The NBS operates the IPS system in which payment service providers can execute individual instant credit transfers (instant payments) 24/7/365, i.e. at any time each day in the year and almost instantaneously, i.e. within a few seconds only.
The IPS system was launched on 22 October 2018. The method of its operation, functionalities and technical-technological solutions reflect state-of-the-art trends in the payment systems area.
Instant payments can currently be initiated via electronic banking, mobile banking and by submitting payment orders at tellers of payment service providers in accordance with regulations. Banks must provide their payment service users with at least one method of effecting instant payments. As of 1 April 2019, banks will be obliged to offer all methods of instant payments to users to effect credit transfers on a specific day. Those payment service providers that issue and/or accept payment cards to initiate a domestic payment transaction at the merchant’s point-of-sale must offer to their users, as of 1 April 2019, the issuance/acceptance of a payment instrument whereby it is possible to issue the request for payment at the merchant’s point-of-sale.
The advantages of instant payments compared to hitherto payment methods are numerous. Some of the most important include:
- payments in the 24/7/365 regime from each site and using various state-of-the-art telecommunications devices;
- money is available to the payee within a few seconds;
- lower costs of processing low-value transactions;
- possibility to create new products and services;
- possibility that the service of acquiring payment instruments may also be provided by payment service providers who have so far not been providing such services;
- a reduction in payment costs;
- upgrading cash flow management;
- a new and cheaper payment instrument for merchants, competitive with card payments.
Objectives of establishing the IPS system
Instant payments are of strategic importance for the further modernisation of the Republic of Serbia’s payment system.
The regulatory framework, IPS system and fee policy ensure the standardisation of instant payments and cost efficiency that payment service providers can use to introduce new services and significantly upgrade the existing ones.
Main features of the IPS system
The IPS system enables the execution of instant payment orders in individual amounts of up to RSD 300,000.
In addition to making instant payments by using standard payment methods (e.g. via electronic/mobile banking or at tellers of payment service providers), the IPS infrastructure enables instant payments at the merchant’s point-of-sale, including the services of Bill Presentment (taking over data on the account and/or bill on payer’s request) and the Central Addressing Scheme – CAS (making instant payments at the registered alias of the payment service user, such as, for instance, the mobile phone number).
Participants in the IPS system may be:
- bank with the head office in the Republic of Serbia holding an operating licence issued by the NBS, in accordance with the law regulating banks,
- ministry in charge of finance of the Republic of Serbia – Treasury Administration,
- payment institution with the head office in the Republic of Serbia holding an operating licence issued by the NBS, in accordance with the law regulating payment services,
- electronic money institution with the head office in the Republic of Serbia holding an operating licence issued by the NBS to issue electronic money, in accordance with the law regulating payment services,
- public postal operator with the head office in the Republic of Serbia, established in accordance with the law regulating postal services.
Direct participants in the IPS system are banks with their head offices in the Republic of Serbia, the NBS and the ministry in charge of finance of the Republic of Serbia – Treasury Administration, i.e. those participants that, in accordance with regulations and operating rules of the RTGS system, may have accounts in the RTGS system.
Other payment service providers may be indirect participants – if directly connected to the IPS system and/or persons with indirect access, in which case they are not directly connected to the system, with direct participants making payments in the system on their behalf.
Main features of instant payments
Instant payments are a type of credit transfers and are effected in the manner and within deadlines determined by the decision defining the general rules for instant credit transfers.
The nature of instant payments is such that if the payer, at the moment when its provider is to make the transaction, does not have sufficient funds – the transfer order is rejected. Otherwise, this would not be an instant transfer.
Payment service providers can offer to their users simple execution of instant payments as the payer may transfer funds by using the payee’s alias – e.g. the payee’s mobile phone number. For this service to be provided, both users must be registered with their payment service provider as payments are, in line with regulations, made from one account to another, but in a much simpler way – by linking the mobile phone number to the account.
The standardised specification of the IPS QR code was also determined and payees may use it in printed bills/invoices for instant payments at merchants’ points-of-sale.
Compliance with the defined specification is important for the regular execution of payments. On the other hand, when payments are made at points-of-sale, it should be borne in mind that the IPS QR code is generated and that, in accordance with regulations, the merchant’s payment service provider – acquirer enables the merchant to generate the code.
Fees for execution of transactions in the IPS system
The fee for the execution of transfer orders in the IPS system which the NBS, as the system operator, charges against system participants is the same as the fee for low-value payments through the RTGS and clearing systems, and equals RSD 4 per order.
The fee for the execution of transfer orders based on the request for payment at the point-of-sale for the amount of up to RSD 600 equals RSD 1 and the fee for orders over RSD 600 is RSD 2. These fees are charged against the acquirer – the merchant’s payment service provider.
The multilateral interchange fee is defined pursuant to the operating rules of the IPS system and equals 0.2% of the effected instant payment at the point-of-sale and is paid by the acquirer to the issuer.