Harare — THE Real Time Gross Settlement payment system has been suspended for almost all transactions from today to stop it from being used by currency speculators and businesses pricing according to the "transfer exchange rate".

Businesses and individuals will now have to use cheques or debit cards for all non-cash transactions.

The Reserve Bank of Zimbabwe said the RTGS facility was being used for illicit foreign exchange deals and was being used by shop owners and other businesses to overprice their goods and services.

In his statement, RBZ Governor Dr Gideon Gono said the RTGS would continue to be used by banks to send payments to the Reserve Bank, and for the central bank to send money to banks.

This, he said, was in recognition of the need to provide liquidity to facilitate settlement of clearing house obligations by financial institutions.

Businesses and individuals could continue using RTGS to pay taxes to Zimra and to make payments to Government accounts held at the Reserve Bank.

"As the central bank, we have no option but to take this drastic measure in order to maintain sanity in the financial system."

Dr Gono said it had become necessary to suspend the RTGS system as banks had contributed in making the system vulnerable to speculators' abuse because of their delays in processing RTGS payment instructions by their customers.

He said the design of the RTGS system was such that payments and inter-account transfers must reflect in the recipients' accounts a few minutes after effecting transfer.

The system was designed to handle high-value, high-risk payments and enable instant transfer of funds from one bank to another and in addition facilitate real-time end to end processing of payments between customers of different banks when it is complemented with Straight Through Processing.

Another key factor of the RTGS system, Dr Gono said, was that it provided final and irrevocable settlement through accounts held at the RBZ, thereby reducing credit risk.

"The abuse which the RTGS system is being subjected to, therefore, negates the benefits highlighted above."

Public concern has heightened in recent months over delays in RTGS transactions with the general belief being that the delays were man-made and meant to safeguard the interests of a few rich individuals.

In worse cases, it took up to a week or two before RTGS payments could be effected.

Banks had in the past blamed multiple digit growth on the local unit for delays saying their systems had been unable to handle several digits.

However, following the lopping off of 10 zeros from the currency on August 1, there hasn't been any significant improvement in RTGS settlements from some banks although others have managed to speed up the system.

RTGS transactions now constitute more than 85 percent of all financial transactions that go through Zimbabwe's electronic payment platform.

Cheques made a comeback recently when the Reserve Bank removed the ceiling on cheque transactions.