The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
The payments sector in Romania has been very dynamic in recent years. Since its launch in 2019, the Romanian domestic instant payment system has seen a sharp rise in uptake and plans to further develop electronic payments in the country are underway. We spoke to Radu-Gratian Ghetea, currently serving as the Chairman of the Board of Libra Internet Bank and as Honorary Chairman of the Romanian Association of Banks (RAB), about the payment landscape of Romania today and the work done by RAB and other stakeholders to develop electronic payments in the country.
What are the current main characteristics of the payment landscape of Romania? How has it evolved in the past ten years?
The payment infrastructure of Romania is relatively new (operational since 2005) but robust, dynamic, comprehensive and in continuous development. The settlement backbone is provided by the Central Bank’s systems (ReGIS for RON and TARGET2 component for EURO). The retail payments platforms are provided by TRANSFOND (the local ACH) to the banking community that use the platforms to provide payment services to consumers and companies: from old fashioned checks and other papers (in obvious decline), to direct debits, credit transfers (in RON and EURO) and, since 2019, instant payments in RON. It is relevant to mention that although not in the Eurozone, the Romanian banking community has adopted SEPA standards (SCT and SCT Inst) even for payments in local currency.
In the last years we have seen major banks migrate to instant payments (IP), and new additional services for IP arise: Alias Pay (a centralised proxy service) to enable payments initiation using a mobile number, and SANB (Confirmation of Payee) to strengthen trust in IP and online payments in general.
In terms of IP transaction volumes, at the end of 2021 there was an increase of 27% compared to the previous year, from 1.113 billion transactions to almost 1.5 billion. These include cards, credit transfers, direct debits and other payment instruments.
Romania launched its domestic Instant Payment (IP) system in 2019. What are its main features? What are the main developments in the Romanian payments sector since its launch?
The IP System provides instant settlement according to the SEPA Instant Credit Transfer (SCT Inst) scheme: max 10 seconds, available 24/7, and interbank settlement is fully collateralised. In terms of pricing, IP is cheaper than a normal SCT to encourage adoption, in fact it is the cheapest payment instrument in Romania.
Since the launch of IP in 2019 ten banks have joined, namely Banca Transilvania, CEC Bank, Libra Internet Bank, Banca Comercială Română, Patria Bank, Vista Bank, Raiffeisen Bank, BRD Groupe Société Générale, Intesa Sanpaolo Bank, and ING Bank. The combination of these PSPs today cover more than 70% of the Romanian retail payments market.
In terms of volumes, we notice a high increase in the rate of IP: this year the volume of IP is expected to be ten times higher than in 2022, while the share of IP in total interbank payments will increase to more than 35%.
The benefits of banks participating in the IP System have translated into ensuring customer satisfaction as well as meeting their needs, which has resulted in customer retention and loyalty, strengthening the bank's image on the market by including in its range of services the most innovative solutions in payments between open accounts at different banks.
Simply speaking, RoPay will enable people to pay easier, instantly, using their mobile banking apps in all day situations: peer to peer, in eCommerce, in small and big shops, while using transport services, for parking services, invoices and so on… making all parties benefit from the advantages of instant payments.
How have electronic payments evolved in Romania since the introduction of the IP System?
The IP System was introduced a few months before the influences of the pandemic became visible in statistics. For example, in Romania the total number of electronic payments (EP) increased by 21,87% between 2020 and 2021, much more than the growth rate of 14,71% in the previous year (2019/2020). Meanwhile, the number of instant payments increased 4,5 times due to the gradual implementation by banks operating in Romania. This ratio is the same for 2021 to 2022.
At the end of September 2023 we observe promising trends in both electronic- and instant payments; between September 2022 and September 2023 the total number of EP increased by 22,83%, the total number of IP increased by 7.9 times, while the total number of non-IP declined by 8,84%. For the end of this year, we expect similar trends considering the decrease of non-IP and parallel increase of IP volumes.
Financial inclusion is one of the key policy objectives of the European Retail Payments Strategy. How has the Romanian payments industry responded to challenges related to accessibility to electronic payments by the unbanked population?
According to World Bank reports, financial inclusion in Romania has seen an increase from 57.64% in 2017 to 69.12% in 2021 (editor's note: statistics refer to bank account ownership among people over the age of 15).
To improve financial inclusion and extend electronic payments, there have been initiatives in the banking and financial market such as offering very comfortable ways of initiating payments, extremely efficient in terms of availability, speed and security. These models offer consumers, both individuals and institutional, the comfort of a very pleasant payment experience, which is desired to be repeated until it is absorbed in daily behaviour.
What developments can we expect to see in the payments sector over the coming five years?
Romania has very high potential in regard to the development of electronic payments. Developments in this area will bring benefits to end consumers, individuals, and to merchants who will gradually adopt new technologies and provide their customers with their own modern, easy, safe, and attractive payment methods.
The Romanian Association of Banks and TRANSFOND are now focused on developing a new service based on a new national scheme (RoPay). As defined in the common vision of the Banking industry, RoPay is intended to unleash the potential of Instant Payments and create a new payment ecosystem around IP as an alternative to cash and card. Simply speaking, RoPay will enable people to pay easier, instantly, using their mobile banking apps in all day situations: peer to peer, in eCommerce, in small and big shops, while using transport services, for parking services, invoices and so on… making all parties benefit from the advantages of instant payments.
Infographic: The Romanian payment landscape (October 2023)
(Click to enlarge and download)
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