A trip around the world
in immediate payments
Colophon
Publication and Copyright: Clear2Pay nv/sa - June 2014
Editors:
Conny Dorrestijn, Head of Corporate Marketing & Analyst Relations, Clear2Pay Susan Feinberg, Feinberg FS Consulting
Contributions:
Guy McIntosh, Senior Consultant, Clear2Pay APAC Elena Whisler, Product Manager, Clear2Pay Americas Marijke Koninckx, Product Marketing Manager, Clear2Pay Mark Hartley, Chief Innovation Officer, Clear2Pay Warren Gardiner, Chief Strategy Officer, Clear2Pay
Design:
Kris Vandewalle, Marketing Execution, Clear2Pay
Images:
www.istockphoto.com
Production:
A trip around the world
in immediate payments
fast
of
5 4
Management Summary
The global banking community is awash with national fast(er) payment initiatives. Some are well established having been around for many years, while other countries continue to ponder what they should do about it, if anything. However one thing is clear, the industry does not have a single definition of what a ‘faster’ payment is; is it a real-time payment, an immediate payment or even a near real-time payment?
This paper offers a definition of fast payments and reviews a number of global offerings that fit the bill. In its purest form, a fast payment system is a domestic, inter-bank, purely electronic payment infrastructure into which irrevocable funds are transferred from one bank account to another and where confirmation back to the originator and receiver of the payment is available in one minute or less.
Fast Payment Innovation Index
The end-to-end payment processing time is of course a critical decision factor in reviewing fast payment initiatives, but speed alone adds very little value to the end customer. For this reason, each of the global initiatives reviewed are also rated against a Fast Payments Innovation Index. Not only does this assess to what extent the scheme meets mandatory requirements as stated in the definition above, but also the level of support for highly desirable added value such as universal access, fast settlement, 24x7 availability or usage of ISO standards. Of equal importance is the ability of a domestic or regional fast payment scheme to promote and foster innovative solutions running on top of the scheme such as for example extended B2B remittance or alternate identifiers. Modern Fast Payment systems such as UK Faster Payments or Swiss SIC have truly revolutionised the payment environments in their respective countries, while many others have been happily running for many years, including the Japanese Zengit System or the Brazilian SITRAF payments system. Each solution has had its own implementation drivers ranging from an appetite for leading-edge technology, to high inflation rates, or sometimes slow and unreliable domestic postal systems. A multitude of fast payment initiatives in different stages of development can be found in Latin America (Brazil, Chile, Mexico, etc.) and Asia (India, Republic of Korea, Japan, China, Singapore, Australia, etc.) and also across much of Europe (Switzerland, Denmark, Sweden United Kingdom and Poland), but it is notable that a financial powerhouse like the United States is still defining its recipe.
Innovation is key for success
For banks to fully leverage their competitive advantage using fast payment schemes, just responding to a government mandate is not sufficient. To maximise the return on investment, it is key to focus on bank-specific innovative services: making the initiation of non-automatic payments easier, facilitating the entire transaction value chain while enhancing and enriching payments information. Of course, we at Clear2Pay understand that rolling-out new payment systems is not a minor task, It has implications on design, development, implementation, maintenance and customer service. The payments platform must be able to conduct fraud and money-laundering checks in real-time, make sophisticated routing decisions, manage exception processes, be flexible enough to deal with the continuously changing regulatory climate and needs to be scalable as well as reliable to ensure 24x7 availability. The industry is proving that when all stakeholders
co-operate in true partnership much can be achieved.
Management Summary � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �5 Contents � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �7 Introduction � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �9
A Definition of ‘Fast’ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �12
Fast Payment Innovation Index � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �13
Vintage Flavours of Fast � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 14
Japan . . . 15
Brazil . . . 16
Republic of Korea . . . 17
Innovating ‘Fast and Deep’ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �18 4 Star Establishments � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �22 Switzerland . . . 23
United Kingdom . . . 24
UK Faster Payments: a platform for Innovation � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �25 Hidden gems � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �28 China . . . 29
Mexico . . . 30
Chile . . . 31
CCA Chile – An early adopter moving fast � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �32 The Main Course � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �34 South Africa . . . 35
India . . . 36
Poland . . . 37
Sweden . . . 38
2014 Nouvelle Flavours of Fast � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �39 Denmark . . . 40
Singapore . . . 41
Still Working on the Recipe � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �42 Australia . . . 43
NAB and NPP: an opportunity for innovation � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 44 United States . . . 46 Fast Payment Innovation Index - a global view � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 48
Payment Innovation in Practice: Where’s the beef? � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �50 Sources � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �53
Acknowledgements � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �54
9 8
“Speed seems to get all the attention
in the emerging interbank payment
systems, yet creating end customer
value should matter most”
Warren Gardiner, Clear2Pay
Introduction
Many payment systems around the globe are undergoing fundamental changes to reflect the new realities of digital commerce, especially when it comes to the speed in which payment requests are processed. The electronic payment systems that were designed in previous decades can no longer meet all of the expectations of a society where devices with enormous computing power are literally in the hands of most adults and instantaneous response has become the norm, even when it isn’t necessarily required for business reasons. “Convenience, security, universal access, financial inclusion of previously unbanked populations, adoption of international standards, enhanced remittance capacity for B2B transactions and low cost are other important characteristics of emerging interbank payment systems but speed seems to be the one that gets all of the attention”, says Warren Gardiner, Chief Strategy Officer, Clear2Pay.
There are plenty of available sources to obtain the facts and figures and the nuts and bolts of how individual fast payment system work (we have provided a list of sources at the end of this paper). The purpose of this paper is to provide readers with a framework for understanding a wide range of payment system changes that are in production, planned or being considered; to examine the nuances of specific fast payment initiatives with a focus on innovation that adds value to the end customer. We aim to open up the dialogue on this very important topic and to inspire you with lessons learned through the interviews with some key players who are going ‘faster’ as we speak.
So why ‘flavours’ of fast?
Other discussions on this topic interchangeably use terminology such as ‘immediate’, ‘real-time’, ‘near real-time’ or ‘faster’ payments . The lack of a universally accepted term for these systems is a reflection of the fact that accelerated processing of payments is not consistent from one country’s payment system to another.
This is a result of many factors:
• The level of regulatory pressure being exerted to create a new, accelerated payment scheme for economic, societal and/or financial stability reasons
• The number of banks processing payments: a few, hundreds or thousands
• Whether the main impetus for accelerating payments is to protect the existing banking franchise from emerging competitors (including non-banks) in the grab for retail payments
• Or whether is it to provide a more robust and modern payments infrastructure to enhance the local economy, enabling it to compete on a global scale
• The need for financial inclusion in developing nations where a large percentage of the population is unbanked
• What the starting point looks like (i.e. how restrictive are the capabilities of current electronic payment systems)
Flavours of Fast describes a continuum of payment initiatives that fall into the grey area between slow, traditional forms of payment and truly real-time gross settlement (RTGS) payment systems that are designed for corporate and institutional high value payments. Fast is not inherently innovative. The question is how banks can and should innovate by offering additional value with new payment and payment-information services to end customers. Without taking a customer-centric approach, simply posting payments faster has limited value. And in some cases, providing faster information about payments with certainty of timing for future settlement has as much value as posting, clearing and settlement those payments on a fast basis.
Fast is in the eye of the beholder. It is relative, both across time and based on the expectations of the participants in the payments value chain. What is called ‘Faster Payments’ in the UK might seem slow to bankers in Japan and incredibly fast to bankers in most of the rest of the world. In trying to describe this continuum of fast, we could have easily chosen the analogy of transportation. Three hundred years ago, fast was riding a horse from one village to another, slow was walking the same distance. What was fast then is almost never considered fast now, but even that is coloured by ‘local’ expectations. If you live in a remote jungle or mountainous area, horseback might be as fast as it gets. Another example would be high-speed rail: we all know that what is called high speed in North America is laughable to most Europeans and Asians. But it is important to remember that speed is not the only criteria used when choosing a transportation method. Sometimes, slower provides sufficient value to make it the right choice. Faster isn’t always better, both in transportation and in payments.
What is called ‘Faster Payments’
in the UK might seem slow to bankers
in Japan and incredibly fast to bankers
in most of the rest of the world.
Back to the question then, why ‘flavours’ of fast? The analogy of food fits very nicely into our continuum. Some dishes are described as spicy, others not so much. But just as fast is in the eye of the beholder, so is spicy. It is relative and based on ‘local’ expectations. And, to take this analogy to another level, globalisation has affected what people perceive as spicy. Just like ‘spicy’ foods from many countries have spread around the globe resulting in tastes changing over time, ‘fast’ payments are doing the same but with modifications to fit the specific needs and expectations of the local population and the financial system.
A Definition of ‘Fast’
A few industry experts have made attempts at definitions of what they call real-time (which is not really real-time), immediate (which is not really immediate) or faster payments; but not surprisingly, these definitions are inconsistent.
Our definition is:
Flavours of Fast excludes payments that flow through the card networks, ‘traditional’ RTGS payments (high value between banks or between corporations and banks) and any payment that begins as a paper cheque or some other manual form. Flavours of Fast also excludes digital currency exchanges and closed loop payment schemes, although there may be optional value added services on a closed loop basis that become extensions of a fast payment system. At some point in the future, a logical progression would be the linkage of domestic systems to create one or more cross border fast payment systems.
Based on this definition, the many flavours of fast payments as they are being implemented in various countries include Person-to-Person (P2P), Business-to-Business (B2B), Person-to-Business (P2B) and Business-to-Person (B2P) as well as government payments. They can be initiated online, on a mobile phone or tablet, by batch transmission of payment instructions to the originator’s bank or clearing house or through some other form of electronic communication. The payments can be credits or direct debits. And, while posting and confirmation takes place in a ‘fast’ environment, settlement may be just as fast as posting or be delayed. Indeed, some of the flavours of fast include fast batch processing and settlement. Because of local practices, priorities and privacy concerns, some fast payment systems include the ability to pay a receiver using an alternate identifier, in other words, something other than the bank account number. This is especially true in initiatives that are focused on facilitating account-to-account mobile payments.
Domestic, inter-bank (i.e. not alternative payment schemes),
purely electronic payment systems in which irrevocable funds
are transferred from one bank account to another and where
confirmation back to the originator and receiver of the payment
is available in one minute or less.
Fast Payment Innovation Index
Extended B2B remittanceAlternate Identifier
Batch and Individual Payments Fast Settlement
Optional features maximising customer value and innovation
5 Meets all features
4 Meets all highly desired and one or more optional
3 Meets most highly desired and optional
2 Meet some highly desired or optional
1 Meets required features only
Highly desired features enhancing customer value and innovation Required features Legend: Scoring: Universal Access ISO standards (20022 or 8583) 24x7x365 Interbank Account to Account <1 min End-to-end Irrevocable
Ideally, a payment system would operate in an environment in which the vast majority of financial institutions in a specific country participate either directly or indirectly, 24 hours a day, 7 days a week, 365 days a year. Without such universal access, consumers are unable to predict which payments will be eligible for ‘fast’ processing and therefore, be more likely to use a card-based or alternative payment scheme. The reality is that most new fast payment systems are being implemented in phases, with bank participation being optional for both initiation and receiving; and with some participants unable (or unwilling to bear the cost) to maintain connectivity to support ‘always available’ fast payment services.
In order to provide a framework for comparison and discussion, Clear2Pay has developed a Fast Payment Innovation (FPI) Index. This index measures the potential for innovation based on the current or proposed design of the fast payment system. The innovation doesn’t come strictly from being able to process payments more quickly – it comes from the service overlays that individual banks or groups of banks create to add value to end customers.
The spicier the score, the higher the potential for innovation.
13 12
Vintage Flavours of Fast
Like fine wine or mature cheese, some fast payment systems have been around for a long time. Given Japan’s well-deserved reputation for leading-edge technology and business efficiency, it is not surprising that the Japanese Zengin payment system was far ahead of its time when it was introduced in 1973. The Republic of Korea (South Korea) introduced a fast payment system in 2001, reflecting early demand for efficient, consumer online payments. The third mature fast payment system we will explore in this paper is Brazil’s SITRAF (Funds Transfer System) which has been providing fast payment services since 2002. The idea that Brazil is further ahead than most of the developed world in electronic payment systems may surprise some readers but there are logical reasons for this development which we describe in the SITRAF profile below.
You will note that the FPI scores for the original fast payment systems described here are not as high as some of the others profiled in this paper. Given the timeframe during which they were developed, that is understandable. As these systems evolve to include ISO standards and meet contemporary customer demands, their scores will undoubtedly rise.
Operated by:
Japanese Banks’ Payment Clearing Network (Zengin-Net), association owned by banks
Official website: www.zengin-net.jp
Government Involvement: Central bank (BoJ) settlement
Ave daily volumes/value: 6 million/ ¥ 11 trillion
Speed of posting to accounts: Real-time
Speed of settlement: End of day net settlement for non-RTGS payments (over maximum value)
Maximum value: 100 million yen
Individual or batch payments: Both (batch usually future dated)
Operating hours: 08.30 - 16.40
Payment applications: All non-card based electronic payments 3 peppers: 6th generation in 2011
The original fast payment system is Japan’s Zengin. The Zengin system allows consumers and businesses to initiate fast domestic payments and collections (direct debits) using a number of methods ranging from paper based instructions and ATM transactions (neither of which fits our definition) to online and mobile payment initiation. As the system has evolved over time, virtually all deposit-taking financial institutions in Japan now participate in the Zengin system, which processes payment requests in real-time during normal business hours.
Zengin is notable not only for the early development of fast payments but also for its commitment to continued innovation since 1973, adapting the system to changing consumer and business behaviour as well as to the evolution of thinking on the topic of payment systems risk by global and national regulators. Zengin-Net’s mission statement includes the following statement: “We aim to realise a clearing system that responds flexibly to environmental changes and is able to continually undergo innovation.” While the speed remains the same, Japan’s flavour of fast has changed with the times.
With the Sixth Generation Zengin System, implemented in late 2011, Japan now has a fast payment system that supports bulk and individual message payment requests, a dual scheme that supports both net settlement and real-time settlement based on value (RTGS for payments greater than 100 million yen) and optional use of XML-based formats including ISO20022 for certain message types.
Japan
Zengin System
Operated by: Camara Interbancaria de Pagamentos (CIP), non-profit association owned by banks
Official website: www.cip-bancos.org.br/cip/solucoes/sitraf.html
Government Involvement: Central Bank Net settlement
Ave daily volumes/value: 930,000/16.1 billion reales
Speed of posting to accounts: 97% released in < 1 minute
Speed of settlement: Continuous net settlement
Maximum value: 1 million reales
Individual or batch payments: Individual
Operating hours: 07.30 - 17.00
Payment applications: Credit transfers - TED (Transferência Eletrônica Disponível) 2 peppers: Not available 24x7x365
By any measure, Brazil is the largest economy in Latin America. Its payment systems have evolved in a unique fashion because of the country’s particular geography, infrastructure, and economic history. Brazil is a huge country with an area larger than Europe (excluding Russia), resulting in a banking system that was traditionally dominated by regional banks. Transportation and postal systems were slow and unreliable and much of the population was unbanked, resulting in low adoption of cheques and other paper-based payments. These factors, combined with a history of hyperinflation in the late 20th century, resulted in an urgent need to develop efficient, electronic payment systems with fast (near immediate) settlement long before any other country in the Western hemisphere.
At its worst, the inflation rate exceeded 4000% in 1990. It is hard to imagine that any consumer or business that was expecting a payment would wait for a cheque to arrive in the mail under these circumstances. So, it was logical that Brazil would be among the first countries to develop a real-time electronic payment system. Investing in automation of financial transactions for both efficiency and liquidity purposes has been of the highest national priority since the Brazilian financial crisis of the early 1990s. All of the electronic payment systems in Brazil share the same backbone and private network (RSFN) and messaging is XML-based. The intention to move to ISO20022 standards for payment messaging was announced in 2010.
Brazil
Funds Transfer System - SITRAF
Live 2002
Operated by: Korea Financial Telecommunication & Clearings Institute
Official website: www.kftc.or.kr
Government Involvement: Central Bank oversight
Ave daily volumes/value: 46 million/KRW 33 trillion
Speed of posting to accounts: Immediate
Speed of settlement: Deferred Net (next day)
Maximum value: KRW 1 billion (corporate), KRW 100,000 (retail)
Individual or batch payments: Individual
Operating hours: 24x7x365
Payment applications: All credit payments, mobile, online 2 peppers: Lack of ISO adoption
Since the Korean banking industry first introduced the Electronic Banking Payment System (sometimes called HOFINET), the country has seen a very high mobile penetration among its population. This has led to the system rapidly becoming the vehicle for mobile payments, driving dramatic growth rates and eclipsing other electronic payment methods.
Republic of Korea
Electronic Banking - HOFINET
Live April 2001
The SITRAF payment system, first introduced in 2002, is a hybrid, continuous net settlement system used for relatively high value transactions between 5,000 and 1 million reales (equivalent to approximately EUR 1,500 – EUR 300,000). Most retail payments are settled through another (not fast) payment system operated by CIP called Siloc; payments of higher value are settled through the Brazilian RTGS system, called STR. Although SITRAF is not primarily a retail payment system, it does fit the Flavours of Fast definition of a non-RTGS, fast (<1 minute) payment system. It is expected that much of the future innovation in the Brazilian payments environment will take place in retail payment systems that are not fast or in non-bank alternative payment schemes. The question is whether the Brazilian banking system can apply its expertise and heritage in fast payments to a broader set of transactions.
17 16
Tino Kam
EMEA Corporate Payment Solutions
Royal Bank of Scotland
Vanessa Manning
Head of EMEA
Payments & Cash Management
Royal Bank of Scotland
Innovating ‘Fast and Deep’
Implementing faster payment schemes for the benefit of customers
RBS is well-positioned to talk about ‘flavours of fast’ or real-time payments, having helped its customers access Faster Payments (FP) in the UK, G3 in Singapore and, gearing up for a roll-out of the New Payments Platform (NPP) in Australia. As a UK-based bank with an international focus, RBS intermediates on 80% of the world’s trade flows, directly supporting corporate and institutional clients across its extensive country network,
In just five short years, Faster Payments has established itself in the UK as the easiest way to move money at any time – simply, quickly and reliably. It has led to almost two in five people, who use internet or phone banking, make payments after 5pm during the week, while one in five move money during the weekend. One in nine people say they often make payments after midnight. Then, as recently as March 2014, we saw the introduction of another faster payments initiative, this time in Singapore with G3 FAST, which will also support bulk payments and e-mandates using the standard global messaging format (ISO 20022 XML). And we have already seen innovative e-commerce and m-payment solutions on the back of this.
Speaking with Vanessa Manning, Head of EMEA Payments & Cash Management at RBS Global Transaction Services, and Tino Kam, in charge of innovative payment solutions for corporate clients in her team, it becomes clear that RBS has a unified approach and can provide three essential lessons for any bank involved in ‘faster payments’ initiatives:
1. Prepare through participation: Engage actively and relentlessly
in the regulatory, industry and standardisation forums and act
as the voice for your customers.
2. Leverage: Any investment required for regulatory compliance
is an opportunity for change – both to review and improve
internal efficiency as well as enhancing the client’s proposition
and experience.
3. Innovate: Regulation can be an impetus for innovation, use the
organisational momentum to innovate with, and for, customers.
Be prepared and participate
Vanessa Manning says: “Through our industry engagement and product management teams, we constantly monitor what happens in the industry by participating in industry and regulatory boards, centrally as well as locally through our people on the ground in the global markets. For example, as members of the UK Payments Council, we were uniquely positioned to provide insight into the development, timetable and roll-out of Faster Payments to the relevant teams within the bank at the time. Equally, we used our client insight events to review and validate our customers’ input and requirements from the FP initiative back to the Council for consideration.” “In the case of Faster Payments, we took the case for immediate payments from a UK and
international perspective into a group-wide project, to ensure that we have the right capabilities, technology infrastructure and organisational framework in place, and are lined up with the necessary client focus.”
Leverage compliance as opportunity for change
Regulation and compliance with industry-wide initiatives such as faster payments’ schemes lead to innovation among financial institutions.
“For example,” says Tino Kam, “regulatory changes such as SEPA implementation can drive innovation of new services for the benefit of our clients. So when we embarked on the SEPA project, we decided to work with a strategic technology partner who could standardise our global payment processing requirements. We have found that in Clear2Pay as well as other partners. With Clear2Pay, as a result of our collaboration for the Open Payment Framework (OPF) deployment in Europe for SEPA, we were then able to leverage our combined mutual technical and product expertise to accelerate our delivery and time to market of our G3 implementation in Singapore.”
“The partnership with Clear2Pay
has allowed us to meet our clients’
needs, and in a secure way,
as other jurisdictions start to roll out
24/7 faster payment schemes.”
21 20
Innovate for and with your clients
The G3 project in Singapore has only been live for two months at the time of going to print, but already RBS has launched two sector specific innovative solutions on the back of this immediate payments’ capability, as outlined below.
Consumer Group Client
Suppliers of products to retail outlets across Singapore, varying from ‘mum and pop shops’ to large supermarkets, were traditionally operating on a ‘cash-on-delivery’ basis, with the ensuing problems of security of cash handling and the accounting issues when the cash was delivered back at the office – safekeeping, accounting, cash flow, etc.
With the new G3 solution, RBS clients in this segment can ask the shop keepers to implement a FAST credit transfer and provide instant notification to both the originator, sales person and any other relevant party in the company to confirm and secure delivery. Direct debit arrangements can be made as well through the same scheme, and complete payment details can be sent with the enhanced G3 formats for accounting and reconciliation purposes. For the customer, this means guaranteed funds up front, improved cash flow, improved STP and productivity. In short, all parties benefit from G3 as this is where speed, certainty and convenience meet.
Travel Association & G3
This RBS client is an international trade association representing more than 200 travel agents in over 100 countries. Debtor management can be a widespread issue for this type of business where airline tickets are sold by agents and only issued to travellers upon receipt of payment, usually by cash or debit/credit card. For this particular client, credit monitoring had been a key challenge, since it was done manually and involved checking bankers’ guarantee validity or status of payments – all time-consuming and open to human error.
Under the new G3 scheme, RBS supplied this client with a solution whereby the travel agents simply initiate a FAST credit transfer or set up direct debit arrangements. The travel association can initiate real-time direct debits for each ticket issued. The solution generated instant benefit for the travel agents since they saved on banker guarantee fees. While the travel association received guaranteed funds upfront, the faster turnaround time of the ticket for the end-user improved customer satisfaction levels, making repeat bookings more likely. The client further benefitted directly from improved debtor management and ease of tracking and reconciliation. “Clear2Pay already provides the operating payments engine for G3 itself and, similarly, for our Multi Bank Solution (MBS) in China,” says Vanessa Manning. “MBS enables RBS’s clients to have a single entry point to reach more than 100,000 domestic branches across China. The partnership with Clear2Pay has allowed us to meet our clients’ needs, and in a secure way, as other jurisdictions start to roll out 24/7 faster payment schemes.”
4 Star Establishments
Of all of the flavours of fast that we have reviewed, we identified only two payment systems currently supporting 4-pepper levels of innovation according to the FPI scale. Payment
organisations in these two very different countries have taken bold steps during the past decade to make fast payments a reality and to position their respective banking sectors to be key players in payment innovations. Much has been written about UK Faster Payments. It is probably the best known (and best marketed) of all of the flavours of fast. Fast payment developments in Switzerland are less celebrated but no less impressive. Long been known for its efficiency, precision and strong banking sector, Switzerland developed a fast payment system called SIC (Swiss Interbank Clearing System) which represents one of two RTGS systems profiled in this paper that support both traditional, high value payments and retail payments.
Operated by: SIX Group, owned by banks
Official website:
www.six-interbank-clearing.com/en/home/payment-services/sic.html
Government Involvement: Swiss National Bank settlement and oversight
Average daily volumes/value: 1.7 million/122 billion Swiss Francs
Speed of posting to accounts: Real-time
Speed of settlement: Real-time
Maximum value: NA
Individual or batch payments: Individual
Operating hours: 24x7 (until 16.15 for current day settlement) Payment applications: P2P, B2B, Bill Pay, P2B, B2P – Credit transfers 4 peppers: Major overhaul to SIC4 underway
Switzerland’s SIC RTGS payment system processes both retail and wholesale payments on a real-time basis. By leveraging the RTGS system for low value payments, the Swiss banking system has avoided creating a separate infrastructure for fast retail payments, is able to take advantage of economies of scale and can pool liquidity across both types of payments. SIC also operates a separate Euro payment clearing system called EuroSIC.
SIX Group’s mission statement is focused on efficiency and competitiveness: “SIX sets global standards with first-class infrastructure services for the financial sector. Our technical knowledge, innovative drive, and service quality allows us to increase the efficiency and competitiveness of the financial centre, making us the preferred partner for our clients.”
With the current SIC4 initiative to replace the 27-year old original SIC infrastructure underway, SIX is positioning the Swiss domestic payment system for greater innovation, flexibility and efficiency and to enable better integration with regional and global payment schemes. The first migration to the new architecture will be EuroSIC in 2015, followed by the SIC domestic system in 2016. Included in this initiative is the gradual migration to ISO20022 standards by 2018.
Switzerland
Swiss Interbank Clearing - SIC
Operated by:
Faster Payments Scheme Ltd, non profit association, owned by banks, runs on VocaLink real-time platform
Official website: www.fasterpayments.org.uk
Government Involvement: Central bank settlement and oversight
Average daily volumes/value: 2.9 million/£2.3 billion
Speed of posting to accounts: 15 second confirmation, posting within 2 hours
Speed of settlement: Deferred net settlement, 3 cycles per day
Maximum value: £100,000
Individual or batch payments:
Both (Direct Corporate Access supported by some banks)
Operating hours: 24x7, 365 days
Payment applications: B2B, P2P, B2P, P2B, Bill Pay 4 peppers
Faster Payments has revolutionised the payments environment in the United Kingdom by establishing a totally new, fast payment option for consumers and businesses, including some migration from traditional payment systems (e.g. BACS with funds taking up to 3 days to be available to beneficiaries). With now universal access through direct or indirect participation by virtually all UK banks and the convenience of access at any time of day or week, end users have embraced Faster Payments at rapidly growing volumes.
The mission statement of Faster Payments includes a focus on innovation and development of additional services. This is more than just talk: the Faster Payments system has become the backbone for a number of innovative payment solutions including Paym, a mobile payment scheme to be offered by the majority of UK banks in 2014 which uses mobile phone numbers as alternative identifiers; Pingit, a family of proprietary solutions offered by Barclays to customers and non-customers for P2P, mobile point of sale and mobile bill pay; and Zapp mobile and ecommerce solutions to be offered later this year through a variety of UK banks and operated by a wholly owned subsidiary of VocaLink. The true test of innovation with these new solutions is twofold: will they become the preferred method of payment for consumers and merchants over traditional card-based payments and can they compete on a cost-basis with alternative payment schemes that seek to disintermediate the banks.
United Kingdom
UK Faster Payments
Live 2008
25 24Simon Cox
Independent Payments Expert
UK Faster Payments: a platform for Innovation
With the UK’s Faster Payments having been live for some years, we interview Simon Cox, who was from 2005 to 2012 responsible for Innovation & Application Strategy at The Co-op Financial Services. During those years the bank implemented Immediate Payments services on the back of the UK FP scheme. Currently Simon Cox is consulting more broadly on banking system strategy and shaping transformational/ innovative initiatives from a technology perspective to meet desired business outcomes.
Have you seen any real innovation since the UK Faster Payments scheme went live in the
banking community?
“In some way I think UK Faster Payments to date has been a quiet revolution. From a customer perspective there was a lot of confusion surrounding the three times a day clearing cycle and Faster Payments was really giving them something they possibly thought they already had. Having said that, as a scheme it is a success, the numbers speak and we see volumes continue to grow strongly by approximately 30% per annum.”
“To be frank since Faster Payments was launched I haven’t seen a huge amount of banking innovation using the platform, but I think this is all about to change with the advent of Mobile Phone/ Bank Account Number ‘hubs’ provided by Pingit, Zapp and Paypal. These hubs of course will utilise the Faster Payments platform and truly revolutionise how we pay for everything. At this point I don’t think anyone can predict how things will precisely unfold. There are still so many questions to be answered. Will the mobile app be an e-wallet and who will provide this? Your bank? Your Mobile Network Operator? WEVE? Apple? Google? Paypal? My view is that banks really need to get on the front foot to avoid losing a lot of wallet share if I can use that expression, though I think it unlikely that any type of organisation will dominate for quite some time.”
“Equally important, how will the payments business model evolve? Will the major banks lose their essential control over payment infrastructure in the UK? I think this will happen, though not that quickly. I just can’t see the changes in Payment Council governance or the Market Investigation Reference powers of the Payment Systems Regulator biting very quickly. The cost of card/ ATM transactions are pretty much the biggest inhibitor to new banking service providers starting up as they need to pass on these costs to their customers in high monthly account charging. I think the commercial model for retail payments will change mostly as a result of Pingit/ Zapp etc. vying for market share.”
The new payment mechanisms such as Pingit and Zapp that you mention have as much to
do with the smart use of payment data as with speed. How will they evolve?
“There is an explosion in customer purchasing/ payment data (including device/ location data) already today and it is not clear how this will be leveraged, managed and – most importantly - regulated. Who will do this best? Will banks start to build buying pattern indicators for their customers to assist with marketing and fraud prevention/detection? Could Credit Reference Agencies expand to become Personal Reference Agencies? Clearly there must be strong controls around how this incredibly rich data can be leveraged. My own view is that this data will help significantly with fighting fraud, which is probably the biggest issue with Faster Payments.”
“For example a payment hub engine could manage a payment process as follows: depending on transaction value or recent transaction a decision could be made to pull in extra ‘payment insight’ (from either internal bank or CRA systems) then depending on insight and definable rules the customer could be involved in confirming the payment using a mobile device. From a marketing perspective, the opportunities for banks or payment providers to build customer connectivity are almost limitless. All of the above is unbelievably invigorating and exciting and with so much up for grabs I think it begs the really big question for all the players in the mix on how to add value.”
Where on earth does today’s Chief Information Officer start?
“As a technology strategist I think an uncertain future requires or mandates flexible system components. Whilst at the Co-op Bank I helped select and implement Clear2Pay’s payment hub (OPF), but alas problems not relating to payment systems have blown the bank off course for now, hopefully only temporarily, but we will see... Since leaving the Co-op I have mainly focused on the Credit Union sector which I strongly believe needs a flexible payment infrastructure and one which would equip any small or start-up bank with essentially a ‘Payment Hub in the Cloud’.”
What are the prime lessons learned from having implemented a technology
infrastructure for Immediate Payments? (clarifying part of the payment hub
project)
“I think there were two important lessons. The first is to get the timing right for strategic
implementations. At the Co-op the initial implementation for Faster Payments was based on legacy, we considered a strategic implementation to hit the regulatory deadlines for Faster Payments but in the end spent a lot of money on a tactical implementation just to hit the deadlines with acceptable risk. Clearly there are more unknowns in strategic implementations as you are working generally with different technologies but the benefits associated with a flexible payment hub are very significant both in terms of cost/ timescale for development/ change projects as well as benefits arising from new business opportunities. In any geography which doesn’t have a low cost near real-time payment scheme I would recommend planning for this now rather than waiting for the regulation and possible missing out on the opportunity to implement a flexible payment hub due to timescales and risk.”
“Secondly, in on-going system “rejuvenation” or transformation projects, simplifying sub-system interfaces has significant cost advantages. In package implementations integration costs are typically the largest and in most bank infrastructures I think legacy payments systems along with MI and finance systems drive the majority of integration costs. Simplifying payment systems at an early point helps with both being able to deliver and control the cost of system transformation.” “And to be fair, I think during a difficult time for the bank it is important to recognise that the payment hub was implemented in relatively quick timescales. This had a lot to do with the collaborative way in which Clear2Pay works as a company – ultimately change is about people and organisations working together.”
Sheer curiosity, why do you think that in particular Credit Unions can benefit from faster
payment infrastructures?
“Governments see Credit Unions as an important sector for banking/payment services to the customer segments that are not well served by the universal banks today. This could be for a variety of reasons, whether these are customers that don’t manage their finances well and incur significant charges or are even financially and economically excluded. The problem for most Credit Unions is that their core platforms only link into the payment systems via corporate internet banking systems (typically in a fairly manual way) not even via Agency Banking arrangements which still are very much batch based.”
“A single Payment Hub ‘Cloud’ could not only facilitate a ‘proper’ faster payments capability for – in the UK alone around 400 - Credit Unions but allow a lot of bulk purchasing scale to be achieved with the universal banks. Whilst I do think Credit Unions should move towards mobile wallets, the basic payment infrastructure urgently needs putting in place first and the ability to transact immediate payments is one element of that. Interestingly I think such an infrastructure would benefit all small and start-up banks – my own view is that the current Faster Payments scheme for agency banks is scarcely fit for purpose. There is clearly much to do and I cannot wait.”
Hidden gems
The three countries profiled in this section are often omitted from other fast payment analyses. Not surprisingly for each has chosen a very different path toward offering its citizens and businesses faster and more efficient payment alternatives based on the particular needs and characteristics of the population and banking system. China, with a highly fragmented traditional banking system has begun to invest in the infrastructure and technology changes required to establish national electronic payment systems under the umbrella of CNAPS. The roll-out of the Internet Banking Payment System in 2010 provides for payments to be received within twenty seconds. The Banco de Mexico developed SPEI, a new RTGS system in 2004, which was designed from the start to handle both wholesale and retail payments, allowing Mexican consumers and small businesses to take advantage of fast payments. Chile, the smallest of the three, with a highly centralised banking system developed an online transfer capability (TEF) in 2008 that continues to be leveraged as consumer payment demands evolve.
Operated by: China National Clearing Centre
Official website: www.pbc.gov.cn/publish/english/
Government Involvement: Regulated by People’s Bank of China
Annual volumes/value: 2013: 476 million/ 6.45 trillion Yuan
Speed of posting to accounts: Within 20 seconds
Speed of settlement: Deferred net settlement
Maximum value: RMB 50,000 Yuan
Individual or batch payments: Individual
Operating hours: System operates 24x7, Availability varies by bank
Payment applications: P2P, some banks may offer additional services such as bill payment, direct
debits, internal corporate transfers (sweeps)
2 peppers: Lack of universal access, planned ISO adoption
China’s interbank clearing platform, China National Advanced Payment System (CNAPS), supports multiple payment application systems, the newest of which is the Internet Banking Payment System (IBPS), providing real-time retail payments. 132 banks participate in IBPS, representing all commercial banks that offer online banking services. An upgrade to CNAPS II is underway, which includes the adoption of ISO20022 messaging standards.
Between 2010 and 2013, IBPS experienced rapid growth in volume and value cleared, with the most recent annual statistics showing approximately 80% growth in both volume and value. Currently, IBPS remains a small component of the overall electronic payment environment in China. There is an expectation, however that banks and third party organisations will develop new products and overlays on the IBPS platform leading to higher market penetration.
China
Internet Banking Payment System - IBPS
Live 2010
29 28
Operated by: Banco de Mexico (Banixo)
Official website: www.banxico.org.mx/sistemas-de-pago/informacion-general/ sistemas-de-pago-de-alto-valor/interbanking-electronic-payme.html
Government Involvement: Owned and operated by the Central Bank
Average daily volumes/value: 700,000/640 billion pesos
Speed of posting to accounts: Maximum of 1 minute, 5 seconds end-to-end
Speed of settlement: Hybrid, clears and settles within seconds
Maximum value: NA
Individual or batch payments: Individual
Operating hours: System operates 22+hours/7 days a week, 19.00 (previous day) to 17.35;
availability varies by bank but must be available from 06.00 to 18.00
Payment applications: P2P, B2B, P2B, B2P, high and low value, mobile payments 3 peppers
Unlike most other flavours of fast we have analysed, Mexico’s SPEI system is operated by its central bank, Banco de Mexico (Banixco). The system was designed from the start to clear and settle a large volume of payments in real-time in order to provide safety and convenience to customers and to efficiently manage the liquidity of the bank’s participants. Banixco has taken a very firm stance in ensuring that the country’s banks make SPEI real-time payments available to all types of customers and for a broad set of payment types on an affordable basis.
The SPEI website includes daily connection statistics for every one of the participating banks so that consumers, businesses and banks can see whether a bank is connected during non-business hours or days. The screenshot below is an example of this industry transparency showing the connectivity on one particular business day for a small sample of banks.
SPEI also provides a key component of the Directo a México service that facilitates efficient cross border payment movement between the US and Mexico. In the future there are plans to support mobile payments without requiring the sharing of account information by registering the consumer’s mobile phone number with their bank.
The assertive stance of Banixco bodes well for future innovation in fast Mexican payments
including initiatives to shorten response time, improve throughput to support higher peak volumes
Mexico
Sistema de pagos electronicos interbancarios - SPEI
Live 2004
Operated by: Centro de Compensacion Automatizado (CCA)
Official website: www.cca.cl
Government Involvement: Regulatory mandate to eliminate float in 2007, Central Bank settlement
Average daily volumes/value: 430,000/$156 billion (the equivalent of €200 million)
Speed of posting to accounts: Receiving bank must respond within 10 seconds
Speed of settlement: Two times/day through RTGS
Maximum value: Approximately US$10,000
Individual or batch payments: Both
Operating hours: 24x7x365
Payment applications: B2B, P2P, B2P, P2B, Bill Pay, Mobile 3 peppers
The Chilean fast payment system is an example of a private sector response to a regulatory mandate to eliminate float in the original online payment system that was introduced in 2002. TEF was developed by the CCA and implemented in 2008 after only three months of development, allowing Chilean consumers and businesses to initiate fast retail payments with response time required within 10 seconds.
Innovation in terms of payment applications and services is strictly up to the bank membership of CCA and is expected to extend to mobile payments in the near term. The CCA also provides participants in the system with enhanced transparency by allowing them to search the CCA database for transactions submitted within the past 30 days.
Chile
Transferencias en Línea - TEF
33 32
Luis Feldman
Head of Operations & Development
Centro de Compensacion Automatizado - CCA
CCA Chile – An early adopter moving fast
“Oh, the beauty of being flexible, nimble and agile” was our first thought when diving into
immediate payments in Chile. This thought was only reinforced at the interview with Luis Feldman, Head of Operations at the Chilean payments processor CCA, who in 2008 launched Immediate Payments. After three months of internal development work - admittedly with some repairs to be done - Chilean bank customers could, from the first day in 2008, pay and receive in a 24x7 world. CCA has been a payments processor since 1996 and offered an efficient service to banks’ clients. However in 2001 both corporate and retail clients were complaining about the lack of speed, with some payments taking over 48 hours to be executed. On the behest of the regulators an industry project ensued and TEF was established on the drawing board: ‘Transferencias En Linea’ (Immediate Payments), with the aim to settle in less than 15 seconds, the time people find acceptable to wait for a PC screen to refresh with new data. Today CCA processes around 430,000 payments a day with an average daily value of around 200 million euros. Receiving banks must respond in 10 seconds and settlement takes place twice daily through RTGS. Payment services include business, personal, bill and mobile payments.
Feldman: “The regulators had many complaints about the lack of speed in payments so as early as 2001 we started to look at possible solutions. At that time however there were no industry solutions from technology providers for immediate payments, we could not even find something that came close so we had to embark on a full R&D project to define and outline a solution. As there was no standard solution, we decided to truly tune and customise it for the Chilean banks and market, with its own risks and complexities. We looked into the full end-to-end chain of payments processing, e.g. what to do when a payment cannot be completed. We have ensured as an ACH that the bank gets a message within two seconds that the payment was turned down. It is then up to the bank and its service levels to for instance offer a retry or notify the customer. STP, repair, enrichment, were all on the original menu and we have built on our initial service over time”.
Numbers talk
“Humbly, yet proudly I would say that we clearly have a successful model: in the very first year we grew over 100% in transaction volumes and today, seven years on, we grow by 20% year on year. On top of that we saw that initially banks used it simply for account to account payments, but since then we have seen banks building new payment offerings on the back of our immediate payments service in the domain of ‘fast track payroll’, etc. Over 99,9% of the banks active in Chile are participating in TEF and today they all offer a 24x7 service, only some second tier banks with a very limited number of bank accounts in Chile do not. We also saw that banks which were initially hesitant soon realised the value of immediate payments because customers figured out that the costs for online payments were way lower than those for individual checks.”
“The fact that we delivered
an immediate -industry wide-
payments service in 2008
within three months without
experience or reference,
sets us apart as a payments
innovator at that time”
When asked about the move to mobile and omni-channel Feldman concurs: “We have a new project around mobile as we see many non- and near-banks as well taking up deposit and savings accounts. There is a large demand from the under-banked community for banking services without checkbooks or credit, a pure debit and low value payments account. This can even mean paying for a taxi off a debit account by mobile. We are currently working on this and hope to announce a formal service later this year”.
Early adopter – lessons learned
As such an early adopter, the natural question is what have you learned from this and what would you do differently with the knowledge of today? “More than anything I am curious to find out how other schemes have fared or are expecting to achieve high customer adoption. How do they deal with pricing and security? At CCA for example we have an all-inclusive approach to fraud detection, whereby we share common fraud cases across our member banks. Is this something other schemes do or do they leave fraud as an issue to the individual banks to deal with? We are very keen on security and in our system in Chile we can hold any suspicious transfers in a type of ‘waiting account’ where we can do a double check on the identity of the account holder by use of the personal ID number. I would be keen to learn from other processors on how they approach the ever intensifying issue of security and identity fraud.”
Fast forward to the future
Fast forwarding, Feldman would like CCA to spread its wings and also manage payments originated in the mobile and credit card space and in different currencies such as Euros and US dollars. “I can only say that if you view our success in Immediate Payments in the light of being such an early adopter, with no reference, no experience, no technology providers to support us, our steep learning curve qualifies us for the next stage of payment innovation in Chile.”
“Sharing common
fraud cases
across banks
helps to fight fraud
The Main Course
The fast payment initiatives in these four countries have been covered in other publications on this topic. Each is making strides in strengthening the local banking sector’s ability to meet the emerging payment needs of its consumers and businesses. South Africa and India share a common challenge of meeting the needs of high rates of unbanked population and their fast payment systems have both been used to help meet that need. Unlike most other fast payment systems described in this paper, the Indian IMPS system started with a mobile application, providing the capability to generate fast person-to-person payments using a mobile phone. Poland and Sweden both introduced new fast payment solutions in 2012, with limited adoption in the initial phases of roll-out but plans for more extensive value added services going forward that should drive bank participation and consumer adoption.
Operated by: BankservAfrica
Official website: www.bankservafrica.com/PSO-Services/Real-time-clearing
Government Involvement: Managed by Pasa, the Payment System Management Body designated by South Africa Reserve Bank to manage and regulate payment systems, Central Bank settlement
Average daily volumes/value: 26,000/378MM ZAR as of Q4 2012
Speed of posting to accounts: Within 60 seconds
Speed of settlement: Deferred net settlement (hourly during the business day)
Maximum value: ZAR 5 million until 16.00, ZAR 250,000 during non-business hours
Individual or batch payments: Individual
Operating hours: System operates 24x7x365 availability varies by bank Payment applications: P2P, B2B, P2B, Bill pay, salary, online, mobile 3 peppers
The RTC payment system was developed by a small group of commercial banks with co-operation and approval of the Reserve Bank to establish a fast payment service for credit transfers between account holders of the participating banks. Current participation includes 6 of the 22 banks
offering payment services in South Africa; however, they represent the largest banks in the country. South Africa has made a commitment to move to the ISO20022 standard for payments processing, both for enhancing domestic payments as well as for the basis of the Southern Africa Development Community (SADC) Payment System Project, which has been established to promote regional interoperability for electronic payments among the 15 countries in the community.
Although RTC only represented 1% of total retail payment volumes and values as of 2012, the system has shown consistent growth since its introduction. The availability of fast payments that can be initiated using mobile phones is a key aspect of the banking industry’s efforts to reduce the very large unbanked population.
South Africa
Real-Time Clearing - RTC
Operated by: National Payments Corporation of India (NPCI)
Official website: www.npci.org.in/aboutimps.aspx
Government Involvement: Central Bank settlement
Average daily volumes/value: 84,000/Rs 547 million (more than doubled in 6 months)
Speed of posting to accounts: Real-time
Speed of settlement: End of day net settlement
Maximum value: Banks set limits if end-to-end encryption used, Rs 5,000 if not using encryption
Individual or batch payments: Individual
Operating hours: 24x7x365 Payment applications:
Mobile payments, P2P, Internet Banking, Merchant payments, Bill payment, ATM payments
2 peppers: Lack of ISO adoption
The Indian Immediate Payment Service (IMPS) was originally launched as an ‘instant’ mobile remittance solution in November 2010 with seven banks and has quickly evolved as a multi-channel, multi-dimensional payments platform with 59 Indian banks participating. The wide variety of payment applications and channels available is line with the mission of NPCI to offer ‘anywhere, anytime’ payment services and to integrate retail payment services so that they are: “inclusive, customer friendly, simple and easy to use, universally accessible, affordable, safe and secure”. IMPS also helps to meet the goal of the Reserve Bank of India (RBI) to electronify retail payments and to facilitate inter-operability of mobile payment systems based on the Reserve Bank of India Mobile Payment Guidelines 2008. Finally, IMPS is seen as the backbone on which the future of a full range of Indian mobile banking services will be established.
IPMS was initially developed with a requirement that users establish a mobile money identifier (MMID) in order to eliminate the need for sharing bank account information (alternative identifiers), however, the system now supports both MMIDs and account-based transactions. Over 58 million MMID’s have been issued for IMPS.
The Indian IMPS has shown a high level of innovation since its introduction, despite its low FPI score, which is a direct result of the absence of ISO standards. With as much as 40% of India’s total population of 1.2 billion being unbanked, providing universal access to basic payment services is a critical function for the future health of the banking industry.
India
Immediate Payment Service - IMPS
Live 2010
Operated by: KIR National Clearing House
Official website: www.expresselixir.pl
Government Involvement: Central Bank settlement
Average daily volumes/value: <1,000/3.1MM zł
Speed of posting to accounts: Near real-time (seconds)
Speed of settlement: Immediate
Maximum value: 100,000 zł
Individual or batch payments: Individual
Operating hours:
System operates 24x7x365, availability varies by bank (4 of 8 banks offer 24x7x365)
Payment applications: Bill payment, P2P, B2B, Merchant payments, mobile 3 peppers
The Polish national clearing house, Krajowa Izba Rozliczeniowa S.A. (KIR), introduced Express ELIXIR as the Polish version of Flavours of Fast in June 2012. Express ELIXIR supports only individual credit transfers, which are processed separately from the batch payment system also operated by the KIR. Uptake of Express ELIXIR has been disappointing both in terms of bank participation (only 8 of the 49 banks that participate in traditional retail clearing systems are offering fast payments) and in terms of volumes. Without a central bank mandate, the majority of Polish banks have not been able to make the business case to offer Express ELIXIR payment services.
Future plans for layering additional services on the system include the use of alternative identifiers to allow for greater convenience of mobile payments, integration with a planned national P2P mobile service and the possible addition of direct debits.
Poland
Express ELIXIR
Live June 2012
37 36
Operated by: Bankgirot (owned by 7 banks)
Official website: www.bankgirot.se/Default____12747.aspx
Government Involvement: System developed in co-operation with Central Bank
Annual volumes/value: 500,000 active users/1 billion SEK in first year
Speed of posting to accounts: Near real-time (within 15 seconds)
Speed of settlement: Multiple deferred central bank settlements per day
Maximum value: NA
Individual or batch payments: Individual
Operating hours: 24x7x365
Payment applications: P2P, mobile payments (Swish) 3 peppers
Bankgirot, an association owned by 7 banks operating in Sweden, developed the BIR fast payment solution in 2012. The key drivers for the development of the Swedish flavour of fast included the perceived need to adopt ISO20022 as a standard for SEPA and non-SEPA European payments, the competitive threat from non-bank payment providers and the demand from consumers for added value in payment services.
The initial focus on BIR is as the backbone for clearing and settlement for the mobile P2P payment initiative of the Swedish banks, called Swish. Longer term, BIR is expected to support other payment applications including ecommerce, payments between consumers and companies, and inter-bank transactions.
Sweden
Payments in Real Time
Live November 2012
2014 Nouvelle Flavours of Fast
In 2014, we have already seen the successful implementation of one new fast payment system, Singapore’s FAST, which went into production on a limited basis in March. With a major focus on consumer education and a highly level of financial sophistication among the Singaporean population, adoption has already exceeded expectations. Geographically distant but with a similarly sophisticated population, Denmark is establishing a new fast payment system to be available to consumers by the end of 2014. Nets, the operator of many of the existing Nordic electronic payment schemes, is introducing a system called Nets Real-Time 24x7 that will offer similar benefits to the other systems profiled here.
