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Swedish central bank looks to TIPS for instant payments

Sweden's central bank says it plans to join the ECB's Target Instant Payment Settlement (TIPS) system to bring 24/7 real-time payments to the country by 2021.

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Swedish central bank looks to TIPS for instant payments

Editorial

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Launched last year, TIPS is available to both consumers and businesses across the 19 states in the eurozone, offering near real-time payments via smartphones, PCs and in-store payment points.

The initiative was designed to help banks take on the growing popularity of digital, contactless payment services offered by big tech firms such as Apple, Google, Amazon and Alibaba in China.

Sweden's Riksbank says that with the decline of cash, it wants to make instant payments possible in its RIX system.

The central bank has determined that TIPS is the fastest and most cost-efficient way way of giving financial institutions access to RIX 24/7.

However, it has not made a final determination, noting that "national security requirements" will be an important factor in its negotiations to use the platform.

The rise of real-time payments will be a key theme at this year's EBAday, taking place in Stockholm on 18 and 19 June next week. Over 1000 payments heads from across Europe are expected to attend. Register here.

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Comments: (4)

David Gyori

David Gyori CEO at BANKING REPORTS, LONDON

This is very exciting. But why to choose TIPS instead of RIX if RIX has the same near real time capabilities?

Jatinder Bali

Jatinder Bali App Sr Group Manager - VP at Citigroup

Doesn’t RIX use TIPS below it?

John Schlesinger

John Schlesinger Chief Enterprise Architect at Temenos

RIX is an RTGS, that is, a settlement system. A clearing and settlement mechanism (CSM) needs both clearing and settlement to work. Automated Clearing Houses (ACH) provide this part of the CSM. You can read all about RIX at https://www.bis.org/cpmi/paysys/swedencomp.pdf - BIS has descriptions of all the major CSMs in the world. RIX can settle Krona or Euro (K-RIX and E-RIX). There are two ACHs, Postgirot (internal to the Post Bank) and Bankgirot which is owned by the banks and does bilateral net settlement using RIX.

K-RIX is not real time for low value payments. Payments under about $50k are aggregated and net settled. E-RIX payments are sent to TARGET so presumably clear on a D+1 basis, not real time.

Adopting TIPS enables E-RIX to do single immediate payments for low value retail transactions in euros. It is not clear to me how TIPS could be used for K-RIX but maybe that is not the plan.

David Gyori

David Gyori CEO at BANKING REPORTS, LONDON

Thank you, John! This makes sense and this is useful info for me. Thank you for your explanation!

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