August 12, 2020 · 4 min read
The National Bank has been considering the possibility of switching the Electronic Payment System (EPS) to 24/7 operation for several years, but recent events indicate that the regulator is gradually moving towards implementing what was planned. The introduction of new capabilities in the EPS system will contribute to improving business activity and the speed of mutual settlements between counterparties.
Thus, in July 2018, the NBU met with representatives of Banks, where a new version of the EPS was presented, which is to be implemented by the end of 2018. The new EPS lays the foundation for the banking system to operate 24/7. The switch of the EPS system and the internal systems of Banks to non-stop payment processing is expected in 2019.
Within the framework of the new EPS, the launch of instant payments is also planned. Currently, according to the relevant law, payments can take from one to three days. This creates a number of problems, for example, providers or suppliers may interrupt service delivery because the payment is still in transit and they "do not see" the funds.
Recently, the NBU sent a letter to the State Treasury Service of Ukraine to discuss this issue and to determine which period should be considered a banking day and, accordingly, the rules for determining the next banking day (https://minfin.com.ua/ua/2018/05/18/33620136/).
Currently, two options are proposed:
Option One. Every calendar day is a banking day.
An EPS participant must perform banking day opening and closing operations daily, showing the receipt and processing of payments sent on the chosen day. If a transfer of funds occurred on a Saturday or Sunday, this must also be reflected in the submitted reports.
Option Two. Only a working day is a banking day.
If the last banking day ends before weekends or holidays, then the next banking day will refer to the next working day (for example, after the banking day "Friday" ends, the banking day "Monday" begins).
"Operations carried out by the bank on weekends and holidays will be included in the balance of the bank's first working day after weekends and holidays," the regulator noted.
What will the announced NBU initiatives bring?
First of all, banks will be able to carry out their own and client settlements not only during the operating day, which is currently usually until 16:00-17:00, but also at night and on weekends.
Market participants believe that payment efficiency will contribute to increased business activity.
This mode of operation is implemented in leading countries worldwide, for example, in the USA.
Banks will gain the ability to conduct interbank settlements at any time of day, which will allow bank clients to perform quick settlements between counterparties. Currently, all operations outside operating hours are processed the next day; with the new system, it will be possible to conduct them online.
When making bank payments, the debit date of funds, as well as the credit date, are very important, so 24/7 EPS operation will be necessary for all counterparties, especially in goods purchase and sale transactions. This will accelerate the process of planning, concluding new Agreements and arrangements between counterparties.
In 24/7 service mode, there is an increase in fund turnovers on counterparties' accounts due to the ability to process payments without interruptions or weekends. The new operating mode with corporate clients will not lead to a halt on weekends and holidays, will facilitate the ability to make payments at any time, and ultimately will provide a significant increase in economic indicators and GDP.
Regarding the work of accounting departments of legal entities, this will allow for more prompt payment of invoices and international currency payments.
In the last days of tax payments, corporate clients pay bills at inflated rates during non-operating hours, as penalties for late payment significantly exceed bank service fees. The new EPS system will solve the problem of untimely payments.
Furthermore, the initiative will positively influence the formation of payment schedules between counterparties and contribute to flexibility in the work of financial departments.
Lead Accountant
Starovoit Inna
