TT (Telegraphic Transfer) and RTGS (Real-Time Gross Settlement) are both methods of electronic funds transfer, but they differ significantly in their scope and speed. According to the reference, RTGS is used for domestic transfers while TT is used for international transfers.
Key Differences Between TT and RTGS
To understand the difference between TT and RTGS, let's consider the following aspects:
| Feature | Telegraphic Transfer (TT) | Real-Time Gross Settlement (RTGS) |
|---|---|---|
| Geographical Scope | Primarily international transfers. | Primarily domestic transfers within a country. |
| Speed | Transfer times can vary, usually taking 1-5 business days. | Offers immediate and real-time settlement. |
| Settlement Type | Often involves netting of transactions. | Executes transactions on a gross basis, one by one. |
| Network | Typically utilizes secure networks like SWIFT. | Operates within a country's banking system. |
RTGS Explained
- Real-Time: Transactions are processed immediately as they are received.
- Gross Settlement: Each transaction is settled individually without being batched or netted. This means the transfer of funds occurs from one bank to another on an individual order basis.
- Domestic Focus: RTGS systems are designed to facilitate large-value transfers within a country's banking infrastructure.
- Example: Transferring a large sum of money between two businesses in the same country.
TT Explained
- Telegraphic Transfer (TT): Refers to the electronic transfer of funds, typically across international borders.
- SWIFT Network: Often relies on the SWIFT network for secure communication and transfer instructions between banks in different countries.
- International Payments: TT is commonly used for cross-border transactions, such as import/export payments.
- Example: A company in the USA paying a supplier in China.
In summary, while both TT and RTGS involve electronic funds transfer, RTGS is designed for immediate, individual settlement within a country, and TT is used for electronic transfers across international borders.
