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 April 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
QTR 1   29,560   7,018 10.277
Apr     9,286   1,651   3,548
May     9,771   2,007   3,950
Jun     8,284   1,993   4,068
QTR 2   27,341   5,651 11,566
Jul     8,361   1,495   3,787
Aug     7,408   1,804   4,028
Sep     8,726   1,558   3,699
QTR 3   24,495   4,857 11,514
Oct   12,037   1,819   4,015
Nov   11,253   1,807   4,072
Dec     9,303   1,803   4,227
QTR 4   32,593   5,429 12,314
TOTAL 113,989 22,955 45,671
Jan     7,735   2,291   3,998
Feb   11,289   1,612   3,373
Mar   14,275   1,491   4,411
QTR 1   33,299   5,394 11,782
Apr     7,871   1,203   3,565



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
QTR 1   40,130  139,206 1,144,346
Apr   12,491   44,033   389,013
May   14,619   49,109   398,510
Jun   15,069   45,765   433,510
QTR 2   42,179 138,907 1,221,033
Jul   15,531   40,054   399,282
Aug   16,947   46,622   438,602
Sep   16,663   43,715   423,837
QTR 3   49,141 130,391 1,261,721
Oct   16,955   45,291   411,576
Nov   18,108   47,370   439,940
Dec   19,089   52,320   448,949
QTR 4   54,152 144,981 1,300,465
TOTAL 185,602 553,485 4,927,565
Jan   17,294    38,118   398,466
Feb   17,455    34,949   406,587
Mar   21,062    42,630   483,611
QTR 1   55,811  115,697 1,288,664
Apr   19,164    33,761   395,902


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


Note: The total RTGS volumes and values declined by 9 percent and 45 percent respectively in the month of April. The decrease relates to lesser transactions from Corporate companies who hold accounts with commercial banks. In addition, BSP’s migration to new core banking on the 6th April 2023 experienced technical glitches, resulting in most Corporate Companies transacting lesser and with smaller amounts.
Chart. 2: Values & Volumes by Cheque Payments.

Note: The total volume of cheques drawn slightly declined by 0.3 percent and the values declined by 19 percent in the month of April. This indicates that fewer cheques were transacted in the month of April with smaller 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 18 percent and 19 percent respectively in the month of April. With BSP holding 80% market share, these decrease is attributable to technical issues faced by BSP during migration of the new core banking system. This resulted in more Corporate companies transacting lesser during the month of April.

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

Note: There was a slight decline in the volume of cheques in April 2023, which is in line with the overall trend showing 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. Furthermore, in line with improving the National Payment System of PNG, private companies (corporate customers) usage of cheque will cease on the 31st December 2023.

5: Cheques as a Proportion of Interbank Retail Payments
Chart 5 shows two trends since 2015. It shows that the volume and the 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: 1st May 2023

Source: Payment Systems Department, Bank of Papua New Guinea

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