Key Facts for Iran
- Primary real-time rails: Central Bank of Iran (CBI) instant payment system.
- Typical settlement times: Settlement is instant.
- Common limits: Varies by institution.
What “real-time payments” means in Iran
In Iran, “real-time payments” refers to a nationwide interbank service for the instant settlement of funds. This system marked a significant operational shift, moving from card-to-card transfers to a mechanism requiring bank account numbers for all transactions. The scope includes both large and small value payments, making it a foundational part of the country's financial plumbing. While a specific legal definition is not published, the framework operates on the principle of immediate, irrevocable credit transfers between accounts (industry norm), which is the standard for such systems globally.
The Central Bank of Iran (CBI) is the lead regulator and operator, overseeing the entire instant payment infrastructure. The CBI likely manages all clearing and settlement functions directly, which is a common model for centrally operated national payment systems (industry norm). Although the specific messaging protocol is not specified, new payment rails are typically built using the ISO 20022 standard to accommodate rich data and improve communication between financial institutions (industry norm), suggesting a similar path for Iran's system.
Iran's development of a centralized instant payment system reflects a global trend where national banks are building foundational infrastructure to modernize their financial systems.
Payment Rail Overview
Central Bank of Iran (CBI) Instant Payment System
Launched in December 2021, this system is an interbank service managed by the Central Bank of Iran for instant payment settlements. It replaced the previous card-to-card transfer method, now requiring users to initiate payments with bank account numbers. The system is designed to process both large and small transactions in real-time across different financial institutions.
- Instant Settlement: Payments are processed and settled immediately, providing finality of funds in real-time.
- Account-Based Transfers: The system requires bank account numbers for transactions, moving away from the previous card-number-based model.
- Centralized Operation: The Central Bank of Iran directly oversees the system, providing uniform operation and control across the interbank network.
- Variable Transaction Size: It is built to handle a wide spectrum of payment values, from small consumer payments to large corporate transfers.
Pros: Faster transaction speeds compared to previous methods; centralized oversight provides stability; capable of handling both small and large payments.
Cons: The shift from card-based to account-based transfers requires user adaptation; as a state-controlled system, it is subject to national regulations and international sanctions that can limit its global interoperability.
Limits, Fees, and SLAs
- R2P Fees: Leading instant payment models, like India's UPI system, are often free for consumers, as even small fees can deter widespread adoption.
- Operating Hours: Instant payment rails operate 24/7/365, providing continuous availability without downtime or processing cut-offs.
Compliance and Risk
KYC/KYB & AML
Iran’s financial system operates under a strict AML framework. The CBI mandates daily transaction limits and requires reporting suspicious activity to the FIU. Financial institutions must perform robust customer due diligence to identify risks and comply with domestic and international standards.
Data Residency & Privacy
While specific data residency laws are not publicly detailed, the regulatory framework requires that all transaction and identification records be accessible to supervisory bodies. This emphasis on oversight suggests data must be maintained in a way that supports government monitoring and investigations.
Fraud Controls
Fraud prevention is integrated into Iran's AML framework. The instant payment system includes built-in fraud detection capabilities, while transaction limits are designed to curb abuse. Financial institutions must actively monitor for and report suspicious activity, forming a layered defense against illicit transactions.
Recordkeeping & Audits
Iranian regulations mandate that financial entities maintain detailed records of all customer transactions and identification data. This information must be readily accessible to regulatory and supervisory units, creating a clear audit trail for compliance checks and potential investigations into financial activities.
Lightning Network Integration as a Solution
The Lightning Network is a second-layer protocol built on Bitcoin that processes transactions off the main blockchain. It creates payment channels between users for instant, low-cost payments. While local RTP rails are confined within national borders, the Lightning Network provides a global, interoperable payment infrastructure. It can act as a bridge for international transactions, connecting economies where domestic systems like SEPA Instant cannot.
While both systems offer near-instant settlement, the Lightning Network operates at a fraction of a cent per transaction, making micropayments practical. Domestic RTP systems are limited to a single country or region, such as the U.S. or eurozone. In contrast, the Lightning Network’s reach is global, offering a universal settlement layer for anyone with an internet connection, bypassing traditional financial gatekeepers and geographic restrictions.
- Cross-Border Complexity: It circumvents the intermediaries, currency conversion delays, and high fees typical of international bank transfers.
- Scalability Limitations: By moving transactions off-chain, it supports millions of transactions per second, addressing the throughput constraints found in many payment systems.
- Financial Access: It opens global markets to individuals and businesses in regions with limited banking infrastructure, requiring only an internet connection to send and receive payments.
Exploring the Lightning Network offers a path toward a truly borderless and open financial future.
B2B Enterprise Use Cases
- Supplier Payments – Businesses pay international suppliers instantly over the Lightning Network, bypassing traditional banking systems.
Business value: Reduces cross-border transaction fees and settlement delays. - Merchant Settlement – E-commerce and retail businesses accept customer payments and receive funds immediately without batch processing.
Business value: Improves cash flow and eliminates chargeback fraud risk. - Treasury Optimization – Corporate treasuries move funds between global subsidiaries in real-time for active liquidity management.
Business value: Provides instant, 24/7 liquidity management across borders. - Payroll – Companies pay international employees and freelancers instantly, regardless of location or local banking hours.
Business value: Simplifies global payroll and provides immediate fund access for workers. - Machine-to-Machine (M2M) Payments – Internet-connected devices autonomously pay for services, such as an electric vehicle paying for a charge.
Business value: Automates economic activity between smart devices.
Cross-Border Transactions and Remittances to Iran
Cross-border real-time payments are inherently complex, as most rails are domestic. Reaching a sanctioned jurisdiction like Iran introduces extreme difficulty, requiring sophisticated FX paths to move value and rail bridging to connect disconnected financial systems. These transactions must navigate a maze of regulatory controls, compliance checks, and operational hurdles that slow down the movement of money. The result is a fragmented and inefficient process where instant settlement is often impossible through traditional financial networks.
- Technical Services to Iraq: Iran’s main export destination for technical and engineering services is Iraq. This corridor facilitates over 2 billion in projects annually, representing a significant channel for commercial transactions.
- U.S. Personal Remittances: A highly regulated corridor allows U.S. financial institutions to process noncommercial, personal remittances to individuals in Iran. These transactions must pass through third-country banks and adhere to strict compliance protocols.
- Crypto for International Trade: To bypass banking friction, some businesses use crypto for international trade. This channel allows for direct settlement, though it operates in a heavily restricted and state-controlled environment within Iran.
The Lightning Network offers a solution by using Bitcoin as a global settlement asset. This model of rail bridging connects disparate domestic payment systems, dramatically reducing the time and fees required for cross-border transactions compared to legacy correspondent banking.
How Lightspark Makes Integration Easy
Lightspark helps fintechs, digital banks, wallets, and exchanges connect to the Lightning Network with a comprehensive platform. We abstract away the operational complexities, including dynamic liquidity management, optimized payment routing, and built-in compliance screening. Our robust developer tooling and APIs are designed for rapid integration, allowing you to offer your customers sub-second settlement globally without building the infrastructure from scratch. By managing the underlying node infrastructure, we provide a reliable and scalable foundation for you to build new payment experiences. To learn how you can expand your payment capabilities, Talk to our team.
Sources and Further Reading
- https://financialtribune.com/articles/economy/113750/iran-ranks-8th-among-remittance-recipients-of-mena-world-bank – Iran's remittance and export data.
- https://www.gi-de.com/en/spotlight/financial-platforms/seizing-the-instant-payments-opportunity – Global instant payment system opportunities.
- https://www.jpmorgan.com/insights/payments/payables/instant-payments-understanding-rtp-and-fednow-service – Understanding RTP and FedNow services.
- https://www.law.cornell.edu/cfr/text/31/560.550 – U.S. regulations on Iran remittances.
- https://www.lightspark.com/contact – Contact the Lightspark sales team.
- https://www.lightspark.com/knowledge/is-crypto-legal-in-iran – Iran's legal stance on cryptocurrency.
- https://www.lightspark.com/news/insights/what-are-lightning-payments – Explaining Lightning Network payment technology.
- https://ofac.treasury.gov/faqs/topic/1551 – OFAC sanctions on Iran FAQs.
- https://thepaypers.com/fintech/news/real-time-payment-system-set-for-launch-in-iran – Iran's real-time payment system launch.
