate transactions in many ways including payment on e-commerce platforms and the trendy swiping through a card reader.

The bank or financial service provider that sponsors a card is called the issuing bank. The card rails company charges these issuers merchant fees for processing transactions using their integrated payments system.

Cards are increasingly popular because of their ease of use. More than 83% of US adults have at least one credit card according to the Federal Reserve.


How Card Rails Work

Have you ever wondered what happens when you swipe your card on a card reader? 

Here’s what happens in 6 simple steps:

  1. The card reader collects your transaction information 
  2. It translates it into a payment request and sends it to the merchant’s bank
  3. The merchant’s bank sends this request to your issuing bank
  4. The issuing bank checks if you have enough funds (for a debit card) or credit (for a credit card) to settle the request
  5. The issuing bank also checks and validates that the request is from a legitimate source
  6. If all checks out, it processes the transaction request and you can remove your card

It’s important to note that card payments are not settled instantly. The card rail system settles payments in batches, so the merchant has to wait until the next batch before they can access the funds.


FedNow is an instant payment platform that is being developed by the Federal Reserve Banks. It will launch between May and July 2023. 

FedNow is built to help financial institutions across the US provide fast payment service for their customers. It aims to enable instant settlement and access to funds for individuals and businesses.

Aside from improving the speed of transactions, FedNow will also support 24/7 payments including weekends and holidays. This will help ensure participating banks can exchange customer data and settle payments instantly any day of the week.  

What is FedNow? It is similar to RTP but there are a few key differences.


How FedNow Works

  • You initiate a payment through your participating bank

  • Your bank submits your payment information to the FedNow Service

  • FedNow validates the payment information and transfers it to the recipient’s bank

  • The recipient’s bank confirms if the recipient’s account is valid and can accept your payment

  • Once confirmed, FedNow settles the payment (debits you and credits the receiver) and your respective banks will notify you of the transaction status 


Fedwire (aka Fedwire Funds Services) is an electronic payment system also owned by the Federal Reserve Banks. It facilitates same-day transactions between credit unions, banks, government agencies, and branches of the Reserve Banks. It aims to ease the transfer of large funds between these organizations. 

Foreign banks and international financial institutions can also use Fedwire. But they have to be affiliated with a US bank or have an account with the US Federal Reserves.

The twelve US Federal Reserve Banks jointly manage Fedwire. It facilitates both individual and business transactions with the government. For example, for tax payments, levies, and buying and selling federal funds.


How FedWire Works

  • Participating banks or financial institutions initiate funds transfer via phone, email, or offline

  • Federal Reserve Bank debits the initiator and credits the receiving participating bank

The Importance of a New Payment Rails System 

The world of payment rails is changing, and one of the most exciting developments is a payment system that empowers you to build the financial system of your dreams. is the simplest API integration for instant payouts – one solution to access RTP, ACH, Same Day ACH, and more.  

We give you access to all major payment rails without costly bank integrations or prolonged compliance. We’re backed by the most reputable payments experts, partners, top-tier banks, and investors – all to ensure the delivery of every transaction. 

With Orum, as your business grows, you will benefit from our API’s flexibility to meet your changing needs, including getting priority access to new payment rails and tools as soon as they become available – all via the same API. 


Which Payment Rails Are Best for Your Company? 

The payment rails discussed above each have unique features that distinguish them. 

For example, RTP boasts instant payment but might not be suitable for your business because your customers love to swipe cards, or you use pull payments with your partners.

Here are some questions to consider that can help you determine which payment rail is best for your company:

  • Is the payment rail adaptable to your business model and size?

  • What are the technical requirements of the payment rails for your business?

  • How popular is the payment rail among your customer base?

  • What security measures are in place to protect you from losing money during or after the movement of funds?

  • What is the short or long-term investment required to use the payment rail?

Make Money Movement Easy with Payment Rail API

At Orum, we offer companies the simplest API integration for instant payouts. Our easy-to-integrate API allows you to implement instant payouts into your platform in one sprint or less. You save money by avoiding engineering and operating costs, enjoy informed partner support, and gain access to all major payment rails without costly bank integrations or prolonged compliance. We love helping you move money in the simplest, most reliable, and most efficient means. 

Contact us today if you’d like to quickly grow your business by launching instant payouts with our single, easy-to-integrate API.

Ready to move?Let’s talk.