The RIX payment system

All payments that are not made with banknotes and coins involve moving money between accounts at one or more banks. For example, when households and businesses pay a bill, they instruct the bank to transfer money from their own account to the payee’s account. If the payer and the payee have accounts with the same bank, the payment is finalised within the bank. If the payee’s account is in another bank, a centralised payment system is needed to forward payments from one bank to the other. All payments, both directly between banks and on behalf of a customer, are made through the accounts the banks have in RIX. The Riksbank thus functions as the banks’ bank and is the hub of the payment system. As a central bank, the Riksbank can inject money into RIX by lending money to the banks during the day, allowing payments to function smoothly.

Settlement of participants’ accounts in RIX-RTGS and RIX-INST takes place in the Riksbank’s money, i.e. in central bank money. Central bank money is the safest way for banks and other financial institutions to make payments between each other as the Swedish state guarantees the value of the money.

RIX-RTGS

RIX-RTGS is designed to handle large payments between participants. Around SEK 660 billion is traded daily in RIX-RTGS and the average value of a payment sent is around SEK 17 million.

A payment in RIX-RTGS goes through several stages: it is checked, cleared in some cases and settled. The checks ensure that the payer is authorised to make the payment and that there are sufficient funds in the payer’s account. Clearing means that payers’ payments are reconciled before they are passed on for settlement. The settlement of participants’ accounts in RIX-RTGS is the last step in the payment chain and means that the payment is finalised.

How does settlement in RIX-RTGS work?

Transfers between participants’ accounts in RIX-RTGS are made electronically and according to the principle of real-time gross settlement (RTGS). This means that the transfers are made one by one, and that the money coming into the accounts is immediately available for other transfers.

There are also functions in RIX-RTGS that make it possible to make several transfers simultaneously by offsetting them against each other. This increases efficiency in the system. Thus, RIX-RTGS is a hybrid system that utilises both the advantages of gross settlement - the reduction of risks - and the liquidity savings from offsetting transfers. To promote safety and efficiency in the system, the Riksbank can provide credit during the day, what is known as overnight credit, in RIX-RTGS. However, credit is only granted against adequate collateral.

Detailed documentation for RIX-RTGS ca be found on the page “Instructions and system documentation RIX-RTGS”

Future platform for RIX-RTGS

The Executive Board of the Riksbank has decided to negotiate with the Eurosystem for the use of the European settlement platform for payments, T2, to provide the settlement service RIX-RTGS. The change from the current technical platform to the T2 platform is expected to take around five years.

RIX-INST

RIX-INST is the Riksbank’s system for instant payments. Unlike RIX-RTGS, RIX-INST is open around the clock every day of the year and settlement in RIX-INST is instant. Today, payments from the Swish mobile application, among others, are settled on RIX-INST.

How does settlement in RIX-INST work?

There are three different models for settlement of payments in RIX-INST: “Standard Settlement Model (standard model)”, “Single Instructing Party Settlement Model (SIP model)” and "Settlement model for cross-currency payments (ELKT model)".

• Standard model
  When using the standard model, the amount is reserved on the payer’s account in RIX-INST, and then a payment request is sent to the payee. The reserved amount is locked and cannot be used for other payments. If the payee accepts the payment, the reserved amount is released and the transaction is carried out immediately. Both the payer and the payee then receive a confirmation that the transaction has been completed. This model is based on the NCT Inst framework developed by the Nordic Payments Council. As of November 2024, all RIX-INST participants will be able to offer their customers the possibility of sending and receiving payments according to the standard model.
• SIP model
  The SIP model, which the Swish mobile application uses for the settlement of payments, works slightly differently. Here, no reservation of the amount is made and the payee does not need to authorise the payment; the transaction is carried out immediately after the payment instruction has been approved by RIX-INST. Both the payer and the payee receive confirmation of the transaction through an agent that the participants have agreed to use. To be authorised, an agent must apply to the Riksbank. The Riksbank must approve the agent and give it the correct authorisations. For Swish payments, the company behind Swish, Getswish AB, is the agent.
• ELKT - Model
  The ELKT model offers settlement of cross-currency payments, the model links two payments together in two different currencies. The abbreviation ELKT originates from the Enhanced Linked Transaction Model. Currently, participants in RIX-INST have the possibility to carry out cross-currency payments with two other currencies, Danish kroner and Euro.
  
  In a cross-currency payment, two settlement systems are always involved for the payment to settle. For Swedish kronor, the settlement takes place in RIX-INST. The other currency is settled in another settlement system, for example in TIPS EUR for Euro payments. 
  
  It is important for the Riksbank to support the use of common market standards for the cross-currency service and we therefore plan to require the adherence to the coming NPC OLO Inst scheme for the participation in the ELKT model for the Swedish krona. 
  
  The ELKT model is voluntary to use for RIX-INST Participants.

Detailed documentation for RIX-INST ca be found on the page “Instructions and system documentation RIX-INST”

Comparison of the two settlement services

RIX-RTGS and RIX-INST are two different services and thus have several differences as described above, but also some similarities. An overview in tabular form of the similarities and differences between the two services can be found in the document “The Riksbank’s settlement services”.