Payment Rails

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Payment rails are the underlying systems, networks and rules that move money between payers and payees, such as card networks, bank transfer systems and real-time payment systems.

Every payment, whether by card, bank transfer or mobile app, travels over one or more payment rails. Different rails vary in speed, cost, availability and the types of payments they support.

Main types of payment rails include card networks, such as Visa and Mastercard; automated clearing house systems for batch bank transfers, such as ACH in the United States and Bacs in the United Kingdom; high-value systems for large transfers between banks, such as Fedwire, CHAPS and TARGET2; real-time payment systems, such as the UK’s Faster Payments, India’s UPI, Brazil’s Pix and the US FedNow; and cross-border networks, such as SWIFT, which carries payment messages between banks.

For example, when a person pays a friend instantly through a banking app in India, the payment travels over UPI, settling within seconds.

Fintech companies build products on top of existing payment rails rather than creating their own. Choosing the right rail affects how quickly money arrives and how much it costs. New rails, such as blockchain-based systems and stablecoins, are also being developed and tested, particularly for cross-border payments, where existing systems can be slow and expensive.

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