Banco de Portugal releases today the Report on Payment Systems for 2014.

The report presents the main facts and figures on the operation of payment systems in 2014, as well as the activities carried out by Banco de Portugal in this context.

1. Large-value payment systems

In 2014 the real-time gross settlement system operating in Portugal (i.e. TARGET2-PT) operated in a sound and stable manner. The system processed 1.8 million transactions, amounting to EUR 3,699 billion, equating to around 21 times Portugal’s gross domestic product at current prices.

The overall volume of transactions settled increased by 10.1 per cent from 2013, due to an increase in transactions originating in securities settlement systems, notably Interbolsa and transactions in the Interbank Clearing System (SICOI). In turn, amounts settled grew by 6.1 per cent, boosted by positive developments in transactions between institutions, particularly Eurosystem credit operations.

Banco de Portugal amended the TARGET2-PT Regulation (Instruction No 54/2012) in order to allow for the introduction of a negative interest rate in the remuneration of deposits, balances and holdings of excess reserves, following the decision of the European Central Bank (ECB) of 5 June 2014 (ECB/2014/23). To reinforce its activity in oversight of payment systems, in August 2014 Banco de Portugal adopted the Principles for Financial Market Infrastructures (international minimum requirements aimed to promote the security, efficiency and resilience of the financial system).

2. Retail payment systems and instruments

Over the course of 2014 SICOI operated smoothly. The system processed 2.1 billion transactions, to an amount of EUR 339 billion. Compared with 2013, there was an increase of 4.3 per cent in the volume of transactions, and of 5.1 per cent in values processed, in line with the signs of recovery of private consumption observed throughout 2014.

The use of paper-based payment instruments (cheques and bills of exchange) continued to decline, while the use of electronic payment instruments (cards, direct debits and credit transfers) remained on an upward trend.

Processed cheques declined by 12.8 per cent in volume, but increased by 2.9 per cent in value, due to an increase in the use of large-value cheques. The relative weight of the volume of returned cheques in total cheques submitted for clearing in SICOI declined to 0.44 per cent, i.e. the lowest return rate since 1999. As a consequence, the number of entities included in the List of Cheque Defaulters declined by 35 per cent from the previous year, to 30,391 entities. For a long time, cheques were one of the Portuguese’s preferred payment instruments for retail payments. However, for the past 10 years, their relative weight compared with electronic payment instruments has been declining considerably.

Credit transfers processed increased by 3.3 per cent in volume and 9.8 per cent in value, compared with the previous year. On average, 463,000 credit transfers were processed on a daily basis, amounting to EUR 603 million.

The direct debits subsystem recorded the highest growth rates in volume (16 per cent) and value (15 per cent), with 644,000 transactions having been processed, on average, on a daily basis, amounting to EUR 83 million.

Transactions processed through the Multibanco network grew by 3.9 per cent in volume and 6.4 per cent in value, signalling a recovery of private consumption in Portugal throughout 2014. On average, 4.9 million transactions were processed per day, totalling EUR 259 million.

2014 was marked by the migration of credit transfers and direct debits to SEPA (Single Euro Payments Area), with Banco de Portugal carrying out several initiatives to promote and clarify it to stakeholders. This migration was successfully concluded on 1 August 2014, thus indicating considerable progress in the integration of the European retail payments market. Hence, all credit transfers and direct debits in euro were carried out in the same format and under the same conditions and technical and business rules (with the discontinuance of the domestic solutions used until then).

In 2014, in addition to actively participating in EU legislative work within the scope of retail payments, Banco de Portugal also carried out a wide reflection on issues related to virtual currencies (such as Bitcoin), and collaborated with the ECB in the preparation of the third report on card fraud in 2012. At European level, card fraud increased in absolute terms by 14.8 per cent from 2011 to 2012, having been more frequent in card-not-present payment transactions, which reinforces the need to increase security in this type of payment.

3. TARGET2-Securities project

The TARGET2-Securities (T2S) project that aims to build the future European platform for securities settlement in central bank money, was significantly developed in 2014. Its entry into operation at European level is forecast for 22 June, and efforts have focused both at Eurosystem and national level on performing tests and conducting preparatory and informational initiatives with future users.

Internally, Banco de Portugal has continued its work for link-up to T2S, successfully carrying out the platform connectivity tests, and has obtained the certification that will make it possible to move on to the following phases, especially that of linking the Portuguese banking community to the new platform, planned for 28 March 2016.

Lisbon, 16 June 2015