1 / 26

Payments in the Americas  Comparing Experiences: « PE-ACH » Norbert Bielefeld Deputy Director

Payments in the Americas  Comparing Experiences: « PE-ACH » Norbert Bielefeld Deputy Director Atlanta – 8 Oct. 2004. Foreword. Purpose of « Panel 2 »:

Download Presentation

Payments in the Americas  Comparing Experiences: « PE-ACH » Norbert Bielefeld Deputy Director

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Payments in the Americas  Comparing Experiences: « PE-ACH » Norbert Bielefeld Deputy Director Atlanta – 8 Oct. 2004

  2. Foreword • Purpose of « Panel 2 »: « …focus on the experiences of building cross-border exchanges in Asia and Europe, with particular emphasis on their lessons for the Americas…. » • Europe The experience goes beyond « remittances », and is broader and deeper than « PE-ACH »

  3. Agenda • A vision • Defining SEPA • How it is being built • Baseline • Dimensions, constraints • Interim status • Lessons for the Americas • Remittances, more specifically

  4. Imagine… • A geographical area… • … where any customer could step onto any plane, paying the same price, getting the same service, regardless of the destination,… • Or: …make and receive any phone call, regardless of the distance, with the same convenience, and at the same price,… • Or: • …make and receive any payment with the same convenience, and at the same price…

  5. For payments… • Such an area will exist by 2010 at the latest • In the Single Euro Payments Area (SEPA): « Customers will be able to make and receive retail and commercial payments in euro with the same level of security, ease and convenience, than they do in their hometown » • Note: precise perimeter of « SEPA » is function of payment instrument considered (credit transfer, direct debit, cards, cash) • Can be: eurozone, EU, EU +EEA, +CH

  6. How banks build SEPA • A phased programme, • First to deliver pan-European instruments and schemes, • To be subsequently adopted by national systems, • At a pace determined by communities and supported by regulators, • This reflects customer demand rather than a pure « push » approach • EPC (European Payments Council) schemes to be attractive to operators, other market actors and their communities: market forces dictate the evolving landscape

  7. The banks’ focus • Continuation of plans to establish a genuine euro-cash area • During next 2 years, formulation of 3 pan-European « schemes » (rule books with data formats, rules, liabilities,…) for pan-European: • Credit transfers • Direct debits • Debit and credit cards • For voluntary adoption by market operators, and migration of national solution as decided by national communities, and required by customers • Delivery: 2008 - 2010

  8. The baseline… Retail payment transactions in the EU 25 (2002 data) Euro non-Euro Year 2002 (millions) EU12 EU13 EU25 Population 308 147 455 Credit Transfers 12.517 4.198 16.715 Direct Debits 10.200 2.833 13.033 57.8% Cheques 5.919 2.477 8.396 Debitcards 9.423 4.398 13.821 Creditcards 2.045 2.184 4.229 E-money 285 11 296 42.2% ATM 6.147 3.301 9.448 Total 46.536 19.402 65.938 Payment market-share 70.6% 29.4% 100%

  9. …is complex

  10. …very complex

  11. Domestic transactions* Cross-border transactions billion transactions billion transactions 0.8 100% = 100% = 62.4 Others** E-money 1.5% Cheques 0.3% 0.2% Credit transfers 16.5% Direct debits 21.4% Card payments are by far the most frequently used means of payment for cross-border transactions Cheques 15.5% Credit transfers 28.1% Card payments 83.2% Cash withdrawals 13.7% Card payments 19.5% • * Estimate based on 1999 figures, with a CAGR of 6% • ** The "others" category include bills of exchange and other paper based transactions • Source: EFMA; SWIFT; TARGET; ECB statistics; McKinsey analysis And: Cross-Border = 1,2% (EU15, 2001)

  12. Dimensions, constraints • Multi-payment instrument approach: credit transfers, direct debits, debit/credit cards • Highly efficient, existing non-cash payment systems • « cross-border » solutions in operation for over 15 years • Any new solution to be full STP, end-to-end from the beginning • Profound re-engineering of payment systems to ensue • Standardization (different levels): significant work item • Technology is not a barrier • There is no obvious business case!

  13. Acquirer Processor Issuer Processor Clearing Merchant Cardholder Issuer Acquirer E.g.: current structure for cards Proceeds • Traditional POS • Magnetic strip card • Emerging M-V, TV commerce • Chip cards Country 1 International Switch Country 2 International Switch Country 3

  14. Acquirer Processing Issuer Processing Clearing Cardholders Merchants Issuer Acquirers • Traditional POS • TV commerce • M commerce • E commerce Cards: medium term structure Proceeds • Existing products • Chip cards • Digital Wallet Country 1 Country 2 Country 3

  15. BANK F BANK G BANK H Credit transfers: PE-ACH framework -owner &/or user -direct participant settlement bank BANKs L,M,N BANK I ACH Tech. Facilitators BANKs O,P,Q NCB -non-settlement banks -direct participants -settlement bank -direct participant -user PE-ACH BANK A • -settlement bank • -direct participant • -owner • -user BANK C -settlement bank -direct participant -owner -user BANK B or F.I. Grouping (with banking licence) BANK D BANK E

  16. Market Practice A User Group Specific Market Practice B User Group Specific PAN - EUROPEAN ACH SLA MODEL ex. MGS Type: MT103+ Amount : € 12.500 STP Beneficiary Account Identification: IBAN + BIC Guaranteed Execution Timeframe Others.. PAN - EUROPEAN ACH SLA MODEL Market Practice ...X User Group Specific Core Market Practice: Common Standard Code ex. All the elements of the Common standard Code maintained except the Amount : € 250.000 ……... ex. …... Amount : € 250.000 STP Beneficiary Account Identification: BBAN (Clearing Code + Acc. number ex. RIB) ….. Credit transfers going forward: «Concentric Model»

  17. An essential component • Pan-European settlement systems • TARGET1: interlinking of national RTGS systems • EBA Euro1: Lamfalussy-compliant net settlement system (settling in TARGET) • General Functional Specifications of TARGET2 debated and agreed (although this goes beyond retail and commercial payments) • Planned deployment of TARGET2 as Single Shared Platform: 2007

  18. Interim status • Conventions for basic credit transfers (Credeuro) and their interbank handling (ICP) implemented, architecture for clearing defined (PE-ACH), 1st operator active (STEP2) • Cards: conditions for SEPA- wide issuing and acquiring,and dissociation of branding and processing, spelled out. Under implementation with schemes • Significant work underway in Card Fraud Prevention • A high level description of a pan European Direct Debit agreed • Conditions for re-engineering of cash handling and distribution spelled out

  19. Lessons for the Americas? • (this is a quote from the programme!) • What is comparable, and less so • Scope, approach: priority to self-regulation? • Going forward: need for catalyst, dialogue

  20. What is comparable, and less so • Multi-country requirement • Multi-currency • Heterogeneous payment systems • Political, society-level vision, ambition? • Multi-country implementation: legislative, regulatory, self-regulatory capabilities? • Multi-payment instrument? • End-to-end, full STP initiation and delivery? • Cohabitation, or migration of national schemes?

  21. Scope, approach • Pre-condition: remove any ambiguity about scope, objectives • Who are the drivers? Who are the stakeholders? • Originators and beneficiaries: should be equal partners • Identifying and removing obstacles • Making the most of existing systems • Technology: an enabler, yet not a constraint

  22. Going forward • « Public », « private »: what balance? • Regulation can have perverse effects: lessons from Regulation 2560/2001 • There are business cases and business cases • Structured dialogue: a necessity

  23. Remittances: key hurdles • For « customers » • Access to market information • Access to banking services • Access to transaction information • Access to redress procedures • The macro-economic questions • Untapped lever for economic development • Potential feeder for criminal activities • Unrecognized opportunity for social integration

  24. Remittances: challenging regulators • Should the remittance business be regulated? • Who should bear that burden (related costs)? • What balance of public and private initiatives to enhance conditions in the market? • How to foster competition, motivate financial institutions to play a more active role? • Should public intervention foster the infrastructure? • How to move away from cash (without putting the burden on remitters and their recipients)? • How to move beyond remittances?

  25. The WSBI action plan in remittances • Contributing to formulation and implementation of policy: overseeing market structure evolution and monitoring performance, enhancing the legal and regulatory framework, setting standards and defining infrastructure, encouraging and facilitating • Motivating players: working closely with Members to identify and qualify opportunities, creating partnerships, setting best practice • Delivering the value: establishing a SLA framework as the benchmark, facilitating redress and dispute resolution, developing a toolkit for Members

  26. For further information: www.savings-banks.com e-mail: info@savings-banks.com

More Related