Switzerland has taken a substantial step toward becoming a
cashless society with the launch of its instant payment scheme. The Swiss
National Bank (SNB) and financial infrastructure operator SIX made the
announcement on Wednesday. This new system allows funds to be transferred
within seconds rather than waiting days for transactions to clear.
Launching Instant Payments
Instant payments work as credit transfers, with funds
available in the recipient’s account within 10 seconds of the payment order
being made.
According to the SNB, around 60 financial institutions can now
process and receive instant payments. This development covers over 95% of Swiss
retail payment transactions. The scheme was launched on Tuesday.
The central bank expects more banks to adopt similar
services in the coming months. The SNB indicated that all financial
institutions in Switzerland are expected to offer instant payments by the end
of 2026.
Instant payments were launched in the Swiss market on 20 August 2024. Instant payments allow private individuals and companies to perform account-to-account transactions with immediate execution and final settlement in seconds.https://t.co/RdiupYG3Sm pic.twitter.com/UZkMUvr3o3
— Swiss National Bank (@SNB_BNS) August 21, 2024
“This market launch represents a further important
milestone and reflects the collective stakeholder commitment to the future of
cashless payments in Switzerland,” the SNB said.
Earlier, SIX,
the Swiss National Bank (SNB), and six commercial banks launched a pilot
project exploring the use of tokenized central bank money, known as
wholesale central bank digital currency (wCBDC), as reported by Finance Magnates.
The initiative, referred to as Helvetia Phase III,
represents the first application of wCBDC for settling digital securities
transactions in Swiss Francs. The pilot will take place on SIX Digital Exchange,
a regulated financial market infrastructure for digital assets built on
Distributed Ledger Technology.
Instant Payments Reduce Risks
Though traditional payment methods remain available, the SNB
believes instant payments will become the standard in the medium term. The
central bank and SIX initiated the project in November 2023, aiming to keep
pace with Europe and the United States, where instant payments have been
available since 2017 and 2022, respectively.
Instant payments between banks reduce settlement risks. The
debit and credit occur instantaneously, providing both parties with up-to-date
account balances.
This article was written by Tareq Sikder at www.financemagnates.com.
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