Payments Settlements

The Reserve Bank manages the settlement of interbank payments in Australia through the operation of RITS (the Reserve Bank Information & Transfer System) and the conduct of Exchange Settlement Accounts. RITS settles around $170 billion high value payments each day. The Bank also settles its own transactions, and those of around 50 overseas central banks and official institutions.


Greg Johnston, Head of Payments Settlements

Payments are often referred to as the plumbing of the economy.  When people buy and sell goods and services, a payment usually flows.  For more than half of those payments, the buyer and the seller bank with different financial institutions. So when that occurs money needs to flow from one financial institution to another to make the payment successful.  In Australia, that occurs across exchange settlement accounts at the Reserve Bank.

Payments Settlements Department’s role is running the system that enables that settlement to occur. For high value payments, settlement occurs in real time as they’re exchanged between financial institutions. We do this to eliminate the risk, immediately as those payments are flowing, that relates to the obligation from one financial institution to another.

For low value payments such as those made by cards, direct entry and EFTPOS payments, settlement occurs after the exchange, usually at 9 am the next morning. But for direct entry payments we settle those later on the same day those payments are exchanged.

The system that settles payments in Australia is called the Reserve Bank Information and Transfer System, or RITS.  RITS settles around $170 billion high value payments each day, and probably a further $7 billion in low value payments every day.  Payments Settlements Department is also responsible for settling transactions that the Reserve Bank initiates, such as it implements open market operations.  It also is responsible for settling transactions initiated by overseas central banks that bank with the Reserve Bank here in Australia.

RITS is a critical component of the Australian financial system, it’s owned and operated by the Reserve Bank, and we invest very heavily in ensuring that it is stable and reliable and always there to meet the needs of the Australian economy.  Supporting innovation is a very key theme for Payment Settlements Department at the moment.  The industry is involved in developing a new payments platform. This new platform will enable a new payment to be offered to the Australia community. It will enable a sender to send, in real time, a payment to a beneficiary and have that beneficiary be able to see that payment within seconds of the payment being sent.  In addition to that, there will be a good deal of remittance information that will be able to be sent with that payment. If you buy a car on the weekend and it happens to be an expensive car, instead of having to write out a cheque, you might be able to then pull out your mobile phone, send the payment to the car dealer and the car dealer can see straight away that the payment has been made and is therefore happy to give you the keys.