The Central Bank of Iran has given details about its recently-announced instant payment system seen as a major development in the country's banking and payment network.
According to Davoud Mohmmad Beigi, head of CBI payment systems department, the instant payment system is set for launch in December, way2pay reported.
"It will replace the currently popular card-to-card mechanism for transferring money. Users will have to provide bank account number(s) for transfers instead of bank card numbers."
The system is an interbank service under CBI auspices and will handle instant settlement of payments in large and small amounts.
The first aim of the system is to enhance the security of bank customers, the official said. "Bank card numbers are sensitive information better kept private, whereas bank account numbers can be easily shared."
Using the system, users can transfer up to 150 million rials each day, which is considerably higher than the daily cap for card-to-card transactions."
Iranian banks on average process 450 to 500 million interbank transactions a month.
Card-to-card transactions are handled by the CBI's SAHAB platform. SAHAB is a card-based fund transfer system connected to SHETAB (the national interbank network) center, allowing customers to send money to any SHETAB-member bank using their own cards.
"In fact, the instant payment completes the ecosystem of account-based transactions," Mohammad Beigi said. Customers can transfer up to 1 billion rials a day without referring to [other] branches. "Large transactions are being handled by SATNA and the new system is to cover transactions from 1 billion to 150 million rials."
SATNA, internationally known as Real Time Gross Settlement, was established in 2006 for high-value interbank transaction settlement and started accepting inter-customer transactions from 2008. With commercial banks having joined the integrated system, the regulator provides real-time transactions of all banks.
Reduced Fees
The CBI said it will set lower transaction fees for instant payment transfers to help promote the new system.
The system also has other advantages such as reducing payment costs, controlling fraud and creating a bigger space for innovative products. Currently, money transfers are added to the destined card instantly and the CBI completes the processing and clearing at the end of each business day.
Banks are allowed to offer instant payment services through three main channels, namely internet bank platforms, mobile applications and their branches.
"The system is designed in a way that it will be available for fintech developers in the future. However, inclusion of fintech startups is not prioritized at this stage."
Not all the banks have passed the compatibility tests for joining the platform. The service will be available at Bank Melli Iran, Bank Mellat, Ayandeh Bank, Bank Saderat Iran, Keshavarzi Bank, Parsian Bank, Saman Bank, Dey Bank, the Cooperatives Development Bank, Bank Pasargad and Middle East Bank.
Instant payments have emerged at the forefront of fintech innovation across the globe. Adoption of the ‘Payment Services Directive’ paved the way in Europe to boost innovation and open the payment segment to the wider market. This was in contrast to the past when the key payment industry was dominated by banks.
