Banco de Portugal releases today the Payment Systems Report for 2013.
The report describes the main activities Banco de Portugal has carried out in the payment systems area, under a new structure based on the nature of (large-value or retail) payment systems.
This publication also addresses the main developments in key projects in the payment systems area, notably TARGET2-Securities.

1. Large-value payment systems

Large-value payment systems make it possible to process large-value transactions by economic agents and conduct monetary policy operations. Hence, they play an important role in financial stability and economic efficiency.
In 2013 the operation of the real-time gross settlement system TARGET2-PT was sound and stable. It processed 1.7 million transactions, amounting to EUR 3,485 billion (around 21 times the value of Portugal’s gross domestic product at current prices).
Compared with 2012 overall amounts settled in the system declined by around 24.1 per cent, although the number of transactions increased slightly (+3.4 per cent). Financial institutions’ decreasing use of regular open market operations to obtain funds, given the non-standard monetary policy measures adopted in previous periods (particularly longer-term refinancing operations), has contributed to this pattern.
To ensure the smooth operation of large-value payment systems, in 2013 Banco de Portugal developed a number of oversight activities, including a study of the impact of TARGET2-PT participant failure scenarios. This study showed that the possible impact of specific disruptions on the system would be fairly limited.

2. Retail payment systems and instruments

Retail payment systems and instruments are particularly relevant for the confidence of economic agents in the payment system and in the currency.
The Portuguese Interbank Clearing System (SICOI) processes payment transactions under EUR 100,000 made through cheques, bills of exchange, direct debits, credit transfers and bank cards. In 2013 SICOI operated normally. It processed 2,017.7 million transactions, amounting to a total of EUR 322.5 billion.
Overall, in comparison with 2012 there was a 1.7 per cent increase in volume and a 0.4 per cent decrease in processed values. This is due to greater use of electronic payment instruments (cards, direct debits and credit transfers) and a decrease in paper-based payment instruments (cheques and bills of exchange).
The value of national purchases and withdrawals through the Multibanco network increased slightly, in line with a slight slowdown in the contraction of private consumption in Portugal in 2013.
The number of active debit cards rose by 32.1 per cent. In turn, the number of active credit cards declined by 35.6 per cent. This was largely due to the “transfer” of the issue of deferred debit cards (classified as credit cards in networks) to the issue of debit cards, as a result of Banco de Portugal’s intervention with bank card issuers to ensure greater transparency in the recording, classification, processing and commissioning of transactions conducted with deferred debit cards and cards with a debit and credit function.
Use of cheques declined both in volume (-14.4 per cent) and in value (-13 per cent). This was particularly noticeable in lower-value transactions. The use of cheques remained relatively stable in higher-value transactions.
The number of cheques submitted for clearing in SICOI and returned declined by 36.8 per cent in volume and 32.8 per cent in value from 2012. As a percentage, this decline was more marked than that recorded between 2011 and 2012 (decline of 24.9 per cent in volume and 23 per cent in value). As a consequence, the relative weight of the volume of returned cheques in total cheques submitted decreased from 0.72 per cent in 2012 to 0.54 per cent in 2013 (the lowest return index recorded since 2001).
In line with a decline in the use of cheques, the number of entities included in the List of Cheque Defaulters decreased by 23 per cent from 2012.

Single Euro Payments Area (SEPA)

With the implementation of SEPA, households, enterprises and general government bodies may make cashless payments in 28 European Union Member States plus Iceland, Liechtenstein, Monaco, Norway and Switzerland, using a single bank account located in any of these countries and a single set of payment instruments (credit transfers, direct debits and cards).
In 2013 Banco de Portugal furthered its efforts to promote the implementation of SEPA, especially as regards credit transfers and direct debits.
Inter alia, the Bank hosted regional seminars, published a wide set of documents supporting migration and participated in the preparation of Decree-Law No 141/2013 of 18 October setting forth the national measures needed to implement the provisions of the Community Regulation establishing technical and business requirements for credit transfers and direct debits in euro (SEPA transactions) (Regulation (EU) No 260/2012 of the European Parliament and of the Council of 14 March 2012).
On 31 December 2013, 89 per cent of credit transfers and 16 per cent of direct debits processed in SICOI were in SEPA format.

Security of payments

Banco de Portugal has actively participated in the work of the SecuRe Pay Forum, an entity that issues recommendations in the field of security of internet and mobile payments.
The Bank has prepared a series of recommendations for the general public on measures to prevent fraud in remote card transactions. These recommendations, released on Banco de Portugal’s website, take into account both households and enterprises accepting such payments.
In 2013 Banco de Portugal also participated in the analysis of card fraud at Eurosystem level and started to monitor and assess the operation of SICOI in the light of the new international oversight principles (Principles for Financial Market Infrastructures, published in 2012 by the Bank for International Settlements).

3. TARGET2-Securities project

The TARGET2-Securities (T2S) project aims to set up a Eurosystem platform to provide securities settlement services in central bank money to central securities depositories and financial market participants. The platform will contribute to reduce settlement risk, increase security and efficiency in securities transactions and reduce the costs of these transactions at European level. It is expected to enter into operation in June 2015.
The T2S project evolved considerably in 2013. At Eurosystem level, development of the main T2S software functionalities was completed, regulatory preparation work was intensified and the ECB Governing Council approved the migration schedule.
To ensure efficient adaptation of the Portuguese community to T2S, Banco de Portugal has organised a series of communication initiatives, including, in particular, an interbank meeting to release information on liquidity management in TARGET2 and T2S and, in collaboration with the European Central Bank, an information session on T2S for the whole European banking community.

Lisbon, 30 June 2014