Knut Sandal Norges Bank Joint ECBMNB conference on retail payments Budapest 1516 November 2012 Payment efficiency Payments in Norway today Norges Bank mandate Tools ID: 803488
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Slide1
Policy actions to increase payment efficiency – some experiences from Norway
Knut Sandal, Norges Bank
Joint ECB-MNB conference
on
retail
payments
,
Budapest, 15.-16. November 2012
Slide2Payment efficiency
Payments in
Norway todayNorges Bank mandateToolsCurrent policy
2
Agenda
Slide3Many aspects
Cost-efficiency
SpeedUser-friendlinessSecurity ( trust)…Will
focus mainly on
cost-efficiency
3
Payment efficiency
Slide44
Payments in
Norway today
Slide5Sources
: Norges Bank, ECB, BIS/CPSS and Central Bank
of
Iceland
Cash as a
share
of
means
of
payment
(M1)
Per cent. 2010
Slide6Number
of
card transactions per inhabitant
Payments and cash
withdrawal
. 2010
Sources
: Norges Bank, ECB, BIS/CPSS and Central Bank
of
Iceland
2011
6
Slide7Use
of
payment cards. NOK billions. 2001 – 2011
Source
: Norges Bank
7
Slide8Credit transfers and
direct
debit
transfers (retail
customers
) Millions of
transactions. 2001 – 2011
Source
: Norges Bank
8
Slide92007
Banks’
cost
recovery
on
payment
services
Income
in per cent of
costs
.
Norway
, 2007
9
Source
: Norges Bank
*
Interchange
fees
between
banks
are
excluded
in 2007
Slide10Social costs of
payments
: 0,5% of GDPQuite low compared with
other countries
Payments
almost
fully electronic (excl. cash)
Two main reasons
Extensive
standardisation
and
cooperation
within
the banking industryPrices
roughly mirror relative differences in
production
costs
10
Quite
low
payments
costs
Slide11Mandate
Central Bank
ActNorges Bank shall promote an efficient payment system
Payment System ActNorges Bank shall license and supervise important clearing and settlement systems for banksFinanstilsynet
(FSA) shall receive notifications from payment services systems
11
Slide12No supervisory
role
towards retail payments Publish analysis
and policy advicePublish data
Number
and
value of transactions
PricesCosts Speed of transaction
12
Tools
Slide13Annual report
on payment systemshttp://www.norges-bank.no/en/about/published/publications/annual-report-on-payment-systems/Cost surveys
Can compare prices/income
with
costs Input to policyBanks
can compare with
industry
average
Write
opinions,
give
speeches
13
Tools
Slide14Former Governor
Gjedrem
in Dagbladet, May 2010: Banks must raise fees! Must mirror banks’
costs
Slide15Industry’s self
regulationNorges Bank role has changed
over timeUntil early
1990s:
Participated
extensively in work
groups with industry
on
payment
develpment
,
took
”operational” initiatives
Since then: More
analytical/oversight
role
,
occasional
participation
in
work
groups
Norges Bank has
no
intention
of
describing in detail how payment services
should be produced, developed and/or
marketed
Good
experiences
with
self
regulation
Norges Bank has
supported
industry
initiatives Harmonising card, giro and ATM systems etc
15
Slide16Payment
fees
should mirror production costsSufficient
income gives banks
incentive
to invest
in updating and improving systems
Pricing gives
users
incentives
Welfare
maximation
, not
cost
minimation Users
should pay in the
way
that
maximises
their
welfare
But
welfare
maximation
with
the right conditions (prices)
Zero prices not in customers’ best interest
Very
low
fees
per
transaction
+
annual
fee
might
be relevant
Current
card pricing might give incentives to
reduce
usage of cost-efficient national debit card
16
Current
policy
advice
:
Pricing
Slide17Norges Bank has no
view on the level of cash usage in society – this
is for users to decide
Our
cost
surveys have revealed that
banks’ cost recovery for cash is very
low
cash is
efficient
in
the
payment
situationbut cash handling
infrastructure is expensiveCash services
should
be
priced
according
to
costs
Banks
should
increase
prices
rather
than make cash services unavailable
User welfare maximation
Cash still an important contingency solution
17
Current
policy
advice
: Cash
Slide18Current policy advice
:
e-invoicingPaper-based giro is expensive and not
easily integrated with
accounting
systemsThe processing of
invoices and giro processing should be
fully
electronic
From
this
summer,
governmental
institutions in Norway
should be able to send and receive
electronic
invoices
Huge
savings
are
to be
reaped
,
both
in
the
governmental and
the private sector
18
Slide19Has supported
industry moves toincrease number of daily
mass payment settlements from 2 to 4 introduce
instant
payments
(project stage)run pilot projects
with near-field communication
(NFC)
technology
…
while
highlighting
the
need for security and operational
stabilityIn general, banks must take
clearer
responsibility
for services
operated
by
external
providers
19
Current
policy
advice
:
Payment
speed
Slide20Policy actions to increase payment efficiency – some experiences from Norway
Knut Sandal, Norges Bank
Joint ECB-MNB conference on retail payments,
Budapest, 15.-16. November 2012