The Reserve Bank of Australia expects daily balances in exchange settlement accounts to increase from A$1 billion to between $20 and $30 billion as banks make the transition to more frequent settlement of low value payments.Guy Debelle, assistant governor of the RBA, made the projection in a speech at an Australian Financial Markets Association forum held on Friday.From November this year, banks will have to settle direct entry payments (such salary payments, Centrelink benefits and 'pay anyone' internet transfers) several times each day for same-day value, though still in batches. There are around 30 million of these payments each day and their total value averages more than $40 billion per day. At present, banks settle these in a single batch early each morning.Debelle said of the shift: "While this should be of great benefit to financial institutions and their customers, some of these settlements will be taking place outside of normal banking hours. "Furthermore, at the time the interbank cash market closes at the end of the day, ADIs will not know the size of these payments (or receipts) that they will need to settle later that evening. Potentially, these payments could be quite large."Debelle said that "at the present time, the demand for ES balances is generally low", with banks aiming to minimise their balances, given the 25 basis point discount to the cash rate the RBA pays on these balances. He said the more frequent settlement of direct entry payments means "the demand for ES funds will rise significantly, with some of these settlements taking place outside of normal banking hours."Debelle said the Bank will manage the expansion in its balance sheet through its existing liquidity facility for ES account-holders. He said that, from November, the RBA will allow ES account-holders to access a pre-determined amount of funds through its liquidity facility on an 'open' basis.The interest rate on these open repayments will be set at the cash rate target, he said. He said that "in net terms then, there need be no cost to holding an open repo position."Debelle said that the Reserve Bank will need to conduct operations in the open market late in the day "to address any unexpected payment flows and ensure the right amount of settlement funds are in the banking system to allow the cash market to function appropriately."In the past, Debelle said, the RBA has resorted to these 'second rounds' of dealing only two or three times a year. "Going forward, we anticipate that second rounds of dealing will be more frequent.""Given this, we intend to formalise the arrangements for these operations, announcing at a set time each day whether further open market operations will be conducted and, if so, on what terms."