* The views expressed in this article are solely those of the authors and should not be attributed to the European Payments Council.
As of March 2019, the Centre for Exchange and Clearing (CEC), the Belgian automated interbank payment system for retail payments, initiated their instant payment platform (IP CSM), provided by STET. We interviewed Kristine De Lepeleire, General Manager of the CEC, about the rollout of the Instant Credit Transfer ( Inst) scheme in Belgium.
Q. Can you share the key insights into and main lessons from the first months of the Inst scheme in Belgium?
In Belgium, eleven banks joined forces to launch instant payments, resulting in more than ninety percent of Belgian payment accounts becoming reachable and making instant payments an attractive service for customers from the very first day. The central system was outsourced to STET, our partner for the clearing and settlement of retail payments. The Belgian banking community decided to process instant payments within five seconds without any amount limit.
After thorough testing, the launch of instant payments was organised in three phases: in November 2018, the system was activated in the production environment, allowing payments between internal bank accounts only. From 3 March 2019 onwards, the system was opened up to customers, although volumes were still controlled during the first few weeks, starting with around 1,000 payments a day and building up slowly. As of the third week of this March, the volumes were allowed to follow effective customer demand and started to build up very quickly. Since April 2019, an average of almost 200,000 payments a day have been processed successfully. By the end of August, more than 30 million transactions had been successfully executed. The CEC can currently only execute instant payments within Belgium, but as of November 2019, CEC participants will have the opportunity to connect to Clearing’s RT1 and TARGET Instant Payment Settlement (TIPS) via the optional Single Window Instant Payments (SWIP) service. Some banks decided to connect directly to RT1.
The success of the project was based on the determination of all participants to cooperate and to reach the goal of launching instant payments together. This has required a lot of thorough testing and daily calls to follow up on defects. Strong engagement and sufficient resources proved to be of capital importance.
Providing infrastructure and connectivity 24/7/365 is a real challenge; the fine-tuning of the banks and clearing system is ongoing. Moreover, not all accounts frequently used by customers were accessible for instant payments from the very start. These accounts that were initially not reachable were mainly internal bank accounts (e.g. repayment of loans) and some customer accounts (e.g. insurance companies).
Volumes did build up very quickly, mainly thanks to the decision of some participants to promote instant payments as the “new normal”. The commercial strategies of the participating banks vary a lot.
Q. What were the main obstacles encountered during the implementation of Inst, and how were they overcome?
The main obstacles concerned infrastructure and connectivity. Cross-border cooperation with telecom providers proved to be a serious challenge and required a lot of patience due to very long through-put times. 24/7/365 availability puts high demands on the infrastructure of banks and requires new environments.
The application of multiple new technologies and the lack of experienced staff resulted in a very steep learning curve.
Identifying and resolving defects required a lot of engagement and investment from all of the participants as well as from our provider, STET.
Q. How do you see the use of the Inst scheme evolving in the future in Belgium and, more generally, in Europe?
As more banks will join the system (three more are expected before the end of the year and another two are working towards participation in 2020), volumes are expected to further increase in Belgium.
We expect a substantial adoption of instant payments in the coming years, supported by a major shift from to Inst. 24/7/365 might be an interesting option for bulk payment files as well, although the five-second limit would not be applicable. Further analysis is ongoing on this.
As instant payments become well known at the domestic level, interest in processing instant payments across will grow. The IP CSM will offer connectivity to TIPS and RT1 from November 2019.
Q. Finally, based on your experience, what’s the one key piece of advice you would give to European payment service providers planning to implement Inst?
We believe that the basis for our success was the strong engagement from the majority of Belgian banks to deliver instant payments as a community, ensuring a broad reach from day one. Throughout the project, which effectively started in 2016, we learned that the technical as well as the operational implementation presented a challenge that should not be underestimated; demanding requirements combined with new technologies made this a tough but very interesting journey.
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