RTGS introduced for exporters, importers
MBABANE – Exporters and importers will be happy to learn that commercial banks have introduced a fast, reliable and secure payment system which will allow the settlement of payments in real time.
This development was announced by the Eswatini Bankers Association (EBA) through a statement it released a couple of days ago, where it stated that it was transitioning from using domestic and internal electronic funds transfer (EFT) channels to a new system, the real-time gross settlement (RTGS).
By its design, RTGS allows for the instantaneous transfer of money and/ or securities and it is a solution to businesses which need fast, reliable and secure transfer of funds.
Integration
This change indicates a closer integration with the Southern African Development Community (SADC) banking system, as the RTGS is already used by many regional financial institutions, facilitating real-time settlements for bank transactions between member states.
According to EBA, the initial change will be between Eswatini and South Africa and Eswatini and Namibia. A change from the old payment system to the new one between Eswatini and Lesotho is planned to be implemented on September 30, 2024. In the EBA’s strong view, this change is being implemented to enhance the efficiency and security of cross-border financial transactions. The association went on to say that
the change will affect all banks that make cross-border payments and collections.
“The April conversion between South Africa and Namibia, which has now been agreed between the South African Reserve Bank and their Namibian counterparts, will have an immediate impact on cross-border
transactions between Eswatini and Namibia prior to the full impact in September.
‘‘This change will impact mainly low-value (below E5million) cross-border transactions and will have implications on clearing times as well as costs. The change will also affect companies that make cross-border salaries, insurance, and pension payments to Eswatini,” read the notice in part.
According to Agpaytech Research, the adoption of the RTGS system for small cross-border payments holds promise for several reasons: Primarily, the real-time nature of the system ensures faster transfer speeds, eliminating the delays often associated with traditional EFT channels. Secondly, the potential reduction in fees associated with smaller transactions could incentivise increased cross-border trade and economic activity.
Introduced
EBA Executive Director , Zakhele Lukhele said that the changes which are being introduced will move the small cross-border payments from domestic and internal EFT channels to RTGS used by SADC
banks.
Lukhele said this was a proven system operated by the South African Reserve Bank that had been in use for many years by the some SADC banks for large cross-border transactions.
He said this was another channel that also conforms to the regulatory requirement exists that may be used on a limited basis for specific transactions.
According to Lukhele, the Central Banks of the Common Monetary Area (CMA) meet regularly to look at issues that are of interest to the financial stability of the bloc.
“The issues may relate to matters that affect the area as a group, individual countries and customers of the banking sector, and sometimes to improve and comply with and meet international standards,” Lukhele said.
He went on to say that these changes will improve the efficiency and security of cross-border transactions, adding that the ability for businesses and individuals to make cross-border payments would not disappear.
Payments
Lukhele explained that it would be the channels over which these payments were made that will change and as they change, to a platform with different clearing times and costs, it is expected that there could be a change in the time taken to clear the payments through the system and the related charges. He also stated that how charges will change with the transition would be a matter for each bank to deal with and that would be communicated by each bank to its customers.
“The collection of debit orders and insurances may also be affected, but the institutions are working on resolving any issues that might arise,” he said.
Furthermore, the chairperson said the financial sector is an evolving sector and standards change.
Lukhele assured customers that banks are working hard to ensure that there is no negative impact brought about by the changes.
He said each bank will communicate with its customers separately on how their transactions will be impacted.