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 January 2023



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
2022 113,989 22,955 45,671
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
Sep     8,726   1,558   3,699
Oct   12,037   1,819   4,015
Nov   11,253   1,807   4,072
Dec     9,303   1,803   4,227
TOTAL 113,989 22,955 45,671
Jan     7,735   2,291   3,998



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
2022 185,602    553,485 4,927,565
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
Sep   16,663   43,715   423,837
Oct   16,955   45,291   411,576
Nov   18,108   47,370   439,940
Dec   19,089   52,320   448,949
TOTAL 185,602 553,485 4,927,565
Jan   17,294    38,118   398,466



Chart. 1: Values & Volumes by Real Time Gross Settlement (RTGS) Payments


Note: The total RTGS volumes declined by 9.4 percent in the month of January. This indicates that customers both private and public sectors transacted less during and after the festive season. This resulted in the total RTGS values decreasing as well by 16.9 percent.
Chart. 2: Values & Volumes by Cheque Payments.


Note: The total volume of cheques drawn decreased by 27.1 percent and the values increased by 27.1 percent in the month of January. This indicates that less cheques were transacted in January but with larger amounts. Refer to Chart 4 Footnote.

3: Values & Volumes by Direct Credit (DC) Payments

Note: The total volumes and values of Direct Credit declined by 11.2 percent and 5.4 percent respectively in the month of January.

4: Trends in RTGS, CHQS & DC Volumes since the launch of DC payments

Note: There was a decrease in the total volume of cheques in January 2023, compared to the previous month of December 2022, which had a high volume of transactions; however, the overall trend shows a steady decline of cheque volumes since the inception of KATS in 2015. On the other hand, the use of electronic payments continues 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 since 2015. 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: 02nd February 2023

Source: Payment Systems Department, Bank of Papua New Guinea

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