Singapore is set to go live with its G3 Immediate Payments system, putting it in an elite club – alongside the UK, Sweden and Poland – of countries with a practically real-time payments system.
G3 replaces the existing Singapore’s eGiro payment system that dates back to the 1980s. The March date is the first part of a three-stage rollout, coming nine months after it was originally scheduled, and will see leading banks move to close to real-time payments between themselves.
The second stage is expected to come in Q4 and will see the bulk of payments brought into the fold as the existing eGiro system is replaced. The last stage of implementation is expected sometime in 2015 when Singapore’s electronic direct debits payments are brought onto the system – reports Euromoney.
“Singapore will be a fascinating test case for the benefits of real-time payments,” says Chris Dunne of VocaLink, architect of the system. “It is extremely tech savvy, affluent and it’s a city state. It will show other jurisdictions thinking about taking a similar step how demand can grow and how this kind of system can be used.”
Singapore’s authorities have kept relatively quiet about the specifics of the G3 project, making it difficult to gauge its progress, and it has been subject to some delays. However, it is known to be similar in concept to the UK’s Faster Payments system, with important technical differences under the hood.
Crucially, where the UK uses the ISO 8583 messaging standard, in line with the UK’s existing card payment infrastructure, Singapore has gone with the newer and internationally accepted ISO 20022 standard, the same standard used by SEPA. Singapore: tech hub ISO 20022 allows transaction information to flow alongside the payment itself and is more flexible.
“The business case for ISO 20022 is compelling, providing financial services decides to change its existing systems and commercial structure to one that is standardized around internal and external industry process and procedural standards,” says Gary Wright, CEO at BISS Research.
In developing its new payments system, Singapore looks to be attempting to do that, albeit at the behest of the Monetary Authority of Singapore (MAS). Although observers expect Singapore’s experiment to be a success, the experiences of other countries that have implemented real-time payment systems suggests volumes will start small and build up.
Volumes certainly started low in the UK after Faster Payments was introduced, while Poland’s system is still building up momentum after its debut in June 2012. Volumes should pick up and represent a substantial proportion of payments traffic after the rollout moves into phase two, says Stephen Peters, head of Clear2Pay’s Singapore business.
As such, the benefits of the G3 project will not necessarily be obvious for years after initial implementation, with banks having to wait to recoup the money they have invested in compliance via increased volumes and an overall boost to the economy. “In the UK, initial adoption was slow, but there is a network effect as more users come in, increasing the velocity of money and the velocity of commerce,” says Peters. “Real-time payment encourages more commerce because faster settlement makes it possible to ship goods on the day of purchase, and could also facilitate more innovations in the mobile space, such as encouraging the use of debit instead of credit cards.”
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