Intra-day payment Frequently asked questions

Transcription

1 Intra-day payment Frequently asked questions Contents 1. THE MEANING, advantages and scope of intra-day payment What does the launch of intra-day payment mean? What advantages does the introduction of intra-day payment offer to the clients? What kind of transactions are subject to intra-day clearing? What does electronic submission mean? Will all electronic payment instructions be executed on the same day? Are collections subject to the 4-hour rule? Are domestic foreign exchange payments subject to the new 4-hour rule? SPEED, SUBMISSION/EXECUTION DEADLINES What does the 4-hour rule mean? When is the payment instruction considered to be accepted by the payment service provider? What does the 4-hour rule mean from the beneficiary s point of view? How many clearing cycles will be executed each day? Will there be a standard cut-off time for the items initiated by the clients to the different clearing cycles? How shall the 4-hour rule be applied if the payment instruction is received after the cut-off time specified by the given payment service provider? Can payment instructions be submitted by indicating the debit day? When are the items received in the first and in the last cycle expected to the credited? How is it possible to execute payments more quickly? What requires the quicker execution of payments? What is the background of intra-day payments? What does an item with insufficient cover mean and can such event occur at all? 7 3. EXTENDED DATA CONTENT What does extended data content mean? Which transaction types allow the use of extended data content? What is the HCT standard and where is it obligatory to use it? Is there a national standard rule for specifying the data content? Will there be a standard solution for conversion from BBAN to IBAN? Will there be a standard for the unique client ID of the transaction (similarly to the postal payment ID)? Can Hungarian characters be used in the messages of intra-day electronic payments? EXPECTED FEES What fee levels are expected from the payment service providers? TECHNICAL DETAILS What shall be considered as the starting and closing date when calculating the interest? Does VIBER cease to exist? Will the current overnight clearing system be kept? Who shall make the decision on the system in which the paper-based payment instructions are executed? In which system shall the regular (standing) instructions be processed? What is the processing method of the items initiated for intra-day clearing?... 10

2 5.7. What are the rules of refusing the payment instruction? How can the false items be withdrawn and corrected? INTERNATIONAL OUTLOOK How many countries operate intra-day clearing? Which European country operates 7x24 intra-day payment? Which European country operates real-time clearing for payments of low value? To what extent is SCT used in the euro zone? PREPARATIONS FOR INTRODUCING INTRA-DAY CLEARING IN HUNGARY Which parties participate in establishing the possibility of intra-day clearing? Why is widespread cooperation necessary for establishing the possibility of intraday clearing? How and when did the preparation of intra-day payment commence? Which were the main milestones of preparing the introduction of intra-day clearing? Why the Hungarian National Bank had to regulate this? How is the project proceeding? Which steps are left until the launch of the intra-day clearing system? When will intra-day clearing be applied to collections and transfer types which are not included in the first round? DEFINITIONS Debtor (paying party): Transfer or Payment: BBAN (domestic bank account number): BIC: BKR: Addressee (beneficiary) Clearing activity: IBAN (International Bank Account Number): ISO UNIFI standard: Payment instruction: Payment transaction: Payment account: Paying party (debtor): GIRO Zrt.: HCT: Beneficiary (addressee): Business day: Cut-off time of the business day: Paper-based payment instruction: Payment service provider: SCT (SEPA credit transfer): SEPA (Single Euro Payment Area): Queuing: Debit day: Client: VIBER: Back transactions: /15

3 1. THE MEANING, ADVANTAGES AND SCOPE OF INTRA-DAY PAYMENT 1.1. What does the launch of intra-day payment mean? Currently, the funds transferred between the clients of two payment service providers (banks, savings cooperatives, credit cooperatives) are only received by the beneficiary on the next business day, provided that the transfer is initiated before the cut-off time published by the payment service provider. As of 1 July 2012 the domestic HUF transfer instructions submitted electronically (internet, electronic banking system or telephone, but not by fax) within the period published for same-day clearing will be executed on the same day. Therefore, compared to the current situation, the domestic HUF transfers will be executed one business day earlier What advantages does the introduction of intra-day payment offer to the clients? On one hand, the execution of domestic HUF payments submitted electronically and initiated for the benefit of an account held by another payment service provider (bank, savings cooperative, credit cooperative) will be accelerated. As a consequence of this, such electronic payments can be initiated on the day when the payment obligations are due (observing the cut-off time published by the payment service provider), i.e. the debtor can use its funds for one more day. On the other hand, you will have the possibility to provide and receive more data than before in the case of all electronic HUF payments. This is favourable for the corporate clients mainly because it helps the development and extension of the automatic communication between various ERP systems and the account management systems of payment service providers, and the automatic processing of transfer payments from end to end (from client to client). The provided data are in accordance with the European (socalled SEPA) standards, helping the companies having international business relations What kind of transactions are subject to intra-day clearing? The intra-day clearing specified by law (see the 4-hour rule ) shall be applied to all domestic HUF payments initiated by the paying party (debtor) electronically without requiring foreign currency exchange (conversion), in the case of which the payment service providers (banks, savings cooperatives, credit cooperatives) of both the paying party (debtor) and the beneficiary (creditor) provide their payment services in Hungary. The concerned payment types are: single transfer instruction, batch transfer instruction, regular (standing) payment instruction. In addition to this, all payment service providers may decide at their own discretion whether to apply intra-day clearing to certain transfer instructions which are not submitted electronically What does electronic submission mean? Electronically submitted instructions include those submitted via internet, electronic banking systems or by telephone (however, the instructions submitted by fax are qualified as instructions submitted on paper) Will all electronic payment instructions be executed on the same day? All payment instructions submitted by the paying party (debtor) electronically are executed on the same day. The instructions submitted to the given payment service provider after the cut-off time specified for intra-day clearing (generally after p.m., but this deadline depends on the payment service provider) are executed next morning. 3/15

4 1.6. Are collections subject to the 4-hour rule? Currently, the 4-hour rule does not apply to any of the collection types; therefore, the execution deadlines remain unchanged in the case of direct debits, collections based on authorisation letter, bill collections, cheque collections, deferred payment collections and documentary collections Are domestic foreign exchange payments subject to the new 4-hour rule? The new 4-hour rule shall only apply to domestic HUF payments; therefore, the domestic foreign exchange transfers and foreign HUF transfers are still subject to the old rule. 2. SPEED, SUBMISSION/EXECUTION DEADLINES 2.1. What does the 4-hour rule mean? Pursuant to the so-called 4-hour rule specified by the Hungarian National Bank s decree 1, the payment service provider (bank, savings cooperative, credit cooperative) of the paying party (debtor) shall ensure as of 1 July 2012 that the domestic HUF payments initiated by their clients electronically during the period defined for the so-called same day execution (before the cut-off time) be received by the payment service provider of the beneficiary client within 4 hours. Therefore, these 4 hours mean the maximum time of executing the payments to the payment service provider of the beneficiary client, the average duration of the bank transfers is expected to be shorter. The 4-hour rule applies to the payment service providers connecting directly to the domestic payment system clearing the payment instruction, the so-called clearing members 2. In the case of the payment service providers connecting to the domestic payment system indirectly (typically, some of the savings cooperatives and the specialised credit institutions), the 4-hour execution deadline is extended by 2 more hours. The payment service provider initiating the payment is responsible for observing the 4- hour rule (or in the case of payment service providers connecting indirectly to the domestic payment system, the 6-hour rule). Based on this, the payment service provider initiating the payment shall ensure that maximum 4 hours (or in the case of payment service providers connecting indirectly to the domestic payment system, 6 hours) pass by between accepting the payment instruction by the payment service provider initiating the payment and crediting the funds on the account of the beneficiary s payment service provider managed by the Hungarian National Bank. The beneficiary s payment service provider (e.g. bank) shall credit the amount on the payment account of the beneficiary "immediately" but the time required for this is out of the scope of responsibility of the payment service provider initiating the payment. 1 Article 17 of Decree 18/2009 (VIII.6) on payment services, as amended by the Hungarian National Bank s Decree 15/2010 (X.12). 2 Please find the list here: 4/15

5 2.2. When is the payment instruction considered to be accepted by the payment service provider? The payment service provider accepts the payment instruction if the instruction contains all data required for the execution, the instruction comes from the person (persons) entitled to dispose of the payment account, and if the financial cover is available, i.e. the payment account of the debtor is debited, or at least the cover is separated What does the 4-hour rule mean from the beneficiary s point of view? A provision of the Hungarian National Bank s decree 3 guarantees that pursuant to the 4- hour rule (see above), the funds received by the beneficiary s payment service provider (bank, savings cooperative, credit cooperative) are available to the beneficiary without delay. This means that due to the five clearing cycles of each day, the transferred funds are received by the beneficiary within the maximum of 4 hours, but in the case of optimal timing, the funds may be credited even within 1 hour How many clearing cycles will be executed each day? In the case of the items subject to the 4-hour rule, there will be 5 clearing cycles each day as of 1 July 2012, starting every 2 hours between 8:30 a.m. and 4:30 p.m. According to the national bank s expectations, in the long run, the number of clearing cycles will increase and instead of the initial clearing performed every 2 hours, intra-day clearing will be completed more often. In addition to this, the current overnight clearing system will be applied to all transactions not subject to the 4-hour rule Will there be a standard cut-off time for the items initiated by the clients to the different clearing cycles? There will be no standard cut-off time for the country. Such deadline can be specified by each payment service provider (bank, savings cooperative, credit cooperative) at its own discretion, considering the deadlines determined by GIRO Zrt. and the time required for processing the received payment instructions at the given payment service provider. In relation to the cut-off time, slight differences are expected among the payment service providers. The Hungarian National Bank cooperating with the HFSA publishes the cut-off times of all payment service providers, and updates them continuously. The items submitted for same-day clearing will be accepted from the morning hours until 4 p.m. at the latest How shall the 4-hour rule be applied if the payment instruction is received after the cut-off time specified by the given payment service provider? In the case if the payment instruction is received by the debtor s payment service provider (bank, savings cooperative, credit cooperative) after the cut-off time specified for sameday execution, then the payment service provider shall comply with the 4-hour rule on the next business day. The maximum 4-hour execution deadline shall commence when the payment service provider accepted the payment instruction. The time of the last acceptance may vary depending on the processing system of the payment service provider. If the payment service provider can only separate the cover needed for the execution of the payment and the debiting of the paying party (debtor) s payment account during the 3 Article 21 of the Hungarian National Bank s Decree 18/2009 (VIII.6) on payment services 5/15

6 opening hours, then the payment instruction will be accepted upon the opening of the next banking day, and the 4-hour execution deadline shall be calculated from this date. In the case if the system of the payment service provider accepts the payment instruction before the opening of the next banking day, then the 4-hour execution deadline shall be calculated from the date when the payment account of the paying party (debtor) is debited or at least when the cover is separated Can payment instructions be submitted by indicating the debit day? Just like before, clients may submit payment instructions by indicating the debit day. The maximum 4-hour execution deadline shall be calculated from the date when the payment account of the paying party (debtor) is debited or at least when the cover is separated. Such date may vary depending on the processing system of the payment service provider (bank, savings cooperative, credit cooperative). If the payment service provider can only separate the cover needed for the execution of the payment and the debiting of the paying party (debtor) s payment account during the opening hours, then this will be performed upon the opening of the debit day, and the 4- hour execution deadline shall be calculated from this date. In the case if the system of the payment service provider performs the debiting of the payment account of the paying party (debtor) or the separation of the cover before the opening of the debit day, then the 4-hour execution deadline shall be calculated from such date. If the debit day indicated by the paying party (debtor) is not a business day from the payment service provider s point of view, then the next business day shall be qualified as the debit day When are the items received in the first and in the last cycle expected to the credited? In most cases, the items arriving in the first cycle are expected to be credited between 9 and 10 a.m. and the last items will be credited between 5 and 6 p.m. However, there may be days when exceptionally many instructions shall be processed, and therefore, the items can only be credited later How is it possible to execute payments more quickly? In order to comply with the so-called 4-hour rule, the modified procedure and the harmonised system development of the concerned payment service providers (banks, savings cooperatives, credit cooperatives), GIRO Zrt. and the Hungarian National Bank What requires the quicker execution of payments? The quicker execution of payments is required by the fact that the Hungarian National Bank specified the completion of payments initiated electronically within 4 hours in a legal regulation, in its decree on payment services 4 with the effect of 1 July 2012, and is committed to have the concerned parties comply with such requirement. 4 Article 17 of Decree 18/2009 (VIII.6) on payment services, as amended by the Hungarian National Bank s Decree 15/2010 (X.12). 6/15

7 2.11. What is the background of intra-day payments? a) The payment service providers (banks, savings cooperatives, credit cooperatives) initiating the payment arrange the outgoing payment instructions into files, and send them to GIRO Zrt. before the cut-off times specified by GIRO Zrt. for each clearing cycle. b) GIRO Zrt. checks such files without delay (the electronic signatures and compliance with the standards) and reports about the results of the checks to the given payment service provider. c) Immediately before commencing the clearing, GIRO Zrt. informs all clearing members 5 about the number and total amount of the payments to be sent and received, as well as about the net position resulting from the difference of the values to be received and sent. d) GIRO Zrt. collects the cover required for the clearing of the payments on a technical account held by the Hungarian National Bank. The items lacking cover are rolled over to the next clearing cycle, or in the case of the last clearing cycle, such items are deleted. e) GIRO Zrt. clears all of the covered instructions, transfers the closing balances to the clearing members, and informs them about the processed and cleared payments and the instructions refused due to the lack of cover. f) Giro Zrt. sends the creditable instructions to the banks via the GIRO Network. g) The receiving payment service provider credits the transferred funds on the (payment) account of the beneficiary clients What does an item with insufficient cover mean and can such event occur at all? An item with insufficient cover means that at a given moment, the value difference between the items to be sent and received by a given payment service provider (bank, savings cooperative, credit cooperative) is higher than the current liquid balance (liquidity) of the given payment service provider. According to the national bank s expectations, such event may not occur, because in order to comply with the requirement of smooth payment and the 4-hour rule, the payment service providers shall ensure cover in time, otherwise the Hungarian National Bank will impose penalties on such payment service providers. However, the procedure shall also contain regulations for cases which may occur very rarely. 3. EXTENDED DATA CONTENT 3.1. What does extended data content mean? As a consequence of introducing the data content which is similar to the SEPA 6 transfer (SCT) standard, the previously used fields (names of the debtor and the creditor, transfer information) will be significantly longer, and in addition to this, the data content of payment instructions and bank account statements may contain several optional fields. Clients will have the possibility to indicate the names of the final beneficiary and the original debtor as well, which ensures the initiation and receipt of payments on behalf and for the benefit of third parties. 5 Please find the list here: 6 SEPA: Single Euro Payment Area see e.g. 7/15

8 3.2. Which transaction types allow the use of extended data content? In addition to HUF payment instructions submitted electronically and initiated for the benefit of payment accounts managed by other payment service providers (banks, savings cooperatives, credit cooperatives), the extended data content can also be used for payments initiated for the benefit of payment accounts held by the clients own payment service providers. However, the extended data content cannot be used for batch transfers What is the HCT standard and where is it obligatory to use it? HCT is the UNIFI (ISO 20022) XML format SEPA transfer (SCT) standard, extended with Hungarian characteristics: the currency is HUF, Fillér value other than zero shall not be used, and the national part of the bank account numbers shall comply with the Hungarian requirements. The use of the HCT standard is only obligatory among the banks, in the communication among payment service providers (banks, savings cooperatives, credit cooperatives) Is there a national standard rule for specifying the data content? There is no standard regulation for the whole data content; however, the Hungarian National Bank s Decree 7 regulates the minimum data content. There is a consent that the payment service providers (banks, savings cooperatives, credit cooperatives) ensure the use of the majority of the fields contained in the SEPA transfers (SCT) on the sender side, and on the receiver side, they receive and forward the information and fields provided by the paying party when submitting the instruction to the payment service provider. Therefore, truncation (discarding information) is not allowed. In line with this, the Hungarian SEPA Association prepared its guidelines for using the standards 8 in relation to the instructions given in the UNIFI xml format, which may be applied by the paying clients (debtors) on the basis of bilateral agreements. In the long run, the standard data content facilitates changing banks Will there be a standard solution for conversion from BBAN to IBAN? There will be no standard solution to be observed in relation to the conversion from BBAN (domestic bank account number) to IBAN (international bank account number). Therefore, all payment service providers (banks, savings cooperatives, credit cooperatives) may decide at their own discretion when to convert BBAN to IBAN in the case of the creditor s bank account number. The payment service provider may do so before accounting the instruction, reporting back the IBAN to the client submitting the instruction, or only when sending the instructions to the intra-day clearing system (when generating the files). If the bank performs the conversion during the accounting, then something else is reported back to the client than the data received, which may cause problems when conciliating with the client. If the conversion is performed during sending to the intra-day clearing system, then there will be a deviation during the internal check (or the comparing algorithm shall be modified) Will there be a standard for the unique client ID of the transaction (similarly to the postal payment ID)? The paying party (debtor) may use a unique transaction ID consisting of the maximum of 35 characters, which shall not contain any spaces. The purpose of such ID is to store it at 7 Article 13 of the Hungarian National Bank s Decree 18/2009 (VIII.6) on payment services. 8 The guidelines are available here: 8/15

9 each point of the message chain as a unique ID. There is no national recommendation for the generation of this identification, but there may be a standard in the future Can Hungarian characters be used in the messages of intra-day electronic payments? Yes, Hungarian characters can be used in the messages of intra-day electronic payments. 4. EXPECTED FEES 4.1. What fee levels are expected from the payment service providers? The payment service providers (banks, savings cooperatives, credit cooperatives) do not have established positions concerning pricing issues. The pricing and the related announcements will be published during the spring of 2012 at the earliest. The Hungarian National Bank will pay special attention to the changes charged to the clients, and if needed, it will request the intervention of the competent authority. 5. TECHNICAL DETAILS 5.1. What shall be considered as the starting and closing date when calculating the interest? When calculating the interest, the starting date shall be the date when the transferred fund is credited on the beneficiary (addressee) s bank account. As for the closing date, it is important that the paying party (debtor) will not receive interest for the day when his (payment) account is debited due to the payment initiated by him. This interest calculation is in compliance with the domestic and international legal regulations, and is completely in line with the international practice Does VIBER cease to exist? VIBER will not cease to exist, it will continue to fulfil its original function of performing the transactions among the credit institutions, and it will continue to be available to the clients if they wish to execute their urgent items of high value. At the same time, thanks to the current developments, the clients can execute payments more quickly than before via the intra-day clearing system Will the current overnight clearing system be kept? Yes, the overnight clearing system will be kept temporarily for the transaction types which are not yet subject to the 4-hour rule. In the long run, these transactions will be executed more quickly as well, and the overnight clearing is expected to be terminated, but there is no final decision concerning this yet Who shall make the decision on the system in which the paper-based payment instructions are executed? The payment service providers (banks, savings cooperatives, credit cooperatives) may decide in which system they intend to execute the payment instructions submitted on paper, if these shall be credited on payment accounts held by other payment service 9/15

10 providers. The payment service providers may make this decision in general or on a case-by-case basis In which system shall the regular (standing) instructions be processed? The regular (standing) payment does not have a separate legal category. Therefore, only the method of giving the payment instruction (paper-based or electronic) determines in which system (overnight or intra-day clearing system) the payment shall be executed. However, there may be a difference among the payment service providers (banks, savings cooperatives, credit cooperatives) whether they can determine if the original instruction for the regular (standing) payment was submitted by the client on paper or electronically. Those payment service providers which can determine whether the original regular (standing) payment instruction was given on paper or electronically may decide to continue processing the paper-based instructions in the overnight system as of 1 July 2012, and to process the electronic ones during the day, OR to process both of them in the intra-day system. Those payment service providers which cannot determine whether the original regular (standing) payment instruction was given on paper or electronically shall execute all of the regular (standing) payment instructions in the intra-day system as of 1 July The solution chosen by the payment service provider shall be stipulated in its own rules of business or general terms and conditions of agreement. The debit day specified by the client in the regular (standing) payment instruction remains unchanged even if the instruction is executed during the day. In such case, the debit day of the paying party (debtor) s payment account remains unchanged compared to the current system, while the crediting of the beneficiary s account will be executed one day earlier than currently What is the processing method of the items initiated for intra-day clearing? The processing method of the items initiated for intra-day clearing is FIFO, i.e. the item which was launched first will be executed first. However, the payment service provider (bank, savings cooperative, credit cooperative) of the paying party (debtor) may deviate from this on the basis of bilateral agreements. There is no exemption from this at GIRO Zrt. operating the clearing system What are the rules of refusing the payment instruction? The payment service provider (bank, savings cooperative, credit cooperative) of the paying party (debtor) may refuse the payment instruction if the instruction is not in compliance with the requirements of submitting the payment instruction, except if the payment service provider can execute the payment instruction completed by its client with insufficient data content, there is no financial cover on the payment account of the paying party (debtor), except if the payment instruction can be queued on the basis of the agreement signed with the account holder, the period of queuing expired without success. If the payment service provider refuses the execution of the payment instruction, then it shall inform the client about the refusal, if possible, on the reason of the refusal and on the process needed for correcting the errors causing the refusal. The payment service 10/15

11 provider shall send or make the notification available to the client without delay, but on the next business day following the submission of the payment instruction at the latest, or in the case of indicating the debit day, on the next business day following the debiting, or in the case of queued instruction, upon the expiry of the queuing period. The refused payment instruction shall be considered as not accepted for execution. The beneficiary s payment service provider may refuse the items which cannot be credited due to the error or lack of the identification data on the business day following the receipt at the latest, considering that in most cases, the processing of such items requires manual work How can the false items be withdrawn and corrected? The day rule applies to withdrawals and corrections. The withdrawal message shall be used on the interface of the intra-day clearing system, correspondence with free format cannot be accepted in relation to messages forwarded via this channel. The withdrawals can be performed in different ways depending on the fact whether the relevant instruction is waiting at the clearing house for execution or is related to reclaiming an already executed payment via the beneficiary s payment service provider. 6. INTERNATIONAL OUTLOOK 6.1. How many countries operate intra-day clearing? 22 member states of the European Union have intra-day clearing systems for low values, and the Pan-European clearing system (EBA STEP2) also offers the possibility of intraday payment Which European country operates 7x24 intra-day payment? Currently, the United Kingdom operates 7x24 system in Europe, but only as a premium service. We have not found any other example in other countries Which European country operates real-time clearing for payments of low value? The Czech Republic and Slovakia operate real-time clearing for payments of low value, i.e. among businesses To what extent is SCT used in the euro zone? The use of SCT (SEPA transfer payment method) was commenced in January In the beginning, it was used for cross-border euro payments only, but now it is also used to a large extent in domestic euro payments. As of June 2011, the usage rate exceeds 20% in terms of all euro transfers PREPARATIONS FOR INTRODUCING INTRA-DAY CLEARING IN HUNGARY 7.1. Which parties participate in establishing the possibility of intra-day clearing? GIRO Elszámolásforgalmi Zrt., the Hungarian State Treasury, the Hungarian SEPA Association, the Hungarian National Bank and 53 direct members of the Interbank Clearing System participate in establishing the possibility of intra-day clearing. In addition 9 The current usage rate can be downloaded here: 11/15

12 to this, the payment service providers connecting indirectly to the system (smaller savings cooperatives and other so-called correspondent credit institutions) also prepare for applying the modified clearing mechanism Why is widespread cooperation necessary for establishing the possibility of intra-day clearing? Widespread cooperation is needed because no payment service can be established without the cooperation of the service providers (banks, savings cooperatives, credit cooperatives). For example, in the case of bank transfer, it is necessary that the banks of both the debtor and the beneficiary be members of the so-called domestic payment system executing and clearing their payments, and the internal processes of the concerned payment service providers completely comply with the rules and standards of the domestic payment system. Therefore, in the case of launching new services, all participants shall perform the developments together and in a coordinated way, which, due to the large number of payment service providers (approx. 200 institutions in Hungary and 10,000 institutions in Europe) makes it difficult to renew the infrastructure of payment services. Moreover, the market competition does not motivate the payment service providers for joint developments, because they compete with each other on the market. Therefore, a system may operate for years before being replaced by a technological development. Pursuant to the national bank act, it is the Hungarian National Bank s task to develop the national payment and clearing system, and the Hungarian National Bank regulates the payments. As a consequence of this competence (and by stipulating the 4- hour rule ) after several years of joint work and conviction it was able to persuade the payment service providers to participate in the implementation of the project How and when did the preparation of intra-day payment commence? Pursuant to the decision of the Payment System Council co-presided by the Hungarian National Bank and the Hungarian Banking Association, operating with the participation of the Hungarian State Treasury and the most important banks, the workgroup consisting of the experts of the concerned organisations started assessing the client demand for intraday clearing in Following the positive feedback received from the clients and the banks, the effects of intra-day payment on the banks intra-day liquidity management were examined in several versions. The simulations showed it clearly that for most of the clearing members, the introduction of intra-day clearing would not cause any difficulties. After this, the Hungarian National Bank requested cost estimations from the credit institutions, specifying the cost increase caused by the implementation of the different theoretical scenarios Which were the main milestones of preparing the introduction of intra-day clearing? The Payment System Council co-presided by the Hungarian National Bank and the Hungarian Banking Association, operating with the participation of the Hungarian State Treasury and the most important banks made a decision on the 2011 introduction of intra-day clearing in the spring of 2009 and requested GIRO Zrt. for making the necessary preparations, approved the general functional requirements of intra-day clearing in the autumn of 2009 and agreed that the domestic payments complying with the SEPA standard would be introduced within the frameworks of intra-day clearing, made a decision in June 2010 on launching the project on 1 July /15

13 The Hungarian National Bank modified the decree on payment services in October 2010, which will introduce the so-called 4-hour rule as of 1 July 2012 (see separately) Why the Hungarian National Bank had to regulate this? The banking community already supported the intra-day clearing project in In 2010, however, some of the participants had different positions concerning timing, because due to the given economic circumstances, they did not find the project realizable on a voluntary basis. For the development of clearing, the participation of all clearing members is needed, the remaining part of the banking system could not have implemented the development without the others, and it would have been deferred for an indefinite period. The participants agreed that the development had to be performed sooner or later, therefore, the Hungarian National Bank decided to enforce compliance with the original schedule in a legal regulation How is the project proceeding? The implementation of the project is mainly in line with the original schedule, currently, the IT developments are in progress, and the tests have been commenced. Based on this, in the beginning of November 2011, we think that the launch of 1 July 2012 is feasible Which steps are left until the launch of the intra-day clearing system? Currently, the development and testing of the payment service providers own systems and of GIRO Zrt. s system is under way. In addition to this, the payment service providers have to inform their clients about the changes, and stipulate such changes in the General Terms and Conditions of Agreement and in the conditions list as well. Parallel with this, all of the concerned institutions help the information of the clients about the possibilities and rules of the new system with communication steps When will intra-day clearing be applied to collections and transfer types which are not included in the first round? In addition to preparing the introduction of intra-day clearing, the theoretical work on establishing the possibility of intra-day clearing for collections and transfer types which are not included in the first round is in progress. The decision will be made later concerning the date when intra-day clearing can be applied to collections and transfer types not included in the first round. According to the national bank s expectations, this may happen before DEFINITIONS 1. Debtor (paying party): the party initiating the transfer or whose account is debited with the fund transferred, in legal terms: the legal entity who, as the holder of the payment account, initiates a payment instruction from its payment account, or whose payment account is debited on the basis of court order or order to transfer funds. 2. Transfer or Payment: the payment service provided on the basis of the paying party s instructions, during which the payment account of the debtor is debited in favour of the beneficiary, as well as transfer of funds by court order. 3. BBAN (domestic bank account number): the unique identifier generated on the basis of Annex 1 of the Hungarian National Bank s Decree 18/2009 (VIII.I.6) on payment services, serving for the identification of the payment account, consisting of 2x8 or 3x8 numerical characters. 13/15

14 4. BIC: the business identification code serving for the international identification of the payment service providers, the elements of which are generated in line with ISO 9362 standard. The code is registered by SWIFT; the length thereof is 8 or 11 alphanumeric characters. 5. BKR: The gross payment system currently operated by GIRO Zrt., which will be extended with the interface suitable for intra-day clearing as of 1 July 2012, the current overnight system will be kept temporarily, processing and clearing those instructions which are not subject to the intra-day clearing system or cannot be executed in the accounting system of a given payment service provider. 6. Addressee (beneficiary): the party receiving the funds, in general terms, the addressee; in legal terms, the legal entity who is the beneficiary of the funds subject to the payment service. 7. Clearing activity: the execution of the payment instructions of the payment service providers (banks, savings cooperatives, credit cooperatives), the Hungarian National Bank and other organisations entitled to participate in the payment system and of their clients, the determination of the participants receivables and payables. 8. IBAN (International Bank Account Number): the international bank account number indicating the payment accounts and generated in line with the ISO standard, serving for the international identification of the payment account. The IBAN issued in Hungary has the length of 28 characters. The first two characters of IBAN are HU, followed by 26 numerical characters. The first two of these are the IBAN control numbers, followed by the 16 or 24-character BBAN. Eight zeros shall be added to the end of the 16-character bank account number. 9. ISO UNIFI standard: the process and business standard of electronic payments subject to intra-day clearing, the use of which is compulsory among banks. A standard developed by ISO for financial messages, based on the use of the XML syntax. 10. Payment instruction: instruction given by the paying party or the beneficiary to its own payment service provider for the execution of a payment transaction, as well as transfer of funds by court order or other orders. 11. Payment transaction: execution of the instruction given by the paying party, the beneficiary, the party issuing the court order or other order to transfer funds in line with any of the payment methods, irrespectively of the legal relations of the paying party and the beneficiary. 12. Payment account: the account opened for one or more clients of the payment service provider serving for the execution of the payment transactions, including the bank account. 13. Paying party (debtor): the party initiating the transfer or whose account is debited with the fund transferred, in legal terms: the legal entity who, as the holder of the payment account, initiates a payment instruction from its payment account, or whose payment account is debited on the basis of court order or order to transfer funds. 14. GIRO Zrt.: GIRO Elszámolásforgalmi Zrt., the Hungarian payment clearing house. 15. HCT: Hungarian Credit Transfer; the UNIFI (ISO 20022) XML format SCT standard extended with the Hungarian characteristics: the currency is HUF, no Fillér values other than zero shall be used, the national part of the account numbers shall comply with the Hungarian requirements. 16. Beneficiary (addressee): the party receiving the funds, in general terms, the addressee; in legal terms, the legal entity who is the beneficiary of the funds subject to the payment service. 17. Business day: the day on which the client s payment service provider is open for executing the payment transactions. 14/15

15 18. Cut-off time of the business day: the time specified by the payment service provider on the basis of different characteristics (especially: currency, place and method of submission, payment method), before which it accepts the given payment instruction. 19. Paper-based payment instruction: a written payment instruction which is not signed electronically. 20. Payment service provider: the credit institution, institution issuing electronic money, institution operating Posta Elszámoló Központ (Postal Clearing Centre), payment service provider, the Hungarian National Bank and the treasury, performing payment service activities. 21. SCT (SEPA credit transfer): euro transfer in line with the common European standard. 22. SEPA (Single Euro Payment Area): where irrespectively of their residence, within or outside of the country borders, the business participants can perform their euro payment transactions simply and inexpensively, under the same conditions (fees, execution deadlines, legal frameworks) as in their own countries. 27 member states of the European Union, as well as Iceland, Liechtenstein, Monaco, Norway and Switzerland joined the SEPA agreement. 23. Queuing: non-execution (suspension) of the payment instruction received by the payment account managed by the payment service provider due to the lack of cover, and queuing the instruction for future execution, not including the case when the paying party agrees with the payment service provider on queuing for scheduled payments, and for the planned execution of the received payment transactions. 24. Debit day: the day when the payment service provider decreases or increases (in the case of debt) the receivables or payables (in the case of negative balance) recorded on the paying party s payment account with the sum indicated in the payment instruction. 25. Client: the paying party and the beneficiary 26. VIBER: the real-time gross clearing system operated by the Hungarian National Bank, serving mainly for the execution of extremely urgent payment transactions of high values. 27. Back transactions: payment transactions which cannot be executed at all or cannot be executed properly, withdrawals, deleted transactions, returned payments. 15/15