Frontpage News 2014 New world-class pa...

New world-class payments infrastructure

21 November 2014

Denmark will get a new and better payments infrastructure on the 21st of November, when the banks launch the Express Clearing. This puts an end to a major modernisation project, which has increased the flow rate of payments since May 2012.
With the introduction of the Express Clearing, the Danish bank customers will get the opportunity to transfer money in real time. The customers can thereby continue to transfer money between each other - in a fast, secure and easy manner. For example, if a customer wants to buy a bicycle or a car through an ad on Den Blå Avis (Denmark’s largest online provider of purchase and sale between private persons), the customer can transfer money to the seller’s account through mobile banking and the seller will receive the money within a few seconds.
“The Express Clearing is an underlying foundation for payments. It is a great service that we believe meet the customers’ expectations to the banks within the payment area,” says Executive Director at the Danish Bankers Association, Michael Busk-Jepsen, and continues:
“We want to meet the customers, where they are, and we are able to do so with the Express Clearing. We believe that the customers expect that payments take place at the same pace as SMS or e-mail. The Express Clearing is fast, available around the clock, all year round – and thus suitable for time-critical payments. If you have forgotten to pay an important bill such as electricity, gas or rent, the payment can be transferred to the recipient within a few seconds.”
The National Bank of Denmark strongly supports the Express Clearing.
“The Express Clearing is a result of close collaboration between the National Bank of Denmark and the Danish banks. And we are pleased that Denmark with the launch of the Express Clearing has an infrastructure, which is future-oriented and among the best in the world,” says Head of Payment Systems at the National Bank of Denmark, Kristian Kjeldsen.

Hand in hand with mobile payments

“It’s a competitive parameter in relation to other actors to ensure a faster transfer rate for customers, and it thus essential for the banks to provide this service in order to retain existing and attract new customers,” says Group Executive Vice President at Sydbank, Niels Skylvad, who has been the Chairman of the Steering Committee behind the Express Clearing.
“It will be interesting to see how the Express Clearing affects the development of payment solutions. We expect that many of the future’s payment solutions will involve real time transfers, and thus be based on the Express Clearing. It is a platform that we can use for future payment solutions, and it goes hand in hand with mobile payments, as the rate of transfer fits very well into the payment experience of mobile payments, where the customers expect to receive the money right away,” Niels Skylvad further adds.

Digital Danes

In daily life, the Express Clearing can be an alternative to e.g. Dankort (Danish debit card) in situations, where the stores are reluctant to sell goods with a value higher than the guarantee of DKK 4,000, before the stores have received the money. Instead of waiting a day or at best a couple of hours, the customer can receive his/her good right away by using the Express Clearing.
According to Michael Busk-Jepsen, the Danish bank customers have traditionally been very interested in using new digital payment solutions.
“This has been the case with Dankort, Betalingsservice (direct debit), online banking and currently the banks’ mobile payment solutions. It is essential that the banks can offer the right solutions, and the Express Clearing has now created a foundation, which encourages innovation and product development,” explains the Executive Director at the Danish Bankers Association.

The banks’ modernisation project

The Express Clearing is the last part of a large modernisation project of the banks:
  • In May 2012, we started providing companies with faster access to the weekend’s Dankort turnover – now they receive it Monday instead of Tuesday.
  • Next, we gave the customers the opportunity to make same-day transfers of very large payments, such as transfers via the National Bank of Denmark.
  • In November 2013, we launched a new system, the Intraday Clearing, which allowed same-day settlements of smaller payments.
  • From 21 November 2014, we end the work by offering the Danish bank customers the opportunity to transfer money within seconds, 24/7/365.
The project involves an investment of around DKK 250 million for the banks. This follows the recommendations of the International Monetary Fund (IMF) and is based on international standards to future-proof the infrastructure.
Behind the project is a long-term process under the auspices of the National Bank of Denmark’s working group on the domestic payment transfers under the leadership of Governor Hugo Frey Hansen. The working group included additional representatives from the National Bank of Denmark, the Ministry of Business and Growth, the Agency for Modernisation, the Agency for Digitisation, the Danish Financial Supervisory Authority, the Danish Consumer Council, the Danish Chamber of Commerce, Nets, the Danish Commercial Industries Federation, and from the Danish Bankers Association.
The modernisation solution, which the banks are now implementing, meets the group’s recommendations.

The Express Clearing

  • The Express Clearing is part of the total Clearing that transfers approx. DKK 25 billion between the Danes every day.
  • The customer must choose the Express Clearing through his/her online bank.
  • The Express Clearing offers the customers real time transfers, meaning that the money is on the receiver’s account a few seconds after the sender has pressed the ‘send’ button.
  • The Express clearing is always active. The customer can use the Express Clearing 24 hours a day, 365 days a year.
  • There is a maximum amount limit of DKK 500,000 on single transaction, and the amount limit is scalable.
  • Real time solutions are rare on a global scale. Great Britain has developed a solution, and Norway and Sweden are currently developing similar solutions, whereas the US has not yet developed one.
  • The Express Clearing is developed in close collaboration with Nets, which also serves as the supplier and operator of the banks’ other clearing systems.
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