- Latvia was the first euro area country to introduce instant payments. Currently, those innovative interbank transfers, executed in a matter of seconds and available on any day and at any time of the day, can be used by already over 90% of the customers of Latvian commercial banks;
- almost a year after the roll-out, the number of transactions handled by the pan-European platform joining 12 countries has exceeded 5 million, with more than 100 000 instant payments a day processed in certain days of October;
- the Baltic States have been the pioneers in introducing this service, and the leading role has been played by Latvia;
- Latvia is taking the next step with Swedbank AS launching instant payments that are now available between the customers of the three large commercial banks, AS Citadele banka, AS SEB banka and Swedbank AS, as well as between the customers of those commercial banks and the financial institutions of other euro area countries that have also introduced instant payments, including Latvijas Banka;
- with instant payments continuing to develop, commercial banks and financial sector companies can soon be expected to start offering their customers an option to execute instant payments based on their mobile phone number ; the use of instant payments could be extended to trade and e-commerce in the future.
With Swedbank AS finalising the technical preparations and starting to provide instant payment services to its customers on a daily basis, already over 90% of the customers of Latvian commercial banks have access to instantaneous interbank payments 24/7, including weekends and holidays.
The customers of AS Citadele banka and AS SEB banka have been enjoying the advantages of instant payments already since November 2017 in both transfers between both banks as well as to several euro area banks (the list of banks is available here: https://www.ebaclearing.eu/services/instant-payments/participants/). Currently, most customer payments between those credit institutions are executed via the instant payments channel, i.e. in roughly a second, but very often even faster than half a second, on any day and at any time of the day, including weekends and holidays. Up to now, almost 2 million instant payments with the total value of approximately 400 million euro have been handled by Latvijas Banka's system.
The number of instant payments can be expected to increase significantly as a result of Swedbank AS launching this innovative service, as most of the customer transfers between AS Citadele banka, AS SEB banka and Swedbank AS will be executed via the instant payments channel.
The Baltic States and Latvia in particular are the euro area leaders in implementation of the instant payments infrastructure. In October, EBA CLEARING, founded by European banks, announced the results of the first 11 months of the operation of the pan-European instant payments platform RT1 to which is the instant payments infrastructure of Latvijas Banka is connected. Overall, the number of such payments has exceeded 5 million, with more than 100 000 instant payments a day processed in certain days of October. For more details about the operation of the instant payments platform RT1, see: https://www.ebaclearing.eu/news-and-events/media/press-releases/25-october-2018-eba-clearing-s-real-time-payment-system-rt1-passes-5-million-transaction-mark/.
With instant payments continuing to develop, commercial banks and financial sector companies can soon be expected to start offering their customers an option to execute instant payments based on their mobile phone number only; without having to enter the customer account's IBAN number for every payment. Latvijas Banka maintains an IBAN register storing the IBAN numbers of customer accounts and mobile phone links. The IBAN register was developed as part of the EKS, the Electronic Clearing System of Latvijas Banka.
The development of instant payments and innovations will help consumers significantly save their time and provide various ways of better managing their finances, including an opportunity to use instant payments at points of sale and in online shopping or e-commerce in the future. This innovative financial service will also support the development of the financial sector and improve the competitiveness of businesses operating in this sector.
For reference
Latvijas Banka is the central bank of Latvia – an independent institution and a member of the Eurosystem. The primary objective of Latvijas Banka is the same as that of the central banks of other euro area countries and the European Central Bank: price stability (inflation rates below, but close to, 2% over the medium term). This is an essential precondition for a strong and growth-oriented economy. To achieve that, Latvijas Banka participates in the formulation of the Eurosystem's monetary policy, related decision-making and implementation.
Latvijas Banka organises and maintains the payment infrastructure in Latvia, including two fully automated payment systems helping to ensure interbank settlements in euro. TARGET2-Latvija is an interbank euro payment system falling within the Trans-European Automated Real-time Gross Settlement Express Transfer System TARGET2. The EKS is used for the processing of retail payments.
As a further step in the development of the existing payment infrastructure, an instant payment service was introduced in the EKS at the end of August 2017, providing a significant stimulus for development of innovative payment instruments in Latvia.
Latvijas Banka, acting in the public and economic interest, carries out several tasks significant for each and every inhabitant, financial markets and the public at large:
– participates in the formulation and implementation of the euro area's monetary policy;
– issues cash in Latvia and participates in ensuring the cash circulation process in the euro area;
– discharges the function of the central national currency authentication centre;
– maintains the interbank payment systems' infrastructure and promotes their smooth operation;
– manages the foreign reserves and other financial investments;
– acts as the financial agent of Latvia's government and provides financial services to other market participants;
– compiles and publishes financial, monetary statistics and balance of payments statistics;
– maintains and develops the Credit Register;
– acts as an advisor to the Parliament and Cabinet of Ministers of the Republic of Latvia on monetary policy issues and other issues related to Latvijas Banka's operation.
Latvijas Banka promotes analysis and research of macroeconomic and financial issues, thereby laying a secure foundation for professional activities in these areas. The role of the leading industry expert helps Latvijas Banka raise public awareness of the development of the economy and the monetary system, the current situation and the economic policy being pursued. Latvijas Banka takes an active part in educating the general public on various economic topics.