Payment systems

Published: 31/1/2015 Modified: 20/3/2023
Payment systems are funds transfer systems with formal and standardised arrangements and common rules for the processing, clearing and/or settlement of payment transactions. Payment operations in the Republic of Croatia are carried out through three payment systems: TARGET-HR, EuroNCS and EuroNCSInst.

TARGET (Trans-European Automated Real-time Gross settlement Express Transfer system) is a centralised system which includes payment systems in euro enabling settlements in central bank money and offering central liquidity management services,  settlement of payment transactions in real time on a gross basis and services for the settlement of ancillary systems, allowing payments related to securities settlement (TARGET2-Securities-T2S) and instant payments settlement (TARGET Instant Payments Settlement-TIPS).

Eurosystem has launched a project to consolidate the existing TARGET2 and T2S systems, in terms of both technical and functional aspects. The objective is to meet changing market demands by replacing TARGET2 with a new real-time gross settlement (RTGS) system called T2 and optimising liquidity management across all TARGET Services.

The new consolidated TARGET platform was launched on 20 March 2023 on the level of the entire Eurosystem, including the Republic of Croatia as one of the euro area member states.

TARGET Services are developed and operated by the Eurosystem in order to ensure free flow of cash, securities and collateral across Europe. The services have a number of shared features such as centralised monitoring and liquidity management, one message standard ISO 20022, a joint pricing guide and a set of common components used across the TARGET Services.

TARGET is a centralised system that offers the same level of service to all its participants, which in terms of its legal structure, consists of several payment systems, TARGET national components. Each Eurosystem central bank operates its own TARGET system component.

After the introduction of the euro as the national currency in the Republic of Croatia, TARGET-HR is the payments infrastructure that has enabled complete migration of the Croatian Large Value Payment System (CLVPS) to the TARGET platform in euro.

EuroNCS (Euro National Clearing System) is a system that executes the clearing of interbank SEPA credit transfer (SCT) and SEPA direct debit (SDD) payment transactions.

The EuroNCS payment system became operational on 6 June 2016 in accordance with the National SEPA Migration Plan and, until the introduction of the euro, it only processed interbank euro payments of national and cross-border SEPA credit transfers in euro.

With the introduction of the euro in the Republic of Croatia, the necessary adaptation of the EuroNCS system for the clearing of SEPA direct debits (SDD) was carried out. This has enabled the migration of the entire kuna payment operations that used to be cleared in the National Clearing System (NCS) payment system to the EuroNCS system.

The EuroNCS payment system is interoperable with retail payment systems of other member states, for the clearing of both national and cross-border SEPA credit transfers (SCT) and SEPA direct debits (SDD) and it enables a full SEPA availability for all its participants.

EuroNCSInst is a payment system for the execution of payment transactions between the payer and the payee, in almost real time, in only a few seconds (SEPA instant credit transfer – SCTInst).

Within this time frame, the payer's IBAN account is debited, the interbank clearing of the initiated instant payment transaction is executed and the IBAN account of the payee is credited.

With the introduction of the euro as the national currency in the Republic of Croatia, the NCSInst payment system for the execution of instant payment transactions in kuna, which became operational in October 2020, is transformed into the EuroNCSInst system for the clearing and settlement of instant payment transactions in euro.

With the introduction of the euro in the Republic of Croatia, the first stage of the adaptation of the EuroNCSInst payment system that currently only enables the execution of instant payment transactions in euro for national payments has been completed.