Swish Migration To RIX-INST Opens New Chapter In Swedish Payments Success Story

October 12, 2021
Swedish mobile payments service Swish is planning to migrate its services to the new central bank-developed RIX-INST, as part of a wider development of instant payments services in the country.

Swedish mobile payments service Swish is planning to migrate its services to the new central bank-developed RIX-INST, as part of a wider development of instant payments services in the country.

The world’s oldest central bank, the Riksbank of Sweden, has been outlining its plans for its new instant payment service RIX-INST. In a speech last week, first deputy governor Cecilia Skingsley said that its new RIX-INST service, which will be based on the European Central Bank’s TIPS Platform (Target Instant Payment Settlement), will enable 24/7 immediate settlement in central bank money, all year round.

The service, which is designed to support instant retail payments settlement (i.e, non-wholesale), will complement the central bank’s existing large-value payments service called RIX-RTGS.

Speaking to VIXIO, a spokesperson for the Riksbank said that the key reason for launching RIX-INST next year is that “instant payments will be much more important in the future than today.” Given this expected rise, the central bank wants to ensure the availability of settlement around the clock in central bank money.

Instant payments are highly developed in Sweden, but there are currently limitations in how they can be used. All instant payments in the country are currently based on the popular mobile-only payments services Swish.

When the infrastructure underpinning the Swish service was built in 2012 by the bank-owned Bankgirot, it was only designed and intended for low-value payments between individuals. For example, the maximum value of a transaction across Swish is 150,000 krona, equivalent to €14,800, but many banks limit P2P transactions to 10,000 krona, or €990. The service has since evolved to include other low-value payments, such as in-store and e-commerce payments, but the majority of payments are still P2P.

According to VIXIO research, Swish is nevertheless one of the most successful examples of mobile payment services found anywhere in the world. Roughly four in five Swedes use the services, with each user making on average 75 transactions per year, totalling 627m payments in 2020.

According to the Swedish Bankers’ Association, “the new settlement service RIX-INST will open up an opportunity for new solutions”.

This means it will support and help the development of new instant payment services not currently available to Swish users, including use cases for business to business (B2B) payments and various disbursements.

The Swedish Bankers’ Association has confirmed to VIXIO that Swish will migrate its services to the new central bank-developed platform in the hope of expanding its services, adding “this means that Swish will be run on a new platform, TIPS”.

The migration of Swish from Bankgirot’s BiR infrastructure to the new RIX-INST represents the end of a great Swedish payments success story and the start of a new chapter for Swish.

At the moment, “Swish payments are made via banks on a private technical platform and not via the Riksbank’s RIX payment system. The advantage of RIX-INST is that the Riksbank is responsible for settlement,” the Riksbank says on its website.

Bankgirot was recently acquired by pan-Nordic payments service P27, which is working on a multi-currency payment platform that enables instant domestic and cross-border payments between Sweden, Denmark, Finland and potentially Norway. Part of the thinking behind P27 was a need to simplify standards, reduce costs and harmonise payments across the region. As P27 introduces its own schemes and services, it is also possible that some of Bankgirot’s remaining interbank payment services will be phased out.

According to Bankgirot, there is “little transparency” over banks’ plans regarding the migration for Swish. Nonetheless, it confirmed that its current service will be phased out.

P27 will also be using RIX-INST to settle instant payments, the Riksbank told VIXIO.

“This is to say that there will be several instant payment services but only one settlement system for them in [Swedish krona],” the central bank explained.

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