Real-time gross settlement (RTGS) is a payment system that allows for the transfer of funds between banks in real time, typically within a few seconds. This means that payments are processed immediately, rather than waiting for the next settlement cycle, which can take place daily or several times a week.

Here are the key features of RTGS:

• Real-time: Payments are processed and settled in real time, typically within seconds.
• Gross settlement: Each payment is processed separately, rather than being grouped with other payments in a settlement batch.
• Interbank: RTGS allows for payments between banks, not just within a single bank.
• Fast and efficient: RTGS is a fast and efficient way to transfer funds, with minimal delays.

Here are some of the benefits of RTGS:

• Reduced settlement risk: RTGS reduces the risk of settlement failure, as payments are processed in real time.
• Improved cash flow: RTGS can improve cash flow for businesses, as they can receive payments faster.
• Reduced operational costs: RTGS can reduce operational costs for banks, as it eliminates the need for reconciliation and settlement batch processing.
• Increased transparency: RTGS can increase transparency in the payment system, as all payments are recorded in real time.

Here are some of the challenges associated with RTGS:

• System risk: RTGS systems are complex and can be vulnerable to technical problems.
• Failed payments: Despite the low risk of settlement failure, there can still be failed payments.
• Costs: RTGS can be more expensive than traditional payment systems, especially for small payments.

Overall, RTGS is a major innovation in the payment system that has the potential to significantly improve the way we transfer funds.