Swiss companies and consumers are now able to make instant electronic payments, catching up with other European financial centres where the ultra-fast transfers are increasingly popular. Instant payments allow credit transfers within 10 seconds of a payment being made rather than waiting for days for the transaction to clear. They have been in use in Europe since 2017 and in the U.S. since last year.

In Europe, the use of instant payments has risen from 5.2% of all credit transfers in October 2019 to 17.8% in February this year, according to the European Central Bank. Around 60 financial institutions are able to receive and process instant payments, covering more than 95% of Swiss retail payment transactions, the Swiss National Bank said on Wednesday, having launched its scheme with financial systems provider SIX.

In the coming months, further banks will announce similar services, the SNB said, with all financial institutions in Switzerland expected to be on board by the end of 2026.  Despite the rise of mobile payment apps, the Swiss remain attached to physical cash, which remains the most accepted method of payment by companies with physical points of sale, according to an SNB survey earlier this year. 

“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. While traditional payments are still possible, the central bank expects instant payments to become established in the medium term, the central bank added. 

“Instant payments allow private individuals and companies to perform account-to-account transactions with immediate execution and final settlement in seconds, around the clock,” the central bank said in its statement.

It pledged to continue pushing for digital payments to make Switzerland a cashless society by 2026. This is an ambitious target for SNB as Switzerland remains one of Europe’s most cash-loving nations. In 2017, a staggering 70% of the transactions were in cash. Even when the COVID-19 pandemic struck in 2020, 43% of the retail payments were still in physical notes and coins. According to some reports, the average Swiss holds over $11,000 in cash, the most of any country in the world, ahead of Hong Kong and Japan.

Instant payments reduce settlement risk as the transfer is instantaneous and final, while both parties have an up-to-date account balance at all times, making planning and budgeting easier. The speeding up of payments could also boost economic development, as companies can more rapidly reinvest the money they receive.

To discuss how this will affect fintech in Europe as well as attending talks and networking with industry leaders, attend the Innovatrix 2nd Client Onboarding and Digital Identity Summit for Financial Institutions in Prague, Czech Republic, on September 18–19, 2024. 

For more information, visit our website or email us at info@innovatrix.eu for the event agenda.  

Source:

Reuters

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