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Instant Payment Settlement Systems: NBU Studies EU Experience

Instant Payment Settlement Systems: NBU Studies EU Experience

On 28–29 April 2021, the NBU, together with international experts from EU member states, held the expert forum Instant Payment Settlement Systems in the framework of the Twinning project Strengthening the Institutional and Regulatory Capacity of the National Bank of Ukraine to Implement the EU-Ukraine Association Agreement.

The central banks of Poland, Hungary, and Lithuania provide their support to the NBU within the Twinning project in various areas, including the development of a model for instant payments architecture in Ukraine and a roadmap to implement it.

Instant payments are a modern trend involving banks and FinTech companies throughout the world. They are electronic retail payments from account to account processed in real-time, 24/7. The funds are instantly available to the recipient for use.

Instant payment settlement systems combine a high speed of settlements and a potentially low cost of payment processing.

Over 60 countries have already developed their own instant payment settlement systems. The NBU studies the experience and best practices of instant payment systems implementation, including those of the NBU’s international partners.

"The issue of implementation of instant payments is one of the strategic goals of the country’s financial policy defined in the Strategy of Ukrainian Financial Sector Development until 2025," said Oleksii Shaban, NBU Deputy Governor.

The expert forum was attended by the key participants of the Ukrainian financial ecosystem, including representatives of banks, nonbank financial institutions, FinTech companies, and public authorities interested in the implementation of instant payment systems in Ukraine.

During this two-day event, the forum’s speakers talked in detail about the Twinning project’s goal and tasks, and provided comprehensive descriptions of the instant payment settlement systems in Poland, Hungary, and Lithuania, and their key features.

The NBU presented its own perspective on instant payment systems.

As Andrii Poddieriohin, Director of the NBU Payment Systems and Innovations Department noted, the introduction of instant payment systems is a response to new customer needs.

"The digitalization of all areas of human life has generated demand for real-time interaction. Customers and businesses are both interested in instant payments. Specifically, in Ukraine, there already is demand from the public for instant payments. For example, 43% of the total amount of cashless card-based transactions are card-to-card payments. At the same time, the pandemic has accelerated the introduction of cashless payments and made the issue of their cost particularly acute. That is in fact why instant payments have become a new reality in payments, a new normal," said Andrii Poddieriohin.

In the NBU’s opinion, a successful instant payment settlement system is an exclusively comprehensive system that must include convenient channels for payment origination, secondary identifiers of accounts, the means of bank payment details transmission, coverage of a maximum number of accounts, retail payment types that are in demand, and options that come with their use.

During the panel discussion, the forum’s participants were surveyed about their vision of future instant payment systems in Ukraine. The NBU plans to hold a range of working meetings with the financial sector participants to discuss in detail the specifics, models, and advantages provided by the development of instant payment systems in the Ukrainian market. Taking into account this feedback, the NBU will continue the work on a concept of instant payment system introduction in Ukraine.

"We will be happy to share with the payment market’s participants our developments, the experience of our international partners, and our accumulated knowledge, and to choose together the best instant payment system option for Ukraine," said Andrii Poddieriohin.

Financial ecosystem participants may provide their proposals on the building of the instant payment system at e-mail: [email protected].

Please see the following links for more detailed information on the event:

For reference:

The EU Twinning project Strengthening the Institutional and Regulatory Capacity of the National Bank of Ukraine to Implement the EU-Ukraine Association Agreement is implemented by the NBU’s partners from Narodowy Bank Polski and the Bank of Lithuania.

The aim of the project is to promote the macroeconomic stability of Ukraine by building the NBU’s institutional capacity and establishing a reliable banking system and payment infrastructure, and to provide aid to the NBU in implementing the EU-Ukraine Association Agreement.

The Twinning project includes four areas: developing banking supervisory approaches; introducing the instant payment settlement system; improving strategic planning in the central bank; improving the European integration process and international cooperation of the central bank.

The project implementation period is from 1 October 2020 to 30 June 2022. Experts from Narodowy Bank Polski, the Bank of Lithuania, and five other EU central banks will participate in the implementation of this project. 

At present, due to the Covid-19 pandemic, all activities within the project are held remotely. You can follow the latest news about the project at the special webpage (landing page).


 

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