Kina Automated Transfer System (KATS) Monthly Statistics updates

Monthly Analysis on the Use of Payment Instruments

1. Preface

Safe, stable and efficient payment systems are critical to the effective functioning of the financial system. Payment systems are the means by which funds are transferred, primarily among banks. It is the main channel that financial shocks are transmitted across domestic and international financial systems and markets. Therefore, a robust payment system is the key infrastructure required to maintain and promote financial stability.

The payments system is the collective term for all the individual payment systems in a country and has a strong influence on the velocity of financial flows in the economy, the overall costs and liquidity. It is also a channel for monetary policy transmission. The Bank of Papua New Guinea is committed in ensuring that it is safe and functioning efficiently. The Central Banking Act 2000, states that one of the primary objectives of the Bank is to “promote an efficient national and international payments system”. This is strengthened further by the National Payments System (NPS) Act 2013 which provides the legal foundation to implement new payment types, such as electronic cheque truncation that came into operation in September 2014 and direct credits in 2015.

The Bank of Papua New Guinea introduced the Kina Automated Transfer System (KATS) over the last three years with the objective of fostering an efficient payment system for processing and settling all payments (both small and large value) between all the banks and their customers. This included electronic payments which are safe, efficient, fast and predictable. The operation and usage of KATS are defined in the KATS System Rules. All the banks (including BPNG in its dual role as a bank and as the operator of KATS) agree to abide by the System Rules.

2. Types of Payment Instruments in KATS There are three (3) types of payment instruments currently handled by KATS.

  • Real Time Gross Settlement (RTGS). These are mainly high-value and high-priority interbank or individual payment instructions that must be settled by debiting and crediting the accounts of the banks involved immediately (in real time) and individually (gross) with finality and irrevocability (i.e. they cannot be disputed or reversed). It is a requirement of the KATS System Rules that every RTGS payment in favour of a customer of a bank must be credited to that customer’s account at the receiving bank within no more than two (2) hours of being settled in KATS.

RTGS went live on 14th October 2013.

  • Electronic Cheque Exchange (Cheque Truncation). This is a process whereby cheques are scanned at the bank where they are deposited, and the images of the scanned cheques, together with the accompanying details, are exchanged between the banks electronically, via KATS. Currently, banks have a four days period during which they can dishonor cheques. This period will be progressively reduced over the next one to two years as banks become more comfortable with KATS and the way it operates.

Cheque Truncation went live on 8th September 2014

  • Direct Credits (DC’s). This is the process whereby an individual or company can request their bank to make a payment to the account of another individual or company at any bank. Direct Credits are settled twice daily within KATS. Depending on the time of day when a Direct Credit payment is processed by KATS, the funds are available to the recipient’s account on the same or next day, if all account details are correct.

Direct Credits went live on 9th February 2015

3. Payment Systems Unit

Within BPNG, the Payment Systems Unit (PSU) is the operator of KATS and is responsible for opening and closing the KATS business day, monitoring the banks’ reserve funds, monitoring transactions between banks during the KATS operating hours, funding the Exchange Settlement Account (ESA) requirements and responding to queries from all the commercial banks.

PSU is also responsible for producing payment statistics processed in KATS.

4. Inter-bank Transactions

In PNG, there is one single system which processes interbank transactions which is operated and overseen by the Bank of PNG. It is a so-called hybrid system, which accepts both “low value” (cheques & DC’s) and “high value/priority” (RTGS) payments.

Due to different stages of KATS implementation, PSU began to compile statistics in January 2015.

Statistics from January 2015 to August 2022



Year RTGS (K’ Million) Cheques ( K’ Million) Direct Credits (K’ Million)
2015 31,598 43,426 13,181
2016 52,027 34,319 16,846
2017 42,972 28,356 18,740
2018 84,360 26,242 26,683
2019 98,102 23,460 31,052
2020 65,248 19,135 32,121
2021 64,324 17,577 36,679
Jan 4,766 1,550 2,686
Feb 4,560 1,215 2,525
Mar 3,333 1,281 2,857
Apr 4,515 1,293 2,934
May 6,256 1,435 2,644
Jun 4,752 1,504 2,898
Jul 3,999 1,398 3,303
Aug 4,112 1,413 3,007
Sep 3,606 1,597 3,087
Oct 6,854 1,360 3,499
Nov 7,535 1,451 3,302
Dec 10,036 2,080 3,937
TOTAL 64,324 17,577 36,679
Jan 8,742 2,411 3,389
Feb 11,807 2,610 2,955
Mar 9,011 1,997 3,933
Apr 9,286 1,651 3,548
May 9,771 2,007 3,950
Jun 8,284 1,993 4,068
Jul 8,361 1,495 3,787
Aug 7,408 1,804 4,028



Year RTGS Cheques Direct Credits
2015   65,005 1,667,137 2,066,657
2016   70,372 1,419,753 2,419,273
2017   80,067 1,222,793 2,663,180
2018   96,857 1,073,319 3,062,576
2019 108,887 959,876 3,508,368
2020 105,488 705,048 3,958,155
2021 129,783 586,675 4,318,630
Jan 8,223 43,501 316,256
Feb 9,451 46,485 323,144
Mar 8,734 47,835 356,064
Apr 8,643 45,647 343,933
May 9,213 49,224 338,076
Jun 9,851 50,299 364,833
Jul 12,655 50,089 373,650
Aug 12,564 51,511 359,550
Sep 12,473 50,973 384,739
Oct 11,529 46,254 362,264
Nov 12,178 44,616 369,462
Dec 14,269 60,241 426,659
TOTAL 129,783 586,675 4,318,630
Jan 11,777 43,919 350,471
Feb 15,130 44,704 356,512
Mar 13,223 50,583 437,363
Apr 12,491 44,033 389,013
May 14,619 49,109 398,510
Jun 15,069 45,765 433,510
Jul 15,531 40,054 399,282
Aug 16,947 46,622 438,602


Chart. 1: Values & Volumes by Real Time Gross Settlement (RTGS) Payments
Note: The total RTGS volumes increased by 9.1 percent in the month of August due to higher Government related payments, combined with BPNG payments for securities (Treasury Bills & Bonds) compared to the previous month. RTGS values declined by 11.4 percent due to lower transaction amounts compared to the previous month.
Chart. 2: Values & Volumes by Cheque Payments.

Note: The total value of cheques drawn increased by 20.7 percent in the month of August, and the volumes increased by 16.4 percent.

3: Values & Volumes by Direct Credit (DC) Payments
Note: The total values and volumes of Direct Credit increased by 6.4% and 9.8% respectively in the month of August.
4: Trends in RTGS, CHQS & DC Volumes since the launch of DC payments

Note: Although there was a slight increase in the total volume of cheques in August, the overall trend shows a steady decline since the inception of KATS in 2015 while the use of electronic payments continue to increase as shown by the growth in direct credits (DCs). Corporate customers are the main users of cheque payments while Government cheques are steady.

5: Cheques as a Proportion of Interbank Retail Payments


Chart 5 shows two trends. It shows that the volume of cheque and the total value of cheques, as a percentage of total retail payments, are both declining. Cheques are being replaced by electronic means of payment, as expected.


Date Updated: 06th September  2022
Source: Payment Systems Department, Bank of Papua New Guinea

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