Media Release Same-day Settlement of Direct Entry Payments

Starting from 25 November, the settlement of Direct Entry (DE) obligations between payments system participants will occur on a same-day, rather than next-day, basis. At its 15 November meeting, the Payments System Board welcomed the imminent commencement of same-day settlement of DE payments. It noted that the achievement meets one of the objectives set by the Board in its June 2012 Strategic Review of Innovation in the Payments System.

The DE system is used for the exchange of bulk electronic payment files between banks and other authorised deposit-taking institutions (ADIs). Payments occurring through DE include salary, welfare and dividend payments, as well as internet (‘pay anyone’) banking transfers and direct debits for bill payments. DE payments by households, business and governments average around $53 billion per business day.

Previously, the settlement of DE obligations in ADIs' accounts with the Reserve Bank occurred at 9.00 am on the business day following the exchange of payment instructions between ADIs. A benefit of the move to same-day settlement will be that funds can be made available to recipients on a timely basis without the receiving financial institution taking on credit risk.

Achieving same-day settlement of DE payments has required significant changes to the operational and liquidity arrangements for RITS, the Reserve Bank's real-time gross settlement system. This includes changes to ensure that ADIs have access to liquidity into the evening, after the close of the interbank cash market. The Payments System Board commends the efforts of industry participants and Reserve Bank staff in achieving same-day DE settlement and looks forward to continued collaboration in the payments system.


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