Effective Monday, May 2, 2016, the limit for funds passed through the automated clearing house system (ACH) of local banks will be reduced from J$2 million to J$1 million.

As at May 2 as well, transactions over $1 million in value in ACH will attract a J$5000 penalty.

This is the latest attempt by the Bank of Jamaica (BOJ), to cut transaction amounts under the old clearing house system in seeking to encourage increased usage of the Jam-Clear real time gross settlement system (Jam-Clear RTGS)

According to the BOJ, the key to the implementation of the RTGS system is the necessity for intraday finality which allows funds used intraday to be reused to make other payments before end of day.

It says the RTGS system results in more liquidity in the system for all participants as well as reduces the possibility of fraud.

Intraday finality is simply the ability to receive confirmed funds transfers between participant accounts across institutions that are final and irrevocable during the business day. With the older system, finality is only achieved at the end of a day and does not facilitate reuse of the funds in the same day.

Users of JamClear-RTGS can transfer funds between themselves, for own account or on behalf of clients, in real time. Under the RTGS, checks take between one hour to two hours to clear, compared to days under ACH.

The ACH is operated and owned by local commercial banks. The central bank’s 2014 report also indicates that at end-2014, there were 21 participants in the JamClear-RTGS system,

The 2014 report of the central bank noted that for 2014, the total USD transaction values processed in JamClear-RTGS increased by 136.0 per cent to US$4.7 billion compared to approximately US$2.0 billion in 2013.

Jam-Clear RTGS) saw over J$14.6 trillion in transaction value in 2014.