Retail payments

The widespread use of payment instruments based on demand deposits, together with the concern regarding their efficiency and safety, led to the growing involvement of central banks in retail payments, as it was already the case for large-value payments.
 
Developments in cashless payments (bank transfers, cheques, credit cards, debit cards and other means of electronic payment) in globalised financial markets resulted in greater automation of clearing systems, thus increasing the efficiency and safety of payment instruments.
 
The use of internal networks by credit institutions (teleprocessing) for intra-bank transactions facilitated the immediate transmission and access to customer data, enabling real-time access to a bank account of a given customer in any branch linked to the network. In turn, direct interbank transfers are mainly processed through the electronic funds transfer system (Transferências Electrónicas Interbancárias – TEI) or TARGET2 (for large-value operations).

Economic developments and new (electronic) retail payment instruments supplied by a wide range of financial institutions led to the implementation of exchange and settlement circuits based on IT systems and, consequently, to increasingly larger and more automated payment networks and systems. This model replaced the one in use up to the end of the 20th century, which was based on traditional systems, where payment instruments were directly exchanged in the presence of the representatives of each bank, who met at an agreed place and time.
 
Sistema de Compensação Interbancária – SICOI (Interbank Clearing System) is an automated interbank exchange and settlement circuit, allowing information to be channelled (indirectly) between institutions participating through Sociedade Interbancária de Serviços – SIBS (Interbank Services Company). Information received by SIBS is processed, selected and electronically directed to various entities: recipients, drawees and Banco de Portugal. The Bank undertakes the final financial settlement on a daily basis, making debit or credit entries in the deposit accounts of the banks participating in the system, netted against the amounts to be paid/received by each financial institution. SICOI is regulated by an Instruction of Banco de Portugal and includes the clearing of the following transactions: cheques, Multibanco system operations (nationwide ATM and EFTPOS network), electronic transfers (credit, domestic and foreign), direct debits and bills of exchange. 

Banco de Portugal is the settlement agent for SICOI. The final settlement is processed through TARGET2 (gross settlement system).

The introduction of the euro, the deepening of the European single market and the increase in cross-border payment operations led to the establishment of the Single Euro Payments Area (SEPA). This initiative of the major European (commercial, savings and co-operative) banks is aimed at facilitating retail payments in euro across the European Union.  

Most Portuguese banks participating in European payment systems can make payments to residents in the European Union, the European Economic Area (EEA) and Switzerland (credit transfers, which are similar to TEI), in addition to direct debits and card operations (the latter two are still being developed).  

Cheques shall not be covered by a pan-European system, given that they are a non-electronic instrument and have become obsolete in a number of countries, due to high processing costs and fraud levels.  

Banco de Portugal has fostered and closely monitored the automation of payment systems, particularly retail systems that are covered by SICOI, which includes cashless payment instruments such as cheques, bills of exchange, electronic transfers (TEI), direct debits and Multibanco operations.