Instant payments – description
Instant payments enable customers of Czech banks to make one-off credit transfers in Czech koruna (CZK) in a matter of seconds. In order to be able to offer this service to customers, a bank must be a CERTIS participant and join the instant payment scheme. Participation in the scheme is voluntary, so not all CERTIS participants offer the instant payments service to their customers.
The CNB operates the infrastructure for instant payments in its payment system CERTIS pursuant to Article 2(2)(c) and (f) in conjunction with Article 38 of Act No. 6/1993 Coll., on the Czech National Bank, as amended.
One of the basic principles of instant payments is that the payee’s bank provides funds to the payee immediately upon receipt of payment and the payer’s bank immediately notifies the payer that the funds have been delivered to the payee’s bank.
The upper limit for one payment is set at CZK 2 500 000, and the minimum limit is set at CZK 0.01. The payer’s bank may set a lower upper limit for outgoing payments for its customers, but is obliged to accept payments of up to the upper limit.
The CNB’s main role is to offer a technical solution for the execution of instant payments in the CERTIS to its direct participants.
The rules and standards of the instant payments scheme (external link) are available on the website of the Czech Banking Association (CBA).
Speed of instant payments
As mentioned in the introduction, instant payments are executed in just a few seconds. In order to measure the speed of the payments, scheme participants must store and exchange time data with the accuracy of milliseconds.
A series of time data is used to measure the length of time it takes for a payment to be executed.
T1 is the time of payment initiation by the payer
T2 is the time at which the payer’s bank sends an instruction to CERTIS to execute an instant payment
T3 is the time at which the payee’s bank receives the instant payment from CERTIS
T4 is the time at which the payee’s bank provides the funds of the instant payment to the payee
TC is the time at which CERTIS sends the payment to the payee’s bank to be checked
TR is the time at which the result of the checks by the payee’s bank is known and CERTIS decides to execute or reject the payment. The payment is rejected if the length of time between T2 and TR is more than six seconds.
According to the statistics, the median processing time between T2 and T3 is 0.5 seconds and the 99th percentile of the processing time between T2 and T3 is 1.5 seconds. In other words, the processing time from the moment a payment is sent by the payer’s bank until it is received by the payee’s bank, allowing for the time it takes to be checked by CERTIS, delays in the network infrastructure and checks by the payee’s bank, is less than 0.5 seconds for half of the payments executed and less than 1.5 seconds for 99% of the payments executed.
The speed of payments executed by banks is usually similar, so the total time it takes to transfer funds from the payer to the payee is usually around three seconds. However, this is only an estimate as the T1 and T4 timestamps are not available to the CNB.
Processing of instant payments
Instant payments are processed as follows:
The payer makes a payment through his/her bank, where T1 denotes the time at which the payment order is made. The customer’s bank then performs internal checks of the payment, such as whether there are sufficient funds in the payer’s account to execute the payment. As soon as the bank sends the payment to the instant payments system, it allocates the T2 timestamp to this payment.
In terms of the infrastructure of the instant payments system, the monitoring of the processing time of the payment order starts at T2, i.e. when the order is sent from the payer’s bank. The payment undergoes a series of checks as soon as it reaches CERTIS. These include, for example, checks on the payment’s electronic signature, checks on whether the payer’s bank has a sufficient balance in CERTIS and checks on checks on whether the payee's bank is able to receive instant payments. If these checks are successful, CERTIS reserves funds in the payer’s bank account and (at time TC) sends the payment to the payee’s bank for checks on whether the transaction can be executed. If the account exists and the payment can be credited to it, the payee’s bank sends confirmation to CERTIS, on the basis of which CERTIS decides to execute the payment at TR.
CERTIS sends the payment to the payee’s bank which receives the payment at T3. The payee’s bank provides funds to the payee immediately upon receipt of the payment at T4. CERTIS sends notification to the payer’s bank about the delivery of the payment to the payee’s bank at the same time as it sends the payment to the payee’s bank. The payer’s bank informs the payer of this fact.
Instant payments are processed continuously, at night and at the weekend, and are very rapid and reliable. Payments may be delayed or rejected from time to time due to accidental micro-failures along the communication path. Payments are rejected for this reason in 0.1–0.2% of cases (one to two payments out of one thousand instant payments).