Instant Payments: A Global View

Table of Contents

EXECUTIVE SUMMARY 1

1.1. Definition of instant payments 1

1.2. Key findings 1

1.3. Critical success factors 1

2. KEY TAKE-OUTS 7

2.1. Why develop an immediate payment system? 7

2.1.1. Instant payment is the catalyst for the future of banking 7

2.1.2. Cost savings from immediate payments will come first, revenues later 9

3. REAL-TIME RETAIL PAYMENT SYSTEMS 12

3.1. The digital economy has led to the implementation of instant payments in most markets 12

3.2. Definition of key terms 13

3.2.1. Real-time retail payment system vs real-time gross settlement 13

3.2.2. Instant payments 14

4. THE NEED FOR INSTANT PAYMENTS 15

4.1. Why are instant payments being implemented? 15

4.1.1. Central banks are largely behind the push for instant payments 15

4.1.2. The rapid development of communication technologies brings new possibilities for payments 16

4.1.3. Instant payment systems provide an opportunity to upgrade security 17

4.1.4. Consumer non-cash payment volumes have risen at a rapid rate, straining older systems 17

5. INSTANT PAYMENTS AROUND THE WORLD 19

5.1. Asia Pacific 20

5.1.1. Japan led the world in faster payments but with a system that was limited in scope 20

5.1.2. Instant payment development in South Korea was influenced by its electronic industry and government 21

5.1.3. Economics determined the need for instant payment in China 22

5.1.4. India hopes to reduce dependence on cash through instant payments 24

5.2. South America 25

5.2.1. Brazil – SITRAF (2002) 25

5.2.2. Chile – Transferencias en Linea (2008) 26

5.2.3. Mexico – Sistema de pagos electronicos interbancarios (2004) 26

5.3. Middle East and Africa 26

5.3.1. South Africa – Real-Time Clearing (2006) 26

5.3.2. Nigeria – NIBSS Instant Payment (2011) 27

5.3.3. Turkey – Retail Payment System (2012) 27

5.4. Europe 27

5.4.1. Denmark wanted a platform that could make P2P payments in true real-time 27

5.4.2. Poland offers two instant payment platforms 27

6. INSTANT PAYMENT IN THE UK, SINGAPORE, AND SWEDEN 29

6.1. UK: Faster Payments Scheme 29

6.1.1. Credit transfer usage has grown by almost 30% since the inception of Faster Payments 29

6.2. Background 30

6.2.1. Cash and cheque P2P transfers are decreasing, largely due to the FPS 35

6.3. Singapore: Fast and Secure Transfers (FAST) 36

6.3.1. FAST brought true instant payments to Singapore, accelerating the shift away from cash 36

6.3.2. The FAST platform includes push and pull credits, increasing payment flexibility 36

6.3.3. Background 38

6.3.4. FAST: participating banks 38

6.3.5. FAST is driving innovation in the payments market 39

6.4. Sweden: Payments in Real Time (BiR) 42

6.4.1. Payments in Real Time is a big step towards a cashless society 42

6.4.2. Background 43

6.4.3. P2P payment was the key overlay of the BiR system 44

7. THE AUSTRALIAN NEW PAYMENT PLATFORM 48

7.1. The NPP should hit the ground running when it launches 48

7.1.1. The New Payment Platform is seven years in the making 48

7.1.2. The New Payment Platform will propel Australia closer towards being a cashless society 51

7.2. The NPP will bring greater competition in e-commerce 52

7.2.1. The NPP can work with new digital wallets such as Afterpay and ZipPay, giving rise to disintermediation in e-commerce 53

7.3. Rising P2P payments in Australia highlight the need for instant payment infrastructure 54

7.3.1. NPP participants 55

8. APPENDIX 57

8.1. Abbreviations and acronyms 57

8.2. Methodology 58

8.3. Bibliography 59

8.4. Further reading 60