Four hours is actually how many hours? – The actual time required for intraday transfers

In the past, the Central bank of Hungary took measures to improve the service quality of transfers between credit institutions which enabled actual intraday transfers for the clients of payment service providers automatically and without a noticeable increase in related costs (if certain conditions are met) starting from July 2012. This study shows that transfer orders accounted in the five daily cycles of the intraday clearing module reach the beneficiary client within an average of 2 hours and 5 minutes after debiting the bank account of the payer, and 2 hours and 50 minutes in the first cycle which is considered special from several aspects. The time required for execution in the first cycle is between 58 minutes and 3 hours and 48 minutes with a confidence level of 90%, while in the rest of the cycles it ranges from 36 minutes to 2 hours and 53 minutes. The 4-hour time window defined in the regulation does not include the period when the bank accounts of beneficiary clients are credited by recipient banks. Focusing on the period within the time of execution defined in the legislation, experience shows that credit institutions of the payer were able to forward the sum of the payment order to the credit institution of the beneficiary client in an average of 1 hour and 45 minutes throughout the five cycles of the day. That amounts to 44% of the available time window, while the extent of utilisation of the time window is only 35% in cycles 2-5. The time required for execution was also examined by the various subtypes of transfer. Experiences tell us that standing orders require 1 hour more time compared to single transfers, while credit transfers initiated in batch are executed in 20 minutes less time. Efforts are made to discover the reasons behind the longer time required for transfers in the first cycle of the day, which might be attributable mainly to difference in the process of this cycle and to a lesser degree to the fact that twice the average number of transfers in other cycles are accounted in the first cycle. Finally, recommendations are given for potential means of accelerating the execution of transfers.