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1World Bank payment system conference, Washington, 29 May 2007
Get connectedto the future
Trade offs in Payment Systems
Henrik ParlWashington, 29 May 2007
Cooperation versus competition
World Bank payment system conference, Washington, 29 May 2007 2
Key message
• It is virtually impossible to provide a global bank and remittance payment solution without a cooperative approach.
• Co-competition is the key to success
• Commercial interest must be the key driver for system interoperability, not technology. Key ingredients:– Commercial framework– Products & standards– Reach
World Bank payment system conference, Washington, 29 May 2007 3 * Shareholder
60 connections in 49 countries
AL Posta Shqiptare sh.a.AT * BAWAG P.S.K.AU ANZ BankBA Nova BankaBE * Financial PostBG Bulgarian PostsBG Finance EngineeringBR Empresa Brasileira de Correios e Telégrafos -
ECTCA National Bank of CanadaCA Canada Post CorporationCH * PostFinance/Swiss Post CV Cape Verde PostCN China PostCZ CSOBDE * Deutsche PostbankDK SydbankEG CIB (Egypt) S.A.E.ES BBVAES Correos y TelegrafosFI ING/Postbank (EUR transfers)FR * La Banque PostaleGB * Alliance & Leicester Commercial Bank plcGB VisaGR Hellenic PostGR EFG Eurobank ErgasiasHR Croatia PostHU Magyar PostaIE * An PostIL Israel Postal CompanyIS * Póstgíró
IT * Poste ItalianeIT Banca Popolare di SondrioJP Japan Post, Postal Savings Business
Headquarters KR Korea PostLU * EPT LuxembourgLV Latvia PostMA Banque Centrale PopulaireMA Barid Al MaghribMN XacBank NL * ING/PostbankNO ING/Postbank (EUR & NOK transfers)NZ ANZ National BankPH Philippine Postal CorporationPL ING/Bank SląskiPL Polish PostPT * CTT Correios de PortugalRO Banc PostRO Posta RomanaRS Postal Savings BankSE ING/Postbank (EUR & SEK transfers)SI Postna Banka SlovenijeSK Postova BankaSN PostefinancesTG Societe des Postes du TogoTH Thailand Post CoTR Turkish PostTN La Poste TunisienneUS American Express BankUS Deutsche BankUS Federal Reserve Bank
World Bank payment system conference, Washington, 29 May 2007 4
Monthly transactions
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
World Bank payment system conference, Washington, 29 May 2007 5
The new Eurogiro mission
Connectivity
Dedicatedlinks
SWIFTCUG
Eurogiro
Eurogiro is a commercial company that actively
promotes and catalyzes bilateral and multilateral business opportunities
among its
Alliances & Members
BanksPostal
Non-Fin.Inst.
Alliances
Regions
Products
CardPayments
Credittransfers
MoneyOrders
Direct debits
customers in retail financial services and
wholesale banking worldwide with the aim
to constantly add business value to the
whole Eurogiro community
World Bank payment system conference, Washington, 29 May 2007 6
Eurogiro – providing interoperability
Gateway of business opportunities for Eurogiromembers:
The Eurogiro SWIFTNet Closed User Group- Exchange transactions in FileAct format with any
SWIFTNet member and any Eurogiro member on the same system;
- Access from SWIFT system to (postal) members with ELS systems and access from ELS system to (banking) members with SWIFT system
Eurogiro Select solution- Access for non-banks through dedicated network
The Eurogiro/Visa solution- Receive payments from Visa card holders; additional
volume and revenue to the Eurogiro members
WSBI (Savingsbanks) co-operation on remittances
World Bank payment system conference, Washington, 29 May 2007 7
Eurogiro – providing connectivity (cont.)
The FED-Eurogiro Partnership- Incoming traffic (from potentially any US bank) with fee and
foreign exchange income- Live in pilot phase.
Eurogiro/Postal org. – The Eurogiro Cash International (ECI)- New revised two-day cash product mixing Track & Trace
techniques and Eurogiro bulking principles- Can be exchanged electronically between the UPU/IFS
network and the Eurogiro network
Eurogiro/Western Union – Urgent Cash- Support from Eurogiro of the Urgent Cash product of
Western Union- Option to connect to Western Union through the Eurogiro
ELS interface- Nearly 30 Eurogiro members as Western Union agents and
strong volume growth
Multilateral settlement: ESSP and USSP
World Bank payment system conference, Washington, 29 May 2007 8
Example 1: Low cost connectivity of non-banks
Host system
Eurogironetwork
Modem
PC terminals
Prod. system
Test system
Cisco 1721 VPNencryption
Hub
Multitech Modem for remote configuration
Normally disconnected!
Printer
Eurogiro deliveryMember’s network
ELS ApplicationInstallations CD
ELSVer. x.x
World Bank payment system conference, Washington, 29 May 2007 9
Example 2: linking postal and banking world
Eurogiro is approved as a CUG administrator on SWIFTNet allowing SWIFT members to connect to Eurogiro using their SWIFTNet connection
Eurogiro SWIFT
GatewaySWIFTNet
EurogiroCUG
EurogiroNetwork
World Bank payment system conference, Washington, 29 May 2007 10
Valicert
Eurogiro MemberFED
ELS
Example 3: Dedicated link to US ACH
103-10Nacha
103-10
network
Nacha
Store Nacha files and transaction numbers
Forward advices for reconciliation. The EFI will reconcile with the received
Nacha files and send MT910
ELS returns MT011. ELS part of EFI will reconcile with sent
MT103-10
Settlement
NachaNachaNacha
Nacha
There is a 1-to-1 relation between Nacha file and
MT103-10
World Bank payment system conference, Washington, 29 May 2007 11
UK Sender
GermanBank
UK Bank
GermanBeneficiary
Visa Direct
EG Settlement
Bank - ESSP
7 MT103-20
8MT103-20
6CFT
Example 4: Links between card and bank world
1
4 AFT
3AFT+CFT
5CFT
2Auth
VisaNet
Visa DirectSettlement
Bank
GB-GBPFR-EURDE-EUR
9MT202
10MT910
World Bank payment system conference, Washington, 29 May 2007 12
Example 5: Links to remittance organisation
InternetELS
WUdatabase
Eurogiro interface
CSC
Domestic
PO
e-bankingcustomer
Eurogiro
POPO
PO
POPO
PO
Host
ELS screens
Local screens
World Bank payment system conference, Washington, 29 May 2007 13
Example 6: Settlement interoperability
Member BMember A
22 Cover Message MT202
Debit advice MT900
33
D EUR/USD 1000
C EUR/USD1000
ESSP/USSP
A/C A A/C B
Credit advice MT910
3344
Statements of account MT950
44Statements of
account MT950
1
EUR/USD payment instructions[Eurogiro Envelope, MT103]
World Bank payment system conference, Washington, 29 May 2007 14
Examples of key interoperability projects
• SEPA– Cards & ATM’s– Credit transfers– Direct debits
• Global Payment Framework (linking banks and ACH’s)
• Asian regional ACH• SWIFT remittance standards project• BIS/WB remittance standards
World Bank payment system conference, Washington, 29 May 2007 15
‘Co-competition’ could be solution
• Co-operative space– Infrastructure & connectivity– Reach– Products & standards (WB/BIS)– Lobbying & compliance
• Competitive space– Customers and fees– Added value services– Branding
No single organisation can cover first, intermediary and last mile for
payments. With Co-competition can work together at the infrastructure level while still competing for the customer
16World Bank payment system conference, Washington, 29 May 2007
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