Palestine Monetary Authority (PMA) is in the UAT stage of a retail payment processing project, part of a larger payments system venture initiated a few years ago under the guidance of Arab Monetary Fund and World Bank (IBS, October 2009, New interbank system for PMA). PMA is automating gross interbank and retail payments processing on one platform, supplied by a South African specialist vendor, Perago (part of Italy's SIA-SSB group). The combination of retail and inter-bank payments is a new concept envisaged by the payments systems development group of the World Bank, says Luca Passerini, CEO of Perago. Its practical application at PMA through the real-time gross settlement (RTGS) system with integrated retail payments clearing functions is the first in the world.

The interbank clearing and settlement part of the venture went live in November 2010. It processes in real-time the payments of 20 banks (and their 200+ branches) that are operating in Palestine. It simultaneously manages four currencies that are used there: Euro, USD, Israeli Shekel and Jordanian Dinar. In the first four months of operations the system has processed transactions worth $14.4 billion, which equates to over 200 per cent of Palestine's GDP, claims Perago.

Now the retail payments functionality in on the way, says Passerini. It will go live 'within a few months', and by the year-end the project will be fully completed. The new system is replacing manual processes, cheques and faxes, providing PMA with 'visibility and control', according to Passerini. PMA is striving for more automation and has many projects on the agenda, he notes. The next step will be the adoption of a central securities depository (CSD) system, for which there will be a full evaluation process that Perago will participate in.

The new payments system for PMA has been created by Perago from scratch. When a tender was announced in late 2007, the vendor had just one readily available product – an RTGS system – and 'ideas and plans' for the rest. However, Passerini emphasises that the offering for PMA has been built according to plan and schedule, and 'the client is happy'.

The new solution, Perago Suite, is based on a different platform to Perago's older RTGS system and has a 'new software foundation': Java front-to-back (from the GUI interface to the internal processes at the back-end, claims Passerini), JBoss and Oracle, and is compatible with most operating systems. To facilitate fast time-to-market for new products and a quick reaction to regulatory change (this has been a stumbling block in the older system), agile methodology is applied. 'This suite is the foundation for all the new-generation products we offer,' he states. At present, Perago Suite comprises Perago:rtgs, Perago:clear (for retail payments), Perago:paygov (government payments) and Perago:csd. 'It has been a challenging task with a lot of work, effort and investment,' says Passerini. 'By the end of 2011 it will be fully ready and available. In one year we went from one product to a suite of products covering a range of requirements. But, of course, it has not been easy.'

Passerini says there are two more takers of the new offering in the Middle East, whose names will be disclosed in the coming months. The region is seen as promising by the vendor, alongside Central and South East Asia (particularly India), Asia Pacific and Latin America (namely Brazil). 'We are targeting important, buoyant emerging markets,' explains Passerini. In Africa, projects are under way with the central banks of Sudan and Uganda. Uganda intends to join SADC (Southern African Development Community, an inter-governmental organisation that facilitates co-operation between 15 southern African states), and requires a multi-currency payments system for cross-border transactions with SADC nations, retail payments and government payments within the country.

In total, Perago counts eleven financial services regulators as customers, all but two of which are in Africa and the Middle East. The two exceptions are in Western Europe: Norges Bank (Norway) and Sveriges Riksbank (Sweden). Passerini says Perago will be encouraging users of its older software to migrate to the new solution, but he acknowledges 'central banks are not easy to move'. There might be a number of reasons for this, he notes, such as a lack of funds in poorer states. Support for all users will continue, but Passerini hopes to finish the support for the oldest version of the RTGS software 'in a couple of years' and persuade its takers to upgrade.

Meanwhile, Perago's parent group, SIA-SSB, has itself been undergoing enterprise-wide modernisation and restructuring. It unveiled a new 2011-13 strategic plan last year, to address declining growth and falling revenues.