The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
Since January 2022, the Instant Credit Transfer ( ) scheme has been in use in Slovakia, where three payment service providers ( ) have joined the scheme to date. We interviewed Milena Koreňová, CEO of the Slovak Banking Association, to share the lessons her community has learned while implementing the scheme. In addition, our infographic summarises all you need to know about the Slovak payments landscape.
At the beginning of 2022, the first Slovak adhered to the scheme. What were the main reasons that led to the decision to use this scheme in Slovakia?
The Slovak banking sector is one of the most innovative in Europe and has long been providing its clients with new innovative solutions that help them simplify their daily lives. Banks in Slovakia are well aware of the ongoing move towards digitalisation and the trends that go along with it, and want to increase customer comfort so that clients have the opportunity to pay conveniently and quickly. This is supported by the growing number of contactless payments by card, mobile phone or smart watch. This form of payment is on the rise at the expense of cash, due to its ease of use and the growing network of merchants accepting these payments.
At the same time, the payment behaviour of Slovaks has been significantly affected by the COVID-19 pandemic. The growth in the volume of non-cash payments made at point-of-sale (POS) terminals in the last year increased by a double-digit number. The use of mobile cashless payments has also been growing significantly. In 2021, the number of mobile payments increased by more than 100% and for the first time exceeded the number of cash withdrawals from ATMs.
payments have a significant share of non-cash payments in Slovakia. Several years after the introduction of euro banknotes and coins, the implementation of in 2014 was another milestone on the road to harmonising payments at European level, which the Slovak banking sector very much welcomes and supports. After the development of the scheme, it was obvious that banks in Slovakia would introduce this technological innovation to their clients. As a member state of the eurozone, it was important for us to ensure cross-border reachability of banks for instant payments in euros in accordance with the requirements and conditions of the scheme.
In 2019, in close cooperation with the National Bank of Slovakia, the Ministry of Finance of the Slovak Republic and the State Treasury, the National Plan for the implementation of in Slovakia was agreed and published, with a starting date of instant payments set for February 1, 2022. Payment service providers adhere to the National Plan on a voluntary basis.
Three banks declared their interest in implementing instant payments by the set date. The announced adherence of at least three banks with significant share in the total number of credit transfers in Slovakia in the previous calendar year fulfilled the fundamental requirement for introduction of instant payments from February 1, 2022 in the Slovak market.
These three major banks have a share of more than fifty percent in payments, and at the same time the total number of open accounts in these banks exceeds fifty percent. This means that instant payments can already be used by the majority of the country's population.
Can you tell us about Slovakia’s first concrete experience with the scheme and the main lessons already learned – including from an implementation perspective?
The implementation phase was challenging. To ensure 24/7/365 operation and accessibility of instant payments, the banks' IT and cyber security systems had to be adjusted. In addition, strict Anti Money Laundering (AML) standards must be preserved, and risk and fraud monitoring systems must be adjusted to provide and to support a seamless user experience, while being able to meet the challenges of nonstop operation.
Throughout the implementation, we cooperated very closely with the National Bank of Slovakia, and we appreciate their support in all phases of the project. Testing was an important part of the implementation. Banks have run various tests and testing scenarios, from testing connectivity to TARGET Instant Payment Settlement (TIPS) to performing interbank stress tests. Successful testing resulted in a seamless launch of instant payments when the participating banks introduced this new payment service to their clients.
Instant payments were also very well received by clients. In the first week of February alone, Slovaks sent hundreds of thousands of instant payments.
What developments related to the scheme do you expect in 2022 and beyond?
Instant payments represent a revolution in payments and banks believe they will become a new common standard. We therefore expect gradual involvement of other Slovak banks. Another important milestone will be achieved when the State Treasury joins the scheme, and we will be able to take advantage of instant payments also for paying administrative fees or taxes.
The Slovak Banking Association, as a member of the European Payments Council ( ), acts as administrative contact point for submitting applications for participants to join the individual schemes (National Adherence Support Organisation (NASO)). We will continue to support banks through the adherence process to the scheme. At the same time, we intensively monitor and analyse developments at the European level related to instant payments, and we greatly support and appreciate 's work in this area.
Finally, a broader question: what are the main characteristics of Slovakia’s payment landscape and its recent evolution, and how do you see it developing over the next five years?
The banking sector strives to provide its clients with innovations and cashless payment options. The Slovak Banking Association supports member banks in this regard, providing a platform for the creation and development of various standards in the field of payment services. In 2020, in cooperation with our members, we created a payment link standard and based Payme service on it, allowing clients to easily share payment information in an electronic environment via a web link.
With the introduction of instant payments, the innovative potential has been fully unlocked – now, payments via Payme have become a matter of seconds.
The pandemic accelerated changing consumer behavior trends around payments that had already been at play in previous years, resulting in a dramatic increase in the use of non-cash payments. We fully expect this trend will continue as instant payments grow in importance.
In the European context, we have also been monitoring current activities of various relevant European forums as well as legislative initiatives and the implementation of the Retail Payments Strategy of the European Commission, which will furthermore contribute to shaping developments in this area in the years to come.
Infographic: The Slovak payments landscape (March 2022)
(Click to enlarge and download)
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Milena Koreňová
Since September 2016 Milena Koreňová has been the Chief Executive Director of the Slovak Banking Association. From April 2012 to April 2015, she worked at the International Investment Bank in Moscow as Executive Director of the Risk Management Department. She was a member of the Bank Board of the National Bank of Slovakia between 2005 and 2010, having worked at the central bank since its establishment in 1993. She has held various positions, ranging from head of section or department director to chief information officer and head of financial management and payments division.
Notably, she was responsible for the entire preparation process of the Euro’s introduction throughout the whole financial sector in Slovakia.