The evolution of payment systems in the digital age: A central bank perspective

Andréa M. Maechler / Thomas Moser, Member of the Governing Board / Alternate Member of the Governing Board

Monetary Market Event, Zurich, 28.03.2019

In the digital age, the payments landscape has become an increasingly topical issue for private companies and central banks alike. The Swiss National Bank (SNB) has a mandate to facilitate and secure the operation of cashless payment systems. In Switzerland, the core payment system is Swiss Interbank Clearing (SIC). SIC was set up by commercial banks and the SNB, and is operated by SIX Interbank Clearing Ltd on behalf, and subject to the oversight, of the SNB. Both interbank and retail payments are settled via the SIC system. This unified approach to payments reduces costs and improves security. SIC's technology is flexible and the system has successfully adapted over the years to keep pace with changes in payment operations.

Digitalisation is now ushering in numerous further changes, which are affecting the entire payments ecosystem. New players with new business models are entering the market. Competition for access to client interfaces is intensifying, value chains are being reconfigured, distributed ledger technology is gaining traction, and new cyber risks are emerging. In order to ensure that payment operations continue to be secure, all stakeholders need to engage with each other to achieve a consensus on the way forward. Collaboration in a secure Swiss finance network would be an important step in this direction.

A key question central banks are currently asking themselves is: what form should these new players' access to core payments infrastructure take? The SNB has decided to grant access to the SIC system for licensed fintech companies whose business model makes them significant participants in the area of payment transactions. This will allow retail payments made using payment solutions from new providers to be settled efficiently and securely in central bank money. The SNB is thus ensuring fair competition in the cashless payments arena. This move will encourage innovations that facilitate payment operations, while also ensuring that cashless payments in Switzerland continue to be secure in the future.