2014-05-06
The Bank of Lithuania’s proposal to the payments market: faster payments at a lower cost
The Bank of Lithuania has offered some novelties to payment market participants. They create preconditions for speeding up payments and reducing tariffs to clients. After introducing the proposed payment system, a new fast payments service would be provided already from 2015. By 1 January 2016, a system of retail payments in euro, complying with the European SEPA standards, would be introduced. Not only banks have been invited to join the system of the Bank of Lithuania, but credit unions, payment and e-money institutions as well.
“Our proposals are particularly useful for the end user, who would get better service quality at a lower cost. However, success will depend on the number of participants; therefore, we are inviting all banks, credit unions, payment and e-money institutions to participate in the proposed system, thereby enabling their clients to effect payments faster and cheaper,” says the Member of the Board of the Bank of Lithuania, Marius Jurgilas.
He stressed that the solution proposed by the Bank of Lithuania would increase competition in the payments market and provide the conditions for the payment system’s development taking into account Bank of Lithuania needs. Payment and e-money institutions will be able to use the system of e-transfers proposed by the Bank of Lithuania. Currently, due to legal restrictions, these institutions do not have direct access to the payment systems and are obliged to make use of bank services.
“Payment and e-money institutions apply more favourable tariffs to their clients for cash payments, thereby already now ousting the banking sector from the market of such payments — in terms of the number of such operations, banks only account for less than a fifth of the domestic market. The provided possibility to participate in the Bank of Lithuania’s payment system will also boost the possibilities of their competition in the e-transfers market. No one else, but the user would benefit most from that,” says M. Jurgilas.
With the consent from system participants, already from 2015 they would be provided with the possibility to effect fast retail payments between themselves by applying a tariff of EUR 0.10. Without the consent to this initiative, similar services to banks from 2015 would become available at a cost several times higher.
In order to create the preconditions for cutting transfer prices to the end user, the Bank of Lithuania encourages payment market participants to participate in the system in line with SEPA standards and offers tariffs, much lower than those currently applicable. Market participants have already been advised that, from 2015, a EUR 0.01 tariff will be applied on payment orders submitted and effected. Currently, the similar tariff on payments in litas is LTL 0.19 (EUR 0.055) for one payment order.
The Bank of Lithuania’s proposal provides that, from 2016, a tariff of EUR 0.05 would be applied to the first million payment orders per year, while each subsequent payment order would, again, only cost EUR 0.01.
The Bank of Lithuania will be waiting for replies from banks, credit unions, payment and e-money institutions until 14 May.