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Sweden's Riksbank presents case for modernisation of retail payments infrastructure

Sweden's central bank says the country's retail payment infrastructure needs to be modernised to accommodate more instant payments and third party access to payment and settlement rails.

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Sweden's Riksbank presents case for modernisation of retail payments infrastructure

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The Riksbank’s view is that the future infrastructure for retail payments will have to comply with European standards, be ready to receive retail payments both instantly and at predetermined times, and facilitate the entry of new actors using new technologies.

"In recent years the clearing infrastructure has not kept pace with the development of new standards, legal requirements and other changes taking place in the Swedish market for retail payments," states the central bank. "The Riksbank therefore sees a need to modernise the infrastructure for clearing and settling retail payments in a way that meets these changes and anticipates future needs."

The central bank says that payments should, as far as possible, be settled at the Riksbank in central bank money. New players, including payment and e-money institutes, should be able to apply for access to the Riksbank’s settlement system and to the infrastructure for clearing payments. The infrastructure of the future should also offer a high level of protection against money laundering, cyber-attacks and other disruptions.

Operators in the Swedish retail payments market will need to adapt their systems and processes for payments says the central bank, warning that such efforts will be complicated and time-consuming.

"This is crucial to ensure that the payment infrastructure in Swedish kronor remains stable and efficient in the future," states the Riksbank. "A modernised infrastructure also facilitates innovation in the Swedish payment market.

"If the market participants do not succeed in their task, it may be appropriate for the government, including the Riksbank, to take greater responsibility for steering the development of the retail payments infrastructure in Sweden.

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Comments: (1)

Anders Olofsson

Anders Olofsson Payment Oracle at FintechCore

In end of December 2024 the Sveriges riksbank is extending the domestic real time payments system, RIX Inst, to enable bank initiated account to account payments. Already the SWISH wallet has moved its clearing and settlement to this platform.

Where SWISH and many other wallets and peer-to-peer solution are adopting an alias service to enable the sender of payments to actually pre-validate the name of the payee this new service that the Central Bank is launching will not have any such service, enabling the fraudster to have a window of opportunity to move their activities. The Swedish financial system has seen a huge increase in fraud where user of Swish has in various ways managed to instruct unknowing user to transfer amount to fraudulent accounts. With this new RIX Inst service I foresee that there is a significant risk that just move their activiites off SWISH to use the banks as the next target.

As in with most recent announcement of central banks, and the Swedish central bank in particular, expect that the industry (eg. banks) would need to adress this issue. The central bank has also made it clear if the industry does not rapidly progress on making the batch payments compliant with the Wire transfer regulation, WTR, they would open to intervene in the market to ensure a safe and reliable money movement.

Clearly the central banks around the world and Bank for International Settlements – BIS seem very determined to deliver on the G20 vision of the future of payments. Lately announcement has been made by many central banks to enable interoperability of regional real time payment system.

This motion is also making the money movement a governmental and state controlled model, especially movement of cross border payments (both for cards and account based payments) has been for the private industry to solve and develop. What central banks are NOT adressing is how the system should be used, and that it must be protected. However they are taking very limited responsibility for offering remedy. As the announcement by the Riskbank they expect the banks to deal with the tricky part and those things may end up getting bad publicity in the press.

https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2024/more-payments-than-swish-can-now-reach-recipients-instantly/

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