More NewsFinland Looks to Real time Payments

Finland Looks to Real time Payments

The Federation of Finnish Financial Services (FFI) has launched a request for information (RFI) to update its payments system. The Finnish banking community invites interested parties to submit a written response to the RFI, in English, by 12 September.

The move is likely to lead to Finland becoming the latest country to adopt real time payment (RTP) systems for handling everyday transactions. They have already been launched in South Africa and Mexico in 2006, the UK in 2008, Poland in 2012, Sweden in 2013 and Singapore last month.

The UK banking initiative, the Faster Payments Service launched in May 2008, now processes more than one billion transactions per year and accounts for almost twice the number of cheques written. A survey presented in April this year at the National Automated Clearing House Association (NACHA) payments annual conference showed than 90% of professionals believe an RTP system will be rolled out in the US over the next five years.

In Finland, urgent payments are currently transferred between banks using the Finnish online urgent payment system (POPS) that handles payments twice a day on banking days only. POPS, launched in Finland in the early 1990s, is steadily becoming obsolete – a process hastened by the approaching single euro payments (SEPA) deadline of 1 August 2014.

Finnish banks found that the existing POPS system is not compliant with SEPA standards, which requires a change as the FFI must find a real-time system that will replace POPS and meet SEPA. The RFI details how the new payments system should handle real-time 24/7 transfers and also how it will provide solutions for complying with SEPA.

The FFI stated: “Customer demands have changed and will keep on changing, and it is important for banks to have a payment system that makes it possible to develop real-time payment service products for both consumers and corporate customers.”

There were 343,000 urgent transfers in Finland in 2012, representing just 0.16% of payment transactions, with a compound annual growth rate (CAGR) at 6.5% between 2002 and 2012. Despite the small percentage of transfers completed, the method helps firms to access a special service that permits transactions to be carried faster than regular payments. The average size of each transaction was €959 (US$1,303). Furthermore, the immediate payment system could be used for small value transactions.

SEPA credit transfers (SCTs) were launched in Finland in 2010 and by 2012 had completely replaced non-SEPA credit transfers that included national banking identification format instead of European international bank account numbers (IBANs). This instrument was used in 42% of transactions in 2012.

Related Articles

Infosys Finacle to power Santander UK’s international cash management system

More News Infosys Finacle to power Santander UK’s international cash management system

4w The Global Treasurer
Preparing for GDPR? Here’s four things to consider

More News Preparing for GDPR? Here’s four things to consider

4m Elliott Wiseman
Cash flow in focus for investors

Cash Management Cash flow in focus for investors

5m Conor Deegan
Treasury TV: Karen Pugsley, Domino's Pizza Group

More News Treasury TV: Karen Pugsley, Domino's Pizza Group

5m Victoria Beckett
Treasury TV: Yeng Butler compares US and European MMF reforms

Compliance Treasury TV: Yeng Butler compares US and European MMF reforms

5m Victoria Beckett
Treasury TV: Tim de Knegt, The Port of Rotterdam

10 Minutes With The Treasury Treasury TV: Tim de Knegt, The Port of Rotterdam

6m Victoria Beckett
Banks are selling clients short with short dated cash deposit U-turns

Banking Banks are selling clients short with short dated cash deposit U-turns

6m Victoria Beckett
What does sterling’s Brexit boost mean for UK manufacturers?

More News What does sterling’s Brexit boost mean for UK manufacturers?

6m Tasja Botha