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National Bank of Serbia’s IPS System Goes Live

The instant payment system (Instant Payments Serbia) operated by the National Bank of Serbia has gone live. The system will be operational 24/7, 365 days a year and enables transfers within a few seconds only.

The NBS has worked for almost two years to establish this system, which is one of the most important projects the NBS has undertaken so far.

The IPS system, powered by CMA Small System’s instant payments technology, will significantly facilitate the transfer of funds both to citizens and corporates. It enables dinar transfers of up to RSD 300,000 per transaction. When making payments, a user will no longer have to think about whether it is a working or non-working day, what time of day it is and whether the bank branch office keeping the relevant account is open. They will be able to make payments at any time of the day, through different channels, depending on the bank’s offering. Options are numerous – in addition to tellers, there are mobile and e-banking applications, as well as retailers’ points-of-sale (brick-and-mortar and virtual).

Initially, banks will be obligated to provide clients with at least one channel for instant credit transfers (e.g. a mobile phone or e-banking app), and by 1 April 2019 they will have to enable instant payments through all available channels for initiating payment transactions. The IPS system provides banks with the infrastructure which is the basis for developing new, innovative products and services, and in the upcoming period the NBS expects banks to make use of all the possibilities offered by this system.

By no later than 1 April 2019, banks which allow the issuance and acceptance of payment instruments to clients at points-of-sale will also have to enable the instant payment service at all brick-and-mortar and virtual points-of-sale. Buyers will be able to make the payment using a QR code. One way to do this is for buyers to generate the QR code on their mobile phone, which the retailer then scans. Another way is to have the retailer generate the QR code on its point-of-sale, which the buyer then scans and thus completes the payment. In addition to making the payment process faster, instant payments will be a true competitor to card payments in Serbia, particularly as they make funds instantly available to the retailer on its account.

Besides completing the payments instantly at the point-of-sale, the IPS system also enables the use of the central addressing scheme and invoice data download. The central addressing scheme enables the registration of the client’s mobile phone in the central database, where the phone number is connected to the client’s account number, thus the client is able to transfer the funds to another user’s account by using only a mobile phone number. On the other hand, owing to invoice data download, clients can obtain the necessary data electronically from large issuers of bills (mobile phone operators, utility service providers, etc.), based on which they can quickly and conveniently pay for the services provided, wherever they may be and at any time they wish.

NBS stress that when introducing the system, NBS took great care to ensure that the fees charged to system participants are almost symbolic and based solely on the actual costs incurred by the NBS with regard to transactions.

In this respect, the NBS has set the fee for executing transfer orders in the NBS IPS system for the payer’s bank at only four dinars. In the case of payments at a retailer’s point-of-sale, the NBS charges the retailer’s bank a fee equalling RSD 1 for bills in the amount of up to RSD 600, and RSD 2 for bills in excess of RSD 600. In addition to the said fee, the retailer’s bank also pays an interchange fee that cannot exceed 0.2% of the amount of the payment transaction at the retailer’s point-of-sale, which at this moment is cheaper than the interchange fee paid in case of card payments in Serbia.

It is expected that banks will charge final users such fees, in accordance with their business policies, so as to attract as many instant payment users as possible and so as to stay competitive in the market.

Author: Lauren Jones