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Real-time payments surge ahead

Sweden's Riksbank and the European Central Bank (ECB) are to explore the feasibility of using the TIPS platform to accommodate instant settlement of payments across European currencies, such as the Swedish krona and the euro. The two institutions says that providing cross-currency instant settlement services in central bank money under European governance could form an important contribution to the modernisation of the European retail payments.

The Riksbank will introduce its RIX-INST service in May 2022. RIX-INST will provide financial institutions with instant settlement services in Swedish krona employing the TIPS platform. In its current adaptation, settlement on the TIPS platform is limited to transactions where the originator and beneficiary hold accounts in the same currency. The Riksbank and the ECB will explore the feasibility of augmenting the TIPS platform to accommodate instant settlement of payments across European currencies, such as the Swedish krona and the euro. The initiative is launched against the backdrop of growing demands for pan-European integration and ongoing work in the international community to address the paucity of fast, efficient and accessible cross-border payments. The study will involve interaction with market participants.

Real-time payments surge during pandemic

The partnership between Riksbank and the ECB is another example of the strides that real-time payments are making. This is further supported by research released by FIS, which shows that adoption and usage of real-time payments has accelerated amid the COVID-19 pandemic and the real-time rails are now offering capabilities that extend beyond instant payments.

FIS’ seventh annual Flavors of Fast report showed that six countries have seen a twofold or greater increase in number of real-time payments processed over the past year:

  • Bahrain (657%).
  • Ghana (488%).
  • Philippines (309%).
  • Australia (214%).
  • India (213%).
  • Poland (208%).

Over the same time, four countries have seen a twofold or greater increase in the monetary value of real-time payments transactions:

  • Philippines (482%).
  • Bahrain (311%).
  • Australia (231%). 
  • Ghana (222%).

India remains as the leader in real-time payments, processing 41 million real-time transactions per day, more than any other country. South Korea reported the highest number of real-time transactions per capita, with 75 transactions per citizen, per year processed through the country’s HOFINET scheme.

In the US, more than 130 financial institutions are currently implementing real-time payments, a five-fold increase since September 2019. More than half (56%) of all European payments service providers have joined the pan-European SEPA Credit Transfer Instant Payments network, which brings cross-border and instant payments to 20 countries.

Vietnam and Hungary added real-time payments networks since last year, bringing the total number of countries with such schemes to 56.

Treasury payments driving adoption

Request to Pay (R2P), cross-border payments, and corporate treasury business-to-business payments are driving adoption of real-time payments networks globally, according to the FIS report. R2P systems offer a convenient and flexible way for people, businesses and governments to request a payment from a third party. The UK government has formally launched a framework for the development of a national R2P system built on international standards. In addition, The Clearing House in the US is working with banks and billers to pilot an R2P service that is expected to launch later this year.

“The current pandemic has highlighted the critical importance of instantly getting funds in the hands of those who need it, whether individuals or businesses,” said Raja Gopalakrishnan, head of Global Real-time Payments at FIS. “This year’s FIS Flavors of Fast report shows that as real-time payments networks mature, they are bringing value beyond speed. At FIS, we are working to further advance the business payments experience across the global ecosystem to make it simpler, easier and more cost effective while enhancing the user experience.”

The 2020 Flavors of Fast report includes meta-analysis of real-time payments data research conducted in April and May 2020. The report defines real-time or faster payments as funds transferred from one bank account to another with payment confirmation in one minute or less.

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