The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
We interviewed Dieter Goerdten, Head of Products & Services at SIX BBS Ltd. and Michael Montoya, CEO of SIX Interbank Clearing Ltd. to know more about the latest updates on Switzerland's payment landscape and developments.
What are the main features of the payment landscape in Switzerland at the moment, and how has it evolved in recent years?
Switzerland has been pursuing the digitalization of payments for a long time already. This development is being orchestrated by several bodies that “gravitate” around the Board of Directors of Swiss Interbank Clearing Ltd (SIC). SIC is the clearing and settlement platform on behalf of the Swiss National Bank (SNB).
One important milestone towards digitalisation has been the introduction of ISO 20022-based message flows in 2018, which also included client–bank messages. There has been an additional steady pursuit of close alignment with the standards wherever possible.
Why do the Swiss still love cash? What is the estimated share of cash payments versus cashless payments in Switzerland? Has there recently been an evolution and do you see a new trend (e.g. due to the Covid-19 pandemic)?
The Swiss people like cash as a means of payments because it guarantees privacy. Yet in Switzerland – like everywhere else – cash usage is steadily declining. Just recently the number of cashless payments surpassed the number of cash transactions for the first time. In parallel, while cash used to dominate payments up to 50 CHF, this amount has now come down to 20 CHF. Above this figure, most payments in Switzerland are being made in digital forms.
This trend has been significantly accelerated by COVID and the lockdown in Switzerland since March 2020. While we saw a steady decline of ATM transactions of approximately 4-5% p.a., over the last couple of years there has been a sharp fall in ATM usage. However, it is interesting to note that initially there was an increase in cash transactions in large denominations. This means that the Swiss still value cash as a way to store value (presumably at home) in times of crisis. More information is available from the recently published “SNB Survey on payment methods 2020”.
Can you tell us more about instant payments in Switzerland and in particular the prospect for Swiss to adhere to the scheme for euro transactions?
The Swiss financial sector, led by the SNB, is introducing instant payments starting in 2024. By this time, the SIC 5 clearing and settlement platform will be ready to process these new instant payments. In parallel, the SNB has mandated that the largest SIC-participants – those representing 98% of the retail payments market – be able to receive instant payments as of August 2024. From 2026, the same will go for all other participants who are active in retail payments. Implementation guidelines will be aligned with Instant as closely as possible. Moreover, details are being discussed on how to enable Swiss to handle instant euro transactions based on in approximately the same timeframe.
Can you describe in a few words the position of the Swiss community regarding (Single Euro Payments Area) and its developments, given that Switzerland does not belong to the (European Economic Area)?
Switzerland is a small economy compared to its European neighbours. It is dependent on trade and easy access to the European markets. Seamless payment flows are an essential part of this easy access. It is therefore always of keen interest to all parts of the Swiss economy to ensure a close alignment to the European payment standards. Consequently, Switzerland is a member of and continues to implement digital payments based on rules wherever possible.
How do you see the Swiss payment landscape developing over the coming five years?
We will certainly see a continuation of digitalisation. One notable example is the replacement of traditional paper-based payment slips with QR-bills by the end of 2022. That will open up the possibility to effect a digital payment from a paper-based format by scanning a QR code. The other “big thing” will be the advent of instant payments in 2024, which will almost certainly give rise to new market offerings by over time. And ultimately, the Fintechs and new players will continue to gain importance and market share in Swiss payments.
What are the plans in the Swiss market to introduce a Swiss digital currency?
There are no concrete plans. The SNB does not currently see any advantages of a central bank digital currency (CBDC) for the wider population. In the view of the SNB, such a “retail CBDC” could have undesirable side effects on monetary policy and financial stability. These side effects would come to the fore in crisis situations. However, the SNB is experimenting with a CBDC for financial institutions ("wholesale CBDC") in cooperation with the Bank for International Settlements (BIS) Innovation Hub, the SIX Digital Exchange (SDX), SIC and the private sector in the form of Project Helvetia and Project Jura.
The fundamental question addressed in those experiments is how central bank money can be integrated into a distributed ledger technology (DLT)-based financial market infrastructure for safe and efficient settlement. The experiments are, to a large extent, about building a bridge between existing infrastructure and a DLT platform on which transactions can be settled atomically and around the clock. More information is available at bis.org
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