Flavours of Fast

A trip around the worldin immediate payments

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Edition 2 - May 2015 - © 2015 FIS and/or its subsidiaries. All Rights Reserved.

Edition 1 - June 2014 - © 2014 Clear2Pay n.v.

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Contact: [email protected]

Editors:

Conny Dorrestijn, Global Payments Marketing, FIS

Susan Feinberg, Feinberg FS Consulting

Contributions:

Guy McIntosh, Payments Consultancy, FIS APAC

Elena Whisler, Product Management, FIS Americas

Barry Tooker, Product Management, FIS Americas

Marijke Koninckx, Payments Product Marketing, FIS

Mark Hartley, Global Strategic Investments, FIS

Warren Gardiner, Payments Product Marketing, FIS

Design:

Kris Vandewalle, Design & Artwork Production, FIS

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A trip around the worldin immediate payments

5

Management SummaryThe global banking community is awash with national fast(er) payment initiatives. Since we published the original version of this paper, the impetus for fast payments has only accelerated with progress in Denmark, Australia, the United States and the European Union. Some systems 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 Zengin 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 Africa (Nigeria, South Africa), 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 as a payments technology vendor 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.

Will fast payments empower innovation?

7

Management Summary � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 5

Contents � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 7

Introduction � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 9

So why ‘flavours’ of fast? � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 10

A Definition of ‘Fast’ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 12

Fast Payment Innovation Index � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �13

Vintage Flavours of Fast � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 14

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Republic of Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

4 Star Establishments � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 20

Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

UK Faster Payments: a platform for Innovation � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 23

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Hidden gems � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 30

Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

CCA Chile – An early adopter moving fast � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 33

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

The Main Course � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 38

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Poland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Innovating ‘Fast and Deep’ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 43

Still Working on the Recipe � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 46

Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

NAB and NPP: an opportunity for innovation � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 50

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Fast Payment Innovation Index - a global view � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 54

Immediate Payments in Practice � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 56

Innovation: key success factor � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 57

Lessons learned around the world � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 58

Sources � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 60

Contents

8

“Speed seems to get all the attention in the emerging interbank payment systems, yet creating end customer

value should matter most”Warren Gardiner, FIS

9

IntroductionMany 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, FIS.

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. Other publications on this topic have included a number of payment systems or rumoured payment systems that we do not address in this paper. This is for a number of reasons including:

• Thesystemdoesnotmeetourdefinitionoffastpayments(e.g.TaiwanFISC-FISwhichisnotdesigned to support retail payments).

• Thedevelopmentofasystemhasnotbeenconfirmedpublicly(e.g.NewZealand,Colombia)• Availableinformationonthesystemistoolimitedforustomakeadetermination(e.g.Iceland)

The 2015 update of the paper reflects the many conversations we have conducted with industry stakeholders from New York to Edinburgh to Sydney to Johannesburg to Santiago. We aim to continue 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’, ‘instant’ 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 more timely 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

10

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.

11

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 not too distant future, a logical progression would be the linkage of domestic systems to create one or more cross border fast payment systems. As Europe begins to move ahead with one or more pan-European fast payment initiatives, we may see a true cross border system within the decade.

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.

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.

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.

12

Extended B2B remittanceAlternate Identifier

Batch and Individual PaymentsFast Settlement

Optional features maximising customer value and innovationHighly desired features enhancing customer value and innovation

Required features

Legend:

Universal AccessISO standards (20022 or 8583)

24x7x365

InterbankAccount to Account<1 min End-to-end

IrrevocableSupports Retail

5 Meets all features4 Meets all highly desired and one or more optional3 Meets most highly desired and optional2 Meet some highly desired or optional1 Meets required features only

Seedlings of new platforms

Scoring:

© 2015 FIS and/or its subsidiaries. All Rights Reserved.

Fast Payment Innovation Index

In order to provide a framework for comparison and discussion, we have 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. A seedling stands for evidence that a scheme is being discussed or a scheme project is formally underway. You may notice that the score for some systems has changed from the 2014 version of this paper. We modified our scoring methodology for the FPI Index as a result of many discussions with payment stakeholders, which resulted in some scores being lower and others being higher. In addition, some scores changed because we were able to gain more insight into specific characteristics of the systems that were profiled or because enhancements were implemented.

The spicier the score, the higher the potential for innovation

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Vintage Flavours of FastLike 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.

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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

Average daily volumes/value: 5.6 million/ ¥ 12 trillion

Speed of posting to accounts: Real-time

Speed of settlement: End of day net settlement

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: Not available 24x7x365

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.

JapanZengin SystemLive 1973

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In December 2014, the Japanese Bankers Association and Japanese Banks’ Payment Clearing Network published a strategy paper on the future of the Zengin System with a focus on providing expanded access to payments on a 24x7 basis. A survey of Japanese consumers and businesses indicated a market demand for after hours and weekend payment services. The proposed solution involves building a new platform, specifically for clearing and settling of credit transfers outside of the existing operating hours. This platform is not expected to replace the existing one that will continue to be used during business hours. Individual bank participation in the new extended platform will be optional and each bank will be able to determine its own extended schedule for accepting real-time payment requests, however, there is a recognition that the banking industry should develop standards for extended hours in order to minimize consumer confusion.

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.

The project to extend Zengin hours isbeginning in 2015 with a goal of having 24x7 credit transfers available in 2018

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Operated by: Korea Financial Telecommunication & Clearings Institute

Official website: www�kftc�or�kr

Government Involvement: Central Bank oversight

Average daily volumes/value: 10 million/KRW 40 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: No use of ISO

Since the Korean banking industry first introduced 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. In late 2013, the Bank of Korea (Central Bank) began exploring the possible future adoption of ISO 20022 but no firm plans to migrate existing payment systems including HOFINET have been announced.

Republic of KoreaInterbank Home/Firm Banking NetworkLive April 2001 HOFINET

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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

Average daily volumes/value: 1.1 million/16.5 billion reales

Speed of posting to accounts: 97% released in < 1 minute (exceptions can be delayed up to 1.5 hours)

Speed of settlement: Continuous net settlement

Maximum value: No maximum value


Operating hours: 07.30 - 17.30

Payment applications: Credit transfers - TED (Transferência Eletrônica Disponível)

2 peppers: Not available 24x7x365, no use of ISO

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.

BrazilFunds Transfer System - SITRAFLive 2002

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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; most 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.

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4 Star EstablishmentsOf all of the flavours of fast that we have reviewed, we identified four payment systems currently supporting 4-pepper levels of innovation according to the FPI scale. Payment organisations in all four 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. The latest 4 star system is Denmark’s Nets RealTime24/7, which was rolled out in late 2014. With a sophisticated population, Denmark is already benefitting from universal participation of its banking sector and the Danish Central Bank. 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, gathering great traction through an ad campaign to reach the (un)derbanked. Long 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. Finally, much has been written about UK Faster Payments. It is probably the best known (and best marketed) of all of the flavours of fast.

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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: 1.8 million/170 billion Swiss Francs


Speed of settlement: Real-time

Maximum value: NA


Operating hours: 24x7 (until 16.15 for current day settlement)

Payment applications: B2B, Bill Pay, P2B, B2P – Credit transfers

4 peppers: Major overhaul to SIC4 is underway

Switzerland’s SIC RTGS payment system processes both retail and wholesale payments on a real-time basis. More than 95 % of all payments processed in SIC represent amounts below CHF 10,000, while more than half of them are below CHF 500. 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. Despite the frequent use of SIC for consumer payments, Swiss banks do not support P2P payments using the network. Six Group is currently examining the implications of expanding SIC to support volumes would result from P2P and evolving cash-to-electronic payments.

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 April 2015, followed by the SIC domestic system in July 2016. Included in this initiative is the gradual (bank-by-bank) migration to ISO20022 standards by mid-2018.

SwitzerlandSwiss Interbank Clearing - SICLive 1987

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United KingdomUK Faster PaymentsLive 2008

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 (will be increased gradually)

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 that has been offered by the majority of UK banks as of 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 available later this year through a variety of UK banks (excluding Barclays, RBS and NatWest) 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. Barclays continues to demonstrate leadership in leveraging Faster Payments with a recent announcement that it will support mobile payments for consumers and small business customers using Twitter by linking their Pingit accounts to their Twitter handles.

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As of December 2014, the Scheme has announced a new goal: “To drive a consistent and trusted experience for end customers across all directly and indirectly connected Payment Service Providers using the Faster Payments Service.” As such, the Faster Payments Scheme is focused on enabling real-time payment capabilities for non-bank payment service providers through a New Access Model involving vendor accreditation, technology aggregators and new settlement mechanisms for non-bank PSPs. The Scheme’s goal is to have a competitive market of accredited aggregators in place with a “dozen new PSPs (bank and non-bank) using existing and new settlement models”.

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Simon Cox Independent Payments ExpertJune 2014

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.”

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“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.”

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“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.”

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: 160,000/Rs 1.1 billion


Speed of settlement: End of day net settlement

Maximum value: Rs 10,000 per day per account when end-to-end encryption is used, Rs 5,000 per day if bank is not using encryption



Payment applications: Mobile payments, P2P, Internet Banking, Merchant payments, Bill payment, ATM payments

4 peppers

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 76 Indian banks participating. IMPS was developed using ISO 8583 messaging standards. 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.

IMPS 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.

IndiaImmediate Payment Service - IMPSLive 2010

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The Indian IMPS has shown a high level of innovation since its introduction. Several Indian banks have partnered with remittance processors such as Xoom Corporation to support real-time processing of cross border remittance payments coming into bank accounts in India. 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.

Despite substantial growth in volumes over the past two years, IMPS represents a relatively small component of the Indian payment system as a whole. This is in part due to the fees being charged by banks for immediate payments (e.g. the largest IMPS participant, ICICI Bank, charges its customers between Rs 2.5 and Rs 15 depending on the value of the payment). In order to attract more volume, the NPCI is leveraging social media to promote the use of IMPS amongst Indian consumers and businesses with daily marketing updates on the IMPS Facebook and Twitter pages promoting the convenience, ease and speed of IMPS payments. An example of one of their tweets is shown below.

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“Use #IMPS to transfer #money during grocery

#shopping, right from your

#mobile phone“

Operated by: NETS (Also called Express Transfers or Straksclearing)

Official website: www�nets�dk

Government Involvement: In response to government mandate. Central bank settlement and oversight

Average daily volumes/value: NA

Speed of posting to accounts: Near real-time (1-10 seconds)

Speed of settlement: Net, intraday settlement

Maximum value: kr. 500,000


Operating hours: 24x7

Payment applications: Credit transfers, P2P, B2B, Mobile, Online

4 peppers

On behalf of the Danish banking sector, NETS rolled out the RealTime24/7 system in November 2014 as the final part of an on-going modernisation of the Danish payments infrastructure, including more frequent intraday settlement between banks. The new system is based on ISO20022. The key drivers for investment were the need to provide a modern platform in order to meet evolving business requirements and customer demands as well as to compete effectively with emerging non-bank market players. NETS views the movement of payments data in real-time as a key characteristic of the solution. As such, a wide range of overlay services are contemplated including e-invoicing, mandate management and fraud prevention solutions.

DenmarkNets RealTime 24/7Live November 2014

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Hidden gemsThe five countries profiled in this section are often omitted from other fast payment analyses. As ‘hidden gems’ 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. Nigeria established the NIBSS Instant Payment solution (NIP) in 2011 for a wide range of payment use cases and is primarily made available to consumers and businesses using internet banking solutions. Increasingly however it is being used via the mobile channel as adoption grows. Chile, the smallest of the five, with a highly centralised banking system, developed an online transfer capability (TEF) in 2008 that continues to be leveraged as consumer payment demands evolve. Finally, the Central Bank of Turkey developed its version of fast payments, called the Retail Payment System (RPS) in response to a perceived risk that a heavy and sudden growth in volumes of retail payments could disrupt the Turkish RTGS system. As a result, in late 2012, Turkey developed a separate retail RTGS platform which meets our definition of fast payments.

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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: 720,000/612 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


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

2 peppers: Lack of ISO format

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. In addition, consumers and businesses are able to inquire on any payment to which they were a party over the previous 45 business days using the SPEI Information Module.

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 and to migrate more payment applications to SPEI including mobile and government payments.

MexicoSistema de pagos electronicos interbancarios - SPEILive 2004

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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: 421,000/$140 billion

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


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.

ChileTransferencias en Línea - TEF Live 2008

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Luis Feldman Head of Operations & DevelopmentCentro de Compensacion Automatizado - CCAMay 2014

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”

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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 in our experience”

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: 718 million/ 9.5 trillion Yuan

Speed of posting to accounts: Within 20 seconds

Speed of settlement: Deferred net settlement

Maximum value: RMB 50,000 Yuan


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

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. The gradual upgrade to CNAPS II began in October of 2013 is largely complete and the original CNAPS is expected to be decommissioned in mid-2015. Among the key enhancements of CNAPS II is 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 over 200% growth in volume and 166% growth in value. Currently, IBPS remains a small component of the overall electronic payment environment in China (approximately 2.5% of volume and .32% of value in 2013). 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.

ChinaInternet Banking Payment System - IBPSLive 2010

35

Operated by: Nigeria Inter-Bank Settlement System (NIBSS) Plc (owned by all licensed banks and Central Bank of Nigeria)

Official website: www�nibss-plc�com�ng/services/nigeria-central-switch/nibss-instant-payment

Government Involvement: System developed in co-operation with Central Bank

Average daily volumes/value: 150,000/N 75 billion

Speed of posting to accounts: Near real-time (must be posted within 2 minutes)

Speed of settlement: Deferred net settlement, once daily

Maximum value: N1 million (for consumers there is cumulative daily limit of N5 million)


Operating hours: 08:00 - 17:00

Payment applications: Credit transfers and direct debits, P2P, P2B, ecommerce, B2B, merchant payments

2 peppers

NIBSS operates most of the electronic and paper-based payment clearing and settlement for the Nigerian banking sector. The NIBSS Instant Payment solution offers fast payment capabilities to Nigerian consumers and businesses through a variety of channels. With mobile payments and banking adoption lower in Nigeria than the rest of Africa, NIP volumes are relatively low when compared with other fast payment systems.

Nevertheless, growth as measured both in volumes and value has been impressive with transaction volumes doubling between 2012 and 2013 and more than quadrupling in value for the same period. By June 2013, NIP volume exceeded cheque volume for the first time. Banks in Nigeria promote NIP as a safe, convenient and efficient method for moving funds and reconciling accounts. Originally piloted by six banks in 2011, NIP is now offered by all major banks operating in the country. In August 2014, the Central Bank issued guidance on varying levels of authentication of users for NIP payments based on transaction value; compliance by Nigerian banks was required as of December 31, 2014.

NigeriaNIBSS Instant Payments - NIP Live 2011

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Operated by: Central Bank of Turkey

Official website: http://www�tcmb�gov�tr/wps/wcm/connect/TCMB+EN/TCMB+EN/Main+Menu/PAYMENT+SYSTEMS/Payment+Systems+in+Turkey

Government Involvement: Central Bank created and operates this system

Average daily volumes/value: 1.2 million/38 billion Turkish Lira


Speed of settlement: Real-time

Maximum value: Unknown


Operating hours: 8:30-17:30 business days only

Payment applications: All urgent consumer payments

2 peppers

The Central Bank of Turkey established the Retail Payment System in late 2012 as a response to the growing use of the RTGS system (TIC-RTGS) for retail payments. The Central Bank made a decision to remove those payments from the RTGS system in order to eliminate the risk of high volumes of low value payments having a negative impact on settlement of high value payments. RPS payments are posted and settled on an immediate basis. There are 48 direct participants in RPS, which represents virtually all of the banks in Turkey offering payment services. . The system operates only during normal business hours and is based on proprietary formats.

This is a unique example of a Central Bank implementing a fast retail payment system primarily for risk management purposes. As such, little has been done either by the Central Bank or the banking system as a whole to innovate using the capabilities of RPS. Nevertheless, demand for real-time payments is growing, with transaction volume growth between 2013 and 2015 of 37% and growth in value of 17% over the same period.

TurkeyRetail Payment System - RPSLive December 2012

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The Main CourseThe 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. Singapore’s FAST went into production in March 2014. With a major focus on consumer education and a highly level of financial sophistication among the Singaporean population, adoption exceeded expectations very quickly with consumers and businesses rapidly identifying opportunities to leverage FAST in ways that the banking industry did not necessary expect. One example of that was the use of FAST to sweep funds on a daily basis from individuals’ own current accounts to higher rate accounts at other banks and then back again to cover outgoing payments. South Africa faces the 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. 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.

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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: 30,000/440MM ZAR as of Q3 2013

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


Operating hours: System operates 24x7x365 availability varies by bank

Payment applications: P2P, B2B, P2B, Bill pay, salary, online, mobile

2 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. The ISO20022 initiative is now part of two larger projects to modernise South Africa’s electronic payment systems being undertaken by the Payments Association of South Africa (PASA), one for EFT credit payments and the other for EFT. As described in PASA’s 2014 National Payments Plan, South Africa will have established an implementation framework and roadmap for a new platform by the third quarter of 2015 including sunset dates for legacy systems.

Although RTC only represented 2% of total retail payment volumes and values as of 2013, 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 AfricaReal-Time Clearing - RTC Live 2006

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Operated by: KIR

Official website: http://www�companies�kir�pl/en/express-elixir/

Government Involvement: Central Bank settlement

Average daily volumes/value: <1,000/5.1MM PLN

Speed of posting to accounts: Near real-time (seconds)

Speed of settlement: Immediate

Maximum value: 100,000 PLN


Operating hours: System operates 24x7x365, availability varies by bank (5 of 11 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 11 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.

PolandExpress ELIXIR Live June 2012

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Operated by: Bankgirot (owned by 7 banks)

Official website: https://www�bankgirot�se/en/about-bankgirot/payment-systems/payments-real-time/

Government Involvement: System developed in co-operation with Central Bank

Average daily volumes/value: 8,200/2 billion SEK

Speed of posting to accounts: Near real-time (within 15 seconds)

Speed of settlement: Multiple deferred central bank settlements per day

Maximum value: NA



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. There are currently 10 banks participating in BIR.

Bankgirot reports that they have 2 million active users of Swish (out of a total population of approximately 9.6 million). However, in a recent survey of Swedish consumer payments behaviour conducted on behalf of the Central Bank, 22% of respondents indicated that they have access to the Swish mobile app and 10% have actually used the app to make a payment in the month preceding the survey.

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. In 2014, Swish launched a business payment solution with several banks establishing offerings to leverage the Payments In Time infrastructure, in part in response to a Swedish alternative merchant provider of payment services, iZettle. Longer term, BIR is expected to support other payment applications including ecommerce and inter-bank transactions.

SwedenPayments in Real Time - BIRLive November 2012

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Operated by: Banking Computer Services (BCS) on behalf of The Singapore Clearing House Association (SCA)

Official website: www�abs�org�sg/fast�php

Government Involvement: Central bank operation and settlement

Average daily volumes/value: Not publicly available

Speed of posting to accounts: Near real-time (seconds)

Speed of settlement: Deferred settlement twice a day, with intention of increasing the number of cycles as the scheme matures

Maximum value: S$10,000



Payment applications: Bill payment, P2P, B2B, Merchant payments, mobile

3 peppers

On March 19, 2014, the Association of Banks in Singapore (ABS) announced the launch of the Fast and Secure Transfers (FAST) payment system. This system (previously referred to as G3 Immediate Payments) is only one of the outcomes of the Singapore government’s overall payments improvement initiative, which will eventually include replacement of the legacy batch payment system. Fourteen of the 145 members of the Association are participating in the initial rollout of FAST but these banks represent the majority of existing electronic payments volume in Singapore. The system was developed by VocaLink and BCS Information Systems Pte Ltd (BCSIS) on behalf of the ABS.

ABS is heavily promoting the new system to the financially savvy Singaporean population with a video that emphasises speed and ‘always available’ nature of the system showing use cases of payments being initiated using different devices and for different purposes. Unlike many other flavours of fast, the Singapore version allows consumers and businesses to move funds not only between demand accounts (checking and savings) but also to credit and debit card accounts where allowed by the specific bank.

With limited availability of public information on the first year results for Singapore’s fast payments system, it is difficult to make an assessment of the potential impact on the banking system and on consumer and business payment practices. Nevertheless, the system shows great promise assuming that it does become universally available with more bank participation. Even with its first two days of processing announced in the media release on March 19, the FAST system cleared more daily transactions than the Polish Express ELIXIR system, which has been available since 2012.

SingaporeFast and Secure Transfers - FAST Live March 17, 2014

42

43

Tino Kam EMEA Corporate Payment SolutionsRoyal Bank of Scotland May 2014

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, FAST Payments 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 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 Tino Kam, in charge of innovative payment solutions for corporate clients in his 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.

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Be prepared and participate

“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-now, 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 FAST 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”Tino Kam, RBS

45

Innovate for and with your clients

In 2014 RBS has launched two sector specific innovative solutions on the back of the Singapore FAST 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 FAST 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 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 FAST as this is where speed, certainty and convenience meet.

Travel Association & FAST

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 FAST 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 Tino Kam. “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.”

Still Working on the RecipeSeveral countries (and now the European Union) are in the process of evaluating substantial changes to their domestic payment systems that would result in the availability of fast payments, among other enhancements. These jurisdictions are at different stages with Australia being the furthest along, having already made the commitment to implement a new payments infrastructure that will enable fast payments by 2017 (one year later than originally planned). The United States, led by the Federal Reserve Bank System, is studying the possible requirements, benefits and costs of implementing a fast payment system (with one or more operators). The Fed is no longer discussing this possibility in terms of a decade but is beginning to establish nearer-term goals. Since we published the first version of this paper, significant progress has been made although it is fair to say that there is no consensus on the way to move forward to achieve this goal.

Some of the questions that bankers in these locations (and others) should be considering include:

• Howwillbanksmanagethecomplexityofofferingnewservicesbuiltonproposednewpayment infrastructures at the same time that they are managing existing legacy payment services?

• Howdoparticipants(bothbanksandpaymentsystemoperators)protectexistingrevenuestreams?

• Willbankscontinuetoofferextended,valueaddedservicesthathelptosupplementthelimitations of legacy payment systems?

• Willtheinter-operabilityofthesesystemsbecomeamagnetfortechnologyandpaymentservice providers into markets that they may have previously ignored due to size? If so, what are the implications for the incumbent providers?

46

EuropePan-European Instant Payment

One of the most important developments of the past year is the demand by the European Central Bank for the newly formed Euro Retail Payments Board (ERPB) to promote “the need for the development and implementation of at least one instant payment scheme for Euro payments open to any payment service provider in the EU”. The ECB has fast-tracked this initiative, calling on the ERPB to invite the European Payments Council (representing Payment Service Providers) and potential system operators to present a feasibility assessment by June 2015. The primary driver for the ECB is to avoid the development of fragmented, national Euro-based fast payment solutions that are not inter-operable or available as Pan-European solutions, which would represent a step backward from a SEPA payment perspective.

The ECB has made it clear in public remarks that the development of one or more fast (ECB prefers the term instant) payment schemes is a requirement for a modern financial system and is expected by customers. There is no discussion of a quantifiable business case. According to the ECB, the development of a European instant payment system should consist of three layers as described in this chart presented by the ECB at the 14th EPCA Payment Summit in Brussels, on March 9, 2015.

Scheme

Such solutions are expected to leverage the harmonisation and integration alreadyachieved with the SEPA project

Source: www.ecb.europe.eu

In order to avoid fragmentation,instant payment solutions shouldconsist of three layers

Cooperatively or competitively developed on the market

Expected to be mainly based onSCT, IBAN and ISO20022 standards

Deferred net settlement (with cashor securities collateral) vsReal-time gross settlement (in RTGSor in a dedicated module of the RTGS)

IntrabankBilateral interbankACHPoint-to-point network

Clearing

Settlement

Layeredapproach

47

As expected, a number of European industry players have come forward to provide input and to propose their capabilities as components of a pan-European fast payment scheme.

The European Automated Clearing House Association (EACHA) published a study in January 2015 on the Interoperability of Immediate Payment Systems. Rather than propose a new payment scheme, this paper presents a model for interoperability of existing (and future) European fast payment schemes, both in Euro and non-Euro currencies.

EBA Clearing, the bank-owned operator of pan-European payment infrastructures STEP1 and STEP2 has gone even further in response to the call to action of the ECB and ERPB. EBA Clearing created a task force in March 2015 with the ultimate goal of offering “Europe-wide instant payment processing services to PSPs by 2018. EBA Clearing envisions providing not only the basic infrastructure for instant payments, but also proposes the development of a Digital Customer Services Infrastructure (DCSI) as a layer between the infrastructure and overlay services as developed by individual PSPs. In March 2015, EBA also launched The Open Forum on Pan-European Instant Payments, which is intended to provide payment services providers and suppliers with an opportunity to exchange of views on instant payments and contribute to the upcoming instant payment scheme discussions.

SIA, an Italian-based provider of payment infrastructures, has also proposed that its Jiffy P2P Solution will meet the requirements being established by the ERPB for pan-European instant payments.

FIS believes that the combination of a pan-European, standardised instant payments infrastructure, together with the PSD2 regulation is going to jointly drive innovation in the European payments space. There will be more competition from both traditional and non-traditional payment service providers as open access to accounts becomes a reality.

The pan-European initiative has broad global implications as the development of such a solution would likely be the first example of a cross-border fast payment solution, which is a logical next step as fast payment services become expected by consumers and businesses on a domestic level.

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“Instant payments togetherwith the PSD2 regulation

will jointly drive innovation in the European

payments space”

The project to implement fast payments in Australia was spawned by the activities and priorities of the Reserve Bank of Australia (Central Bank), which published its strategic review of the need for innovation in the Australian payments environment in 2012. In response, the banking industry, through the Australian Payments Clearing Association (APCA), submitted a proposal to the RBA in February 2013, which led to the initiative now called the New Payments Platform (NPP). The mission of the NPP is to ‘…provide Australian businesses and consumers with a fast, versatile, data-rich payments system�’

The industry’s approach consists of the development of a resilient, efficient infrastructure that enables ‘innovation at the edge’ and provides a low-risk method to provisioning the service with the ability for functionality to grow, as business needs dictate. This approach is layered, beginning with the establishment of a basic infrastructure to connect all of the participating banks; to establish a link to the RBA for settlement; to create a new, flexible and fast payments messaging system (based on ISO20022) and to support innovation through the development of multiple overlay services that can be tailored to specific payment needs over time. Participation in payment overlay services will be optional by bank, leaving decisions about specific payment offerings to be driven by the market. The first overlay service will be the ‘Initial Convenience Service’ to be focused on consumer payments, especially using the mobile channel. In addition, an alternate identification service has been proposed that would allow payments to be initiated without the receiver being required to share bank account information with the originator.

The NPP work programme includes participation of 12 Australian and international banks and the Reserve Bank of Australia (several banks and PayPal dropped out over the past year primarily due to cost considerations). KPMG has been appointed as the Programme Manager and has already begun the sourcing, planning and mobilisation activities for the basic infrastructure layer and the initial convenience service. KPMG is also co-ordinating with the RBA to link into its development of a new, fast settlement service, which is being designed to support fast settlement of individual payments in central bank funds.

In December 2014, the APCA announced that twelve banks had committed funding to build the New Payments Platform and that it had chosen SWIFT to build and operate the basic infrastructure. A new legal entity, NPP Australia Limited, was created at this time. With this announcement, the third phase of the NPP project (detailed design and elaboration) was kicked off with expected completion by 3rd quarter of 2015. Details for the Initial Convenience Service overlay will be announced at this time. The platform is being targeted for operational production during 2017 (a delay of one year from the original plan).

Based on the APCA’s goals and planned design of the NPP, Australia’s flavours of fast would rate very highly in the FPI index, almost certainly receiving 5 peppers once the various service overlays are established.

AustraliaNew Payments Platform - NPP

49

50

John Murphy John Murphy, Executive General Manager, Everyday Banking & PaymentsNational Australia BankJune 2014

NAB and NPP: an opportunity for innovation

With the winding down of the Mambo project in Australia the appetite for innovation certainly did not dissipate and now three years later the Australian banking industry is reuniting around the New Payments Platform (NPP). Almost immediately the Reserve Bank kicked off a public innovation review and in January 2013 the Payments System Board approved the NPP proposal which had been developed by members of the banking industry in response to the Innovation Review findings. A collaborative effort would wean the Australian payments industry off legacy systems with a restricted payments capability and create an environment for innovative immediate payments products into 2016 and beyond, opening up the market for more competition in the process”.

“The industry response was clear”, states John Murphy, “we want to have an immediate payments utility that all participants can offer new commercial services through. For businesses and consumers this can only be good news as we are likely to see a lot more innovation, from both traditional and non-traditional players. Consumers and business customers are ready to embrace this as in every walk of their digital lives they have become used to ‘instant’, ‘insight’ and ‘experience’.”

“The NPP”, Murphy explains “should really be viewed as a utility like the telecoms network that we all use. On top of that, services need to be developed. The Reserve Bank of Australia has a fixed go live date of 2016 at which point there will be one immediate payments overlay service launched as part of the industry project. At the moment the industry is deciding what this service should entail exactly through the NPP Steering Committee, who are reviewing the current bidders for the initial overlay service, which in reality will be an immediate P2P type of service. The success will depend on early adoption and critical mass so appropriate payments will be pushed through the system and there is a strong commitment in the industry and most definitively at NAB to make this a success from day one.”

Fast, faster, immediate

Fast is relative, when is fast necessary and is fast always immediate or instantaneous and who determines how fast NPP payments should be? “In Australia the industry, voiced through the Payment Systems Board, felt it was not ideal that the regulator should mandate at what speed an account should be credited. Market forces should decide, receiving banks should determine this. Message posting should be real-time but the account posting/crediting of money should be left to competitive forces. My personal view is that I am yet to be convinced of the demand for instant crediting of accounts for consumers at all times. Business customers need certainty of payment, which is different to the actual crediting of the bank account. Clearly next day or 48 hours is no longer appropriate, but intraday might often be sufficient for consumers. If there is sufficient demand for instantaneous payments for consumers we will look at this but we also need to protect our customers and moving to real-time payments in digital seconds will come at significant additional cost to enable the likes of fraud checking. Having said that, at particular incidents of hardship, like the floods we had in Queensland, there are moments in time when people need money instantaneously but for the whole industry to move to instantaneous, comes at a price. Australia’s view is very balanced in that this is initially left to the competitive market forces and market demand will tell the tale.”

“The more competition NPP engenders,

the better it will be”

51

“I think over time business

customers will be the big winners”

Industry collaboration at the core

“At NAB we see NPP more than anything as an opportunity to innovate, there is an element of compliance, but I would never refer to it that way”, continues Murphy as we enquire after the innovation plans at NAB. “As one of founding members of the industry group that designed the NPP concept, we see it more as industry collaboration and we all acknowledge that the industry has an obligation and an opportunity to co-operate to build the next generation of payments services. We are looking at real-time payments initiatives across the group to benefit from this initiative. We are a bank with a market leading presence in the business banking market, and we feel that in particular the business customers from small to corporate will benefit significantly from innovation. Think of the insight and ease of use we can offer them through data enrichment around payments, the efficiency we can offer through simplification. The SME segment will most likely benefit at first from meaningful remittance data and enhanced payment flows which will offer better cash flow. Looking at the larger corporates the benefits become even more evident for they often have large numbers of people in the back office employed in reconciling payments. Greater use of data and richer data with more relevant information around payments and their flows will make a step change in straight through processing. I expect business customers will benefit significantly over time, even more so than consumers, on whom so much public and innovation focus lies.”

NAB NextGen

In NAB’s far-reaching NextGen program, the bank is also revolutionising the way it serves its customers as well as its processes. “Ultimately, NextGen is enabling simplification in response to growth in digital banking and the demand for integrated customer experiences. To date it has delivered securitisation, a new general ledger, funds transfer pricing and our core banking foundation,” Murphy says. “In March this year we installed the Direct Banking Release, a major milestone in our progress towards bringing NextGen into the core NAB franchise for origination and the servicing of personal banking products.”

Looking at other initiatives in the world Murphy realises that Australia is not a front runner; Chile, the UK and some others lead the way. “I would really like to learn from them how they generated the customer traction, and where the real benefit has demonstrated itself for consumers and business customers. What percentage of customer of the overall base moved to ‘Immediate’, where is the real innovation?”

What other countries could learn from Australia might have to do with the process. From a central bank led review, the NPP quickly evolved as industry led initiative: a clear foundation and blue print and then ample space for the market players. “We eagerly embraced this approach; we wanted it to be industry led, not regulator led. The public policy published by the Reserve Bank was widely accepted based on the argument that the underlying principle is building a joint ‘non-competitive’ utility that should be accessible for all, low in cost of build and running, thin in terms of technology with a limited scope to receive and acknowledge messages. All the competitive elements should be left to industry participants. We feel that this stands a better chance than a centrally led approach; as an industry I feel that we are very committed, with the commercial elements very appropriately being at the discretion of the individual participants.”

“The more competition this engenders the better. I hope that ultimately we will see something emerge in terms of innovation that we have not even thought of today. The game changing element, that is what I am hoping and looking for.”

As one of the world’s leading economies with arguably the most complex banking environment, the United States has made slow progress toward implementing fast payments when compared to most of its peers. This is the result of many different factors, including widely varying interests of payment system stakeholders, a Central Bank (the Federal Reserve Bank System) which is loathe to impose a solution as many of its counterparts have done and a banking technology environment which is still largely batch-oriented. As in most other countries described above, many stakeholders in the US are not convinced that there is a valid business case for the investment needed to move forward with fast payments. Nevertheless, the Fed and The Clearing House (a bank-owned private company that currently operates the CHIPS and EPN ACH networks) are pressing on.

After almost three years of gathering input and analysing the US payments environment for gaps and opportunities for improvement, the Federal Reserve Bank System (the Fed) issued its official strategy document in January 2015 titled ‘Strategies for Improving the U.S. Payment System.’ In this paper, they refined the five desired outcomes for an improved payment system that were first described in its 2013 consultation paper: Speed, Security, Efficiency, International and Collaboration. On the topic of speed, the Fed says “A ubiquitous, safe, faster electronic solution(s) for making a broad variety of business and personal payments, supported by a flexible and cost-effective means for payment clearing and settlement groups to settle their positions rapidly and with finality.” This differs from the original outcome as published in 2013 in several important ways. Specific features such as timing of customer notification and confirmation of good funds were removed as a result of public feedback that convinced the Fed that different use cases may require different requirements for timing. These differences will be addressed during the design phase of what the Fed is now calling the ‘Faster Payment Solution’.

The strategy paper includes Appendix 6 ‘Faster Payment Alternative Analysis’ which identified target use cases, assessed a range of possible design options, explored high level requirements and business cases for each option and provided a high-level work plan for moving forward. This analysis is what drove the following strategies and tactics:

1� Actively Engage with Stakeholders on Initiatives to Improve the US Payment System. This includes the establishment of a Faster Payments Task Force, which is scheduled to have its initial meeting in late April 2015. The Fed has indicated a preference of a task force of between 100 and 200 individuals or organizations representing all key stakeholders including consumers, merchants/corporates, financial services institutions, technology providers and payment operators.

2� Identify Effective Approach(es) for Implementing Safe, Ubiquitous Faster Payments. Key tactics (in addition to forming the Task Force) include assessment of alternative approaches, examining policy issues associated with a possible multi-provider approach including rules framework (by 2016), identify effective approaches by end of 2016, and support collective stakeholder efforts to implement faster payment capabilities.

3� Achieve greater end-to-end efficiency for Domestic and Cross Border Payments. This includes

the development of a strategy for the application of ISO 20022 to US Payment Transactions.

United StatesMultiple Initiatives

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4� Enhance Federal Reserve Bank payment, settlement and risk management services. As part of this strategy, the Fed expressed its support for a phase approach to Same-Day ACH settlement capability.

The latter strategy is important to note because the Fed has clearly indicated that it does not consider NACHA’s proposal to extend same-day settlement as a component of a Faster Payment Solution. We agree with that determination since same-day settlement does not meet the criteria of the fast payment solutions as defined in this paper.

Points of Contention

As the Fed moves forward, there are a few interesting points of contention that need to be resolved.

The first point of contention is the role of the Federal Reserve Bank System itself. The Fed has made it clear in both the strategy paper and a subsequent blog on www�fedpaymentsimprovement�org that its role is as catalyst and facilitator but that it will only consider developing or operating a future fast payment solution if the private sector is unable to “provide the capability with reasonable effectiveness, scope and equity.” There are strong opinions on both sides of the coin on the role the Fed should play both in the development and operation of a Faster Payment System. FIS believes that in order to achieve the Fed’s stated outcomes, it take a more forceful stance than it has to date.

The above however does not mean that the Fed is the logical choice to be the operator of Faster Payments. In fact, at least one private sector operator, The Clearing House, has already come forward with its intention to develop exactly such a payment system (more details below). No doubt others will follow, including some existing ‘closed-loop’ fast payment systems. If the Fed is not going to be the driving force required in order to avoid the gridlock that has characterised most of the previous attempts to modernise US payment systems, will The Clearing House or some other organization play that role? It will be challenging for the Task Force to achieve the goals of the Fed given its size and composition. If the Task Force gets bogged down in competing agendas, it is fair to ask what will be ‘Plan B’ for the Federal Reserve for promoting fast payments in the United States or will the Fed’s efforts become irrelevant, especially as The Clearing House moves forward with its own Real-Time Payments initiative, broadly announced in October of 2014. The Clearing House has indicated that it has the support of its Board and owners to move forward without a dependency on deliverables from the Fed’s Faster Payments Task Force. Although details of The Clearing House’s Real-Time Payment System work plan have not been discussed publically other than to say that it will be a multi-year effort, one must wonder whether detailed design for such a system can be completed prior to the Fed’s intended timeframe for developing a framework for establishing rules which is not expected to be concluded until 2016.

Finally, there is the question of the business case for Fast Payments in the US. The Fed has attempted to quantify the costs and benefits of the investment in such a system for five primary use cases at a societal level. This business case did not factor in potential new revenue in the form of value added services. The results indicate a net business case of between negative $900 million and positive $1.8 Billion over 10 years, a range whose breadth allows proponents and detractors to choose the number that best suits their case. Obviously the Faster Payments Task Force will further refine the business case for any alternatives that get serious consideration. Individual financial institutions and other stakeholders will obviously be challenged to make the business case for their own organisation, especially considering the need to replace or upgrade systems that have been in place for decades. As we have seen happen in other countries, FIS expects that the business case argument will eventually become a non-issue but there is a risk that without strong leadership from the Fed to ensure that the overall societal benefits are considered, many US banks could balk or even sabotage the effort.

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Funds Transfer SystemSITRAF Brazil

Real-Time ClearingRTC South Africa

Immediate Payment ServiceIMPS India

Express ELIXIRPoland

Payments in Real TimeBIR Sweden

Nets RealTime 24/7Denmark

Zengin SystemJapan

Fast and Secure TransfersFAST Singapore

New Payments PlatformNPP Australia

Multiple InitiativesUnited States

Transferencias en LíneaTEF Chile

Sistema de pagoselectronicos interbancariosSPEI Mexico

UK Faster PaymentsUnited Kingdom

Interbank Banking Payment SystemIBPS China

Swiss Interbank ClearingSIC Switzerland Interbank Home/Firm Banking Network

HOFINET Republic of Korea

Retail Payment SystemRPS Turkey

NIBSS Instant PaymentsNIP Nigeria

To be definedFinland

ECB Instant PaymentsEurope



Scoring:


Fast Payment Innovation Index - a global view







Zengin SystemJapan
















Scoring:


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Zengin SystemJapan
















Scoring:








Zengin SystemJapan
















Scoring:


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Immediate Payments in Practice

Where’s the beef? Innovation and lessons learnedWarren Gardiner, Payments Product Marketing FIS and Mark Hartley, Global Strategic Investments, FIS

In order to retain the payments franchise, it isn’t enough to just take legacy payment processes and make them faster. Simply responding to a government mandate to move payments faster than they moved before isn’t sufficient. In order to compete effectively against new market entrants and maximise the return on the investment to support the introduction of new domestic payment systems, banks must offer customers (both consumers and businesses) innovative payment services.

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Innovation: key success factor

Innovation isn’t limited to supporting new devices or channels for payments that are already initiated electronically: in fact, with proper design, this should be the easiest aspect of payment innovation. It bears reminding however that every payment is a small component of a larger (usually, but not always commercial) transaction. Customers view the payments they initiate as belonging to them, not to the banks on which they depend to deliver funds to the intended receiver. They view the payment as a small but critical link in a much larger chain of activities that neither begins nor ends with a bank. With an eye toward innovation, banks have tremendous opportunities to facilitate more links in the chain rather than be relegated to the final one – or be disintermediated altogether�

Mark Hartley comments: “It is also important to acknowledge that we are rapidly moving to an environment in which these commercial transactions can be settled with more than just the currency residing in a bank account: consumers and even small businesses use other forms of digital value (loyalty points, coupons, maybe even digital currencies). In general, banks have allowed others to take the lead in the rapidly evolving digital commerce arena. As such, banks that are or will be offering fast payment services need to offer overlay services that are able to:

• maketheinitiationandreceiptofnon-automatedpaymentseasierandlessexpensive• facilitatetheentiretransactionvaluechain–helpingtheendcustomertomakepurchasing,

delivery and financing decisions• enhancepaymentinformationflowstomakeiteasierforcustomerstoefficientlyreconciletheir

financial accounts, easily retrieve historical activity and conduct trend analysis to better inform budgeting and forecasting”.

The individuals responsible for payments strategy at every bank in every country where fast payment services are or will be available need to ask themselves:

• Whatarethechallengesthatourexistingcustomershaveinmakingandreceivingpaymentsandin managing payments information?

• Howcanweleverageourfastpaymentsysteminordertosolvethoseproblems?• Howwillfraudstersattempttotakeadvantageofthespecificcharacteristicsofthefastpayment

system?• Whatkindofdisputemanagementcapabilitiesdoweneedinordertohandletransactionsthat

are either erroneous or fraudulent, in spite of the irrevocable nature of fast payments?

“But the questions don’t stop there. Perhaps even more important, is this one: How do we meet the currentand future payment needs of prospective customers? The unbanked? Gen Y? Gen X? We don’t have all of the answers. As a leading provider of payment software globally, we understand that implementing a new payment system is no mean task. Entering into the brave new world of fast payments has a substantial and sometimes unanticipated impact on banks. In our experience, there are three major areas that banks connecting to a fast payment system for the first time tend to underestimate:

How do we meet the current and future payment needs of prospective customers?

The unbanked? Gen Y? Gen X?Mark Hartley, FIS

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• Thechallengeofinternalintegrationwithlegacysystemsthattendtobebatchorientedandnotdesigned to handle a continuous flow of messages and responses, 24x7x365.

• Theneedsforchangestothebank’sinfrastructuretosupportpaymentprocessingwithinsecondson a reliable basis, including staffing, hardware and services designed to ensure high availability.

• Anentirelynewparadigmofmulti-channelcustomerexperiencethatisrequiredtomanagetheend-to-end initiation and confirmation of payments within seconds, including the potential for payment rejection when the bank on the receiving end is unable to validate and confirm.”

These items require a whole new mind set for the bank teams that are responsible for designing, developing, implementing, maintaining and providing customer service. The specific local requirements may differ, but in general you will need a payments platform that can do the following:

• Conductfraudandanti-moneylaunderingchecksinreal-time• Makesophisticatedroutingdecisions• Automatetheexceptionmanagementprocess• Ensurescalabilityandreliabilityinaworldwhere24x7connectivityisrequired• Managenewmodelsforinterbankliquidityandsettlement• Adapttoaconstantlychanginglandscapeofregulatorychangesandmarketdemands• AdoptISO20022inordertoembracetheallrelevantpaymentsdata,notjustforprocessing

purposes but also for reporting, and what happens around the payment.

On the latter point, the combination of real-time and data creates a wealth of opportunities for banks that generates value for their customers over and beyond the transaction. Think automated and predictive analysis – with customers’ consent, dynamic segmentation and personalised engagements. All these elements add innovation and more importantly a relevant customer experience over and beyond speed and agility.

Hartley concludes: “Added to the challenge is the fact that fast payments do not exist in a vacuum. Banks, payment system operators, and regulators must manage fast payment operations and technology while simultaneously maintaining most if not all of their legacy payment systems, from slow up to real-time. Changes to the legacy payment systems will continue to take place as regulations and market forces demand.”

Lessons learned around the world

Clear2Pay, now part of FIS, has been involved in many immediate payment schemes around the world on behalf of a number of participating banks. Prior to and since the first edition of this report was published in June 2014, Warren Gardiner travelled the world presenting on and participating in immediate payments projects. He has found that “no stakeholder in this process should underestimate the amount of dedication required to guarantee immediate payments to banks’ consumer, SME and corporate clients.”

Delays seem to be inevitable

Any scheme that has been brought to live today has known its delays for all sorts of reasons: Faster Payments in the UK, FAST in Singapore, NPP in Australia and even schemes under debate as in the United States suffer from delays and setbacks. Furthermore changes between what was initially agreed, then announced and finally implemented are commonplace too. Scope and complexity are at the basis of both delays and change.

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Gardiner urges: “An agile approach is therefore called for, keeping things initially ‘simple’ and not trying to please all parties involved equally seems to be sensible advice too. Focus on the end beneficiaries with a set of quick wins, followed by more profound development and innovation once the system has hit the rails is, as in any other complex IT project, a key ingredient for success.”

Lack of vendor involvement

When analysing failed IT projects or those not meeting the anticipated benefits, the industry teaches us a lesson. Those projects where the parties treat each other in the antiquated fashion of vendor versus client are at much higher risk to fail than those where parties treat each other as partners and stakeholders. Success or failure is hardly ever defined by legal contracts and KPIs but by the spirit of co-operation.

In most immediate payment projects to date, we see a lack of (early) vendor consultation, yet it is upon the vendors to ultimately deliver the product or infrastructure off which the scheme is launched. Typically vendors do not get access to a sufficient level of detail for project or product delivery plans until late in the process. Then the squeeze is on the vendors to come up with the magic bullet to deliver the market solution. Even in a scheme which is in development stage today like NPP, vendors do not have full access to detail and this hampers progress and results. Vendors try to address all issues for all parties, try to do the right thing by their client, their customers and the market, yet the bodies involved are not necessarily doing the right thing by the vendors, who regardless of this will get pressure from their clients to deliver on scheme and on time. “It should not be overlooked that vendors like us have provided solutions for most of the Immediate Payment systems in the world today, and therefore, have built a wealth of knowledge on potential do’s and the don’ts of these schemes and the subsequent impact on the participating banks.”

He continues: “It strikes me that this knowledge is not being leveraged by the bodies that are creating these schemes. So I would strongly recommend a more open engagement to allow vendors to participate. Vendors can contribute at all stages and it is very encouraging to see that the EBA in their recent announcements is moving in that direction.”

Payments Memory - Context is everything

As immediate payment projects mature, we are seeing an evolution in purpose and scope. Whereas UK Faster Payments was all about ‘providing the rails’ and to an extent Singapore’s FAST too, next generation immediate payment schemes should move towards a payments contextual system. The rapid rise of Uber has as much to do with the context of instant payment – ordered and delivered - as with the benefit of transport. Immediate payments, more than any other kind, have an intrinsic business or consumer contextual value so the data associated with the payment becomes just as important as the immediate execution.

Future schemes should transmit the data context with the payment, not in parallel or on separate rails, to facilitate easier recognition and reconciliation of the payment by both the payer and the beneficiary. Gardiner concludes: “By this we mean the data or as I prefer to put it ‘the memory of the payment’ – the where, why and what – and it should travel with the payment on the same rails. Lack of bandwidth is an old, skewed defence and no longer a credible argument.”

“In the future, immediate payment systems

are going to be all about the Payments Memory” 59

SourcesIn addition to the websites referenced in each country profile, the following sources were used in the development of this paper:

GENERAL/MULTIPLE COUNTRIES“The ISO 20022 Adoption Initiatives Report”, March 2015, ISO 20022 Registration Authority“Cross-border low value payments and regional integration: enablers and disablers”, November 2014, SWIFT Institute Working Paper No 2014-005, Dr. Leo Lipis, Colin Adams“Non-banks in Retail Payments”, September 2014, Bank for International Settlements, Committee on Payments and Market Infrastructures“Innovation in Retail Payment Services in Major Economies”, November 2014, Bank of Japan Review, Retail Payment Systems Group, Payment and Settlement Systems Department. “Real-Time Payments: Case Studies from Around the World, September 2014, Celent, Gareth Lodge. “Costs and Benefits of Building Faster Payment Systems: The U.K. Experience and Implications for the United States”, February, 2015, Current Policy Perspectives, The Federal Reserve Bank of Boston “Global Payments Systems Analysis: Public Summary”, July 2014, Lipis Advisors“Next Stop: Real Time Payments”, March 2015, presentation delivered by SWIFT at the SWIFT Nordics Regional Conference. “Real-Time Payments: Dispelling the Myths”, August 2014, Celent, Gareth Lodge.“Fast Retail Payment Systems”, December 2014, Reserve Bank of Australia, Bulletin, December Quarter 2014“How Fast do Payments Need to Be”, April 2013, NACHA Payments Conference, presented by Clear2Pay and VocaLink“From Same Day Payments to Same Hour Payments…the Need for Speed”, Undated, In Conversation with Gareth Lodge, Celent and Neil Burton, Earthport“Faster Payments: Models & Retail Payments Innovation”, April 2013, NACHA Payments Conference, presented by Glenbrook Partners, BCG, KIR, VocaLink, Banco de Mexico“Faster than a Speeding Payment: How Real-Time is Changing the Game”, April 2013, NACHA Payments Conference, presented by Lipis & Lipis“What will the role of bank accounts be as Payments evolve”, October 2013, Global Payments Forum Whitepaper developed with Lipis & Lipis“Payments Transformation – Real Time Payments”, 2012, Accenture/Vocalink“The Emergence of Real Time Payments: A Global Comparison”, August 2013, Bobsguide blog by Imran Ali, Citi“Innovations in Real Time Payments: Report of the Working Group on Innovations in Retail Payments”, May 2012, Bank for International Settlements“The Emergence of Immediate Funds Transfer as a general-purpose means of payment”, 3rd Quarter 2011 Economic Perspectives, Volume 35, Federal Reserve Bank of Chicago“Payment, Clearing and Settlement Systems in CPSS Countries, Volumes 1 and 2”, 2011, Bank for International Settlements

AUSTRALIA“Towards a New Payments Platform”, March 2015, NPP Australia, Ltd.“Media Release: Australia’s leading financial institutions sign-up to build the New Payments Platform”, December 2014, NPP Australia, Ltd.\“NPP Launch Presentation,” December 2014, presented by Paul Lahiff, NPP Steering Committee Chair at the Australian Payments Council Payments Community Meeting.

BRAZIL“Brazilian Payment System”, May 2010, Presentation at ISO TC-68 by Camara Interbancaria de Pagamentos“Report on the Brazilian Retail Payment System”, May 2005, Banco Central do Brasil, “Payment, Clearing and Settlement Systems in Brazil” (Red Book), 2011, Bank for International Settlements“Brazilian Payment System”, March 2014, Banco Central do Brasil, Economic Policy Board, Frequently Asked Questions Series.

CHINA“China Payment System Development Report 2013”, No. 1, 2014, Financial Service Report of the People’s Republic of China“Peoples Bank of China, 2013 Annual Report”“Development of Retail Payment Services in China”, undated presentation delivered by Chen Xue, Payments and Settlement Department, People’s Bank of China from worldbank.org

DENMARK“Faster Payments in Denmark”, Monetary Review 3rd Quarter 2012 Part 1, Dansmark Nationalbank“Report on New Payment Solutions”, March 2014, Danish Payments Council“Express Transfers in Denmark”, 3rd Quarter 2014, Dansmark Nationalbank Monetary Review“Real-time Clearing in Denmark”, March 2015, Presentation delivered by Stig Korsgaard, Engagement Director, Nets at SWIFT Nordics Regional Conference.

EUROPEAN UNION“Pan-European instant payments in euro: definition, vision and way forward”, November 2014, European Central Bank“Study on the Interoperability of immediate payment systems, Version 1.3”, January 2015, EACHA Innovation Group, European Automated Clearing House Association.“Instant Payments – the New Normal”, March 2015, presentation delivered by Wiebe Ruttenberg, Head of Market Integration Division DG Market Infrastructure and Payments, European Central Bank at 14th EPCA Payment Summit. “From Instant Payments to Instant Commerce”, March 2015, presentation delivered by Vincent Brennan, Deputy chair of EBA electronic payments working group at 14th EPCA Payment Summit

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FINLAND“Request for Information: Replacement of Finnish Online Urgent Payment System”, May 2014, Federation of Finnish Financial Services

INDIA“Immediate Payments Service (IMPS)” presented at Mobile Payments & NFC Asia 2011, National Payments Corporation of India“IMPS Completes 4 Years of Operation”, NPCI Press Release, November 2014 “NPCI initiates an ecosystem for Unified Payments Interface”, NPCI Press Release, February 2015

JAPAN“Announcement On the Results of Examining the Future Shape of the Zengin System, December 2014, Japanese Bankers Association Japanese Banks’ Payment Clearing Network “Implementation of ISO20022 XML on Zengin-System”, May 2010, presentation delivered by Mamoru Mitsuhashi, Japanese Bankers Association and Yusuke Yanagida, NTTDATA Corporation “Zengin System: The Zengin Data Telecommunication System”, March 2014, Japanese Banks’ Payment Clearing Network“Payment and Settlement Systems Report 2012-2013, November 2013, Bank of Japan

KOREA“Payment and Settlement Systems Report 2013”, April 2014, The Bank of Korea“Korea Financial Telecommunications & Clearings Institute 2013 Annual Report”,

MEXICO“SPEI: The Real Time Funds Transfer System in Mexico”, September 2011, presented at Symposium on Immediate Funds Transfer for General-Purpose Payments, Federal Reserve Bank of Chicago,

NIGERIA“Outside-in Vision of NIBSS: From a simple ACH to a full-fledge central utility of the Nigerian Payment System”, November 2013, Presentation delivered by SIBS International at NIBSS 20th Anniversary International Conference“Electronic Payment Adoption – The Customer’s Viewpoint, November 2013, Presentation delivered by Bisi Lamikanra, Partner & Head, KPMG Management Consulting at NIBSS 20th Anniversary International Conference “Circular on the Review of Operations of the NIBSS Instant Payment (NIP) System and Other Electronic Payments Options With Similar Features”, August 2014.“Payment Systems Vision 2012”, Release 2.0, September 2013, Central Bank of Nigeria.

POLANDKIR 2013 Annual Report“Real Time Payments with Krajowa Izba Rozliczeniowa S.A. - Express ELIXIR Service”, 2014 Cap Gemini Case Study

SINGAPORE“Fast and Secure Transfers (FAST) FAQ”, March 2014, The Association of Banks in Singapore“Fast and Secure Transfers (FAST) Fact Sheet”, March 2014, The Association of Banks in Singapore

SOUTH AFRICA“Payments Association of South Africa (PASA) Annual Report 2013”“National Payments Plan 2014”, Payments Association of South Africa“Real-Time Clearing (RTC) Brochure”, Bankserv Africa

SWEDEN“Bankgirot 2013 Annual Report”“Financial Infrastructure Report 2013”, Sveriges Riksbank“The payment behaviour of the Swedish population”, 2014, Results of survey conducted by Sveriges Riksbank

SWITZERLAND“Swiss Interbank Clearing (SIC) Monthly Statistical Bulletin”, February 2014“The Swiss Interbank Clearing (SIC) Payment System”, February 2009, Swiss National Bank“P2P payments soon possible via SIC? “, March 2015, Clearit: The Swiss Professional Journal for Payments“Migration to ISO 20022 In Progress”, March 2015, Clearit: The Swiss Professional Journal for Payments.

UNITED KINGDOM“Faster Payments: A Vision for a New Access Model”, December 2014, Faster Payments Whitepaper“Clearing Statistics”, December 2014, UK Payments Council“Quarterly Statistical Report”, November 2014, UK Payments Council

UNITED STATES“In Pursuit of a Better Payment System”, February 2015, Federal Reserve Financial Services“Strategies for Improving the U.S. Payment System, January 2015 Federal Reserve Financial Services.“Payment System Improvement Public Consultation Paper”, September 2013, The Federal Reserve Banks“Research Results Summary on End-User Demand for Select Payment Attributes”, March 2014, Federal Reserve Financial Services“Payment System Improvement Public Consultation Paper: Industry Feedback Summary, March 2014, Federal Reserve Financial Services“Payment System Improvements Initiative,” April 2014, NACHA Payments Conference, presented by Federal Reserve Banks 61

About FIS

FIS is a global leader in banking and payments solutions, which combines a comprehensive technology portfolio with

consulting and outsourcing. With a long history deeply rooted in the financial services sector, FIS serves more than 14,000

institutions in over 130 countries. Headquartered in Jacksonville, Fla., FIS employs more than 44,000 people worldwide and

holds leadership positions in payment processing and banking solutions.

As a global leader in real-time payments innovation and next-generation payments platforms, FIS is uniquely positioned to

deliver the technologies and assets that will enable financial institutions across the globe to realize a truly modern payments

environment, encompassing all customer channels, simplifying payment operations, reducing costs and providing a frictionless

commerce experience for business clients and consumers alike.

Its recent acquisition Clear2Pay, offers enterprise payments modernisation through its pure Service Oriented Architecture-

based Open Payment Framework (OPF). OPF facilitates banks and financial organisations in their provision of payments

services, whether they be Card, ACH, Branch, Bulk, High Care or International payment transactions. The OPF technology helps

to reduce transaction processing costs, and to deliver new, compelling payment services in a way that drives both efficiencies

and new growth through innovation. Functions embrace payments origination, reporting, linkage with back-office processing

systems, clearing, netting and settlement.

In addition FIS offers a range of value added solutions and services such as Open Test Solutions and payment consulting. OPF

Clients include global and major regional financial institutions such as Banco Santander, Credit Suisse, Crédit Agricole, The

Federal Reserve, RBS, Commerzbank, The People’s Bank of China (PBOC), Bank of East Asia, Rabobank, BNY Mellon and CBA.

Providing software, services and outsourcing of the technology that drives financial institutions, FIS is 426 on the Fortune 500

and is a member of Standard & Poor’s 500® Index. For more information, visit www.fisglobal.com and www.clear2pay.com.

Acknowledgements

The development of this paper benefited significantly from the input and support provided by our clients, industry analysts and

payments industry experts including:

John Murphy, National Australia Bank

Simon Cox, Independent payments expert

Luis Feldman, Centro de Compensacion Automatizado (CCA)

Tino Kam, Royal Bank of Scotland

Gareth Lodge, Celent

Participants in Flavours of Fast sessions held during 2014 and 2015 in Edinburgh, Sydney, Melbourne, Boston and New York.

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Flavours of Fast

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Transcript of Flavours of Fast