The central bank has started implementing a new system, the Rwanda Integrated Payments Processing System (RIPPS), geared towards making payment systems in the country efficient and reliable.
According to Francois Kanimba, the central bank Governor, the new system provides integrated facilities for clearing and settlement of all interbank electronic payments, irrespective of their value and level of urgency.
“ RIPPS will revolutionise the way interbank payments are carried out and will save money, improve the speed of transactions and increase safety,” Kanimba told a press briefing during the launch
RIPPS on Tuesday.
RIPPS comprises of three main components, including an Automated Clearing House (ACH- a netting system), a Real Time Gross Settlement Transfer System (RTGS) and a Central Securities Depository (CSD).
Specifically, the RTGS allows funds transfer from one bank to another on “real time,” meaning that the payment is not subjected to any waiting period and on individual basis.
“The transactions are settled as soon as they are processed. Clients will see their transactions moving faster and costs reducing,” the Governor explained.
Kanimba also pointed out that the new system will facilitate the banking sector to reduce reliance on cash, support new and innovative payments instruments and systems such as use of Automated Teller
Machines (ATMs) and mobile money.
“It is up to the businesses and the general public to demand more efficient payment methods and ensure that their banks provide these new services,” he said.
With the RIPPS, it is expected the usage of cheques will also be reduced to minimal levels.
“Cheques are risky as they can be duplicated; with time this system will phase them out,” the Governor added.
Last year, the central bank signed a contract with CMA Small Systems AB of Sweden to implement the programme.
Kanimba also said RIPPS will also facilitate the development of capital markets by allowing electronic transfer of funds across the region.
“If an investor in Kenya wants to buy stocks from a seller who is a client of a commercial bank in Rwanda, the Kenyan investor will be able to buy shares and transfer money through the RTGS to the account in Kigali in one second,” he said, indicating that the process will now take approximately 24 hours.
The new system is also part of the integration of payment systems within the East African Community being conducted through a project implemented by the five central banks.
While RTGS is operational in three EAC countries –Kenya, Uganda and Tanzania–the region is currently working towards creating a regional clearing platform for the integration of RTGS.
The new system was funded by the World Bank through the Competitiveness and Enterprise Development Project (CEDP).