LITAS-RLS is the real-time payment system operating since 29 January 2007. The system is maintained and operated by the Bank of Lithuania.
Payment systems help credit institutions to make payments initiated by their customers and themselves. When the payer and the beneficiary have accounts in the same credit institution, the settlement of a payment order only requires internal records in the systems of that institution, when the account of the payer is debited and the account of the beneficiary is credited. When the accounts are held in different credit institutions, payment systems and correspondent bank relations are used to transfer funds and payment-related information. Correspondent banks are currently used less frequently, although they have appeared earlier.
The development of payment systems has largely depended on the progress of telecommunications and computer technology. With the appearance of industrial computation machines, the development of payment systems was started, whereas real-time payment systems (also called large value payment systems) became widespread in the last decade of the 20th century. The Bank of Lithuania developed its first real-time payment system (LITAS) in 2004. The currently operating system LITAS-RLS complies with international standards for such systems, ensures a high level of operational reliability and provides many additional services.
Participants of payment systems (usually credit institutions) hold settlement accounts in one institution, which is also called a settlement agent. Wide-spread global practice is to open such accounts with central banks due to their reliability. LITAS-RLS participants, commercial banks of Lithuania and most foreign bank branches operating in Lithuania, hold their accounts at the Bank of Lithuania. Moreover, commercial banks also hold required reserves in these accounts.
All processes of LITAS-RLS are automated. System participant (payer’s credit institution) submits a payment order to transfer funds to another participant’s customer, the system checks whether the payment order is properly formed and whether system participant has available funds, and debits the paying participant’s account and credits the receiving participant’s account with the Bank of Lithuania. The system informs both system participants about a successful settlement and the beneficiary's credit institution, upon receiving the notification about the received funds and payment-related information (beneficiary's name, account number, amount, payment destination, etc.), is ready to credit these funds to the beneficiary’s account. These processes in the LITAS-RLS system are performed in real time, therefore, it is called a real-time system. The process takes longer for customers, when calculating from the initiation of a payment to the crediting of funds to the beneficiary’s account, but no more than one hour. It is like this, because the payer’s and beneficiary’s credit institutions have to perform the validation of the payment operation and record it properly in their internal systems.
LITAS-RLS operates each day, with the exception of holidays set out in the legal acts of the Republic of Lithuania. Credit transfers are accepted to the system from 7:45 and processed until 16:00.
Real-time systems are particularly important for the modern financial system. They process not only payment operations of customers (natural persons and legal entities), but also those of financial institutions themselves, including central bank operations, and settle securities transactions and net positions of other smaller systems. It is usual that the annual turnover of real-time systems exceeds the national GDP several or even more times. A technical failure of such systems, even a short-term one, would have negative consequences both to the financial market and to each person initiating funds transfer to another credit institution. The Bank of Lithuania allocates a large amount of resources to reduce the operational risk of LITAS-RLS and to ensure its business continuity. For these purposes, several network service providers and backup hardware located in different buildings are used, business continuity plans have been prepared and are regularly tested, reserve workstations have been prepared and many other measures conforming to ISO 27002:2005 standard have been implemented.
Comprehensive information about the operation of LITAS-RLS, management of the risks faced by the system and requirements for system participants is provided in LITAS-RLS Rules of Operation, whereas specific system participants are listed in the Official List of Systems.