The Central Bank (CB) recently provided approval to LankaClear (Pvt) Ltd to operate a Common Payment Switch (CPS) for integrating the transmission and clearing of electronic payments between banks with the aim of promoting a nationwide non-cash retail paments system.
The new payment system will commence operations from mid May 2009 with seven participant banks. A further set of eight banks is due to join by end July 2009. All licensed commercial banks are expected to function as member participants of CPS before end 2009, according to a LankaClear statement.
The objectives of the CPS are to introduce international best practices in clearing and settlement of electronic fund transfers among banks for retail payments, improve efficiency and service to bank customers, improve efficiency and service to participant institutions i.e. banks and reduce the clearing and settlement risks among participants. The system is also expected to serve as an infrastructure for online real-time fund transfers, paving the way to Straight Through Processing (STP), enable rapid economic activity through faster payments and facilitate the integration of future financial services.
The CPS will consist of two main components. The first is a central online transaction processing system at LankaClear providing transaction interchange (switching) facility to member banks. The second is an online bank interface module system at each member bank linking core banking and card authorization hosts to the central online transaction processing system through a Virtual Private Network (VPN), the statement said.
The CPS is expected to be functional 24 hours a day, supporting online real time fund transfers/payments between banks to enable customers to initiate transactions at any time and to make payments through ATM’s, telephone, SMS or the Internet even during non-banking hours. |
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