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RT-RPS – Update – Apr15
Background LVPS timing differences - RT RPS / cards / closed systems
1
Payer pre-funds Transfers within these systems are real-time
A
1-2 days
Closed Systems
1-2 days
Time after transaction when
payer is debited from bank account
Time before transaction when
payer is debited from bank account
Time after transaction when Merchant / Payee
is credited on bank account
D
Bank-to-Bank Real-Time Payment Systems
True Real-Time
~30 days
Credit Cards
Real-time confirmation of payment initiation
(i.e. real-time perception for the payer)
Debit Cards / On-line Systems
Real-time confirmation of payment initiation (i.e. real-
time perception for the payer)
B C
RT-RPS – Update – Apr15
Background Key features of real-time retail payments
2
24x7: payments can be sent and received all times of the day, every day of the year
24 x 7 Instantaneous Irrevocability Certainty
Instantaneous: good funds must be available on the beneficiary’s account in, typically, less than a minute
Irrevocability: once payments are processed, they can’t be recalled
Certainty: payments sent to a beneficiary bank are individually explicitly confirmed (to both payer and payee) or rejected
RT-RPS – Update – Apr15
Background Candidates for RT adoption (from banks’ perspective)
3
Consumer
Business
Consumer
Business
Business
Consumer
4%
51%
18%
7%
80%
20% 20%
Payer Payee Type Share* Confirming Availability Trend Value of RT
Person to Person
Point of Sale (Physical)
Bill Payment**
High Value
E-Commerce
Mobile Commerce
Bulk Payment
Invoice Payment
High Value Order
Primary candidate
Primary candidate
Primary candidate
Secondary candidate
RT Candidate
*share of total non-cash payments worldwide
**including direct debits
Secondary candidate
RT-RPS – Update – Apr15
RT-RPS Characteristics The interbank payment system is only one part of the solution
4
Payee / Beneficiary Customer
Payee Participant Bank
RT Architecture
Applications
Back Office
Infrastructure
Payer Participant Bank
RT Architecture
Applications
Back Office
Infrastructure Payer / Ordering Customer
RT Interbank Payment System
Clearing
Settlement
Agreements Agreements Agreements Agreements Agreements
Three key components required to allow for end-to-end RT-RPS 1. Banks’ infrastructures (front to back) must work in real-time 2. The interbank payment system must work in real-time 3. End-to-end commercial and operational agreements must be in place
3 3 3 3 3
1 1 2
RT-RPS – Update – Apr15
RT-RPS Characteristics But, the approach to clearing and settlement differs
5
Hub Approach RTGS Approach Distributed Approach
Majority of existing RT-RPS’ - UK, SE, SG, PL
CH,MX,CZ AU
• Interactive clearing, where paying bank requests confirmation of payment details
• 24x7x365 (most) • Settlement either via pre-funding or
through deferred net settlement
• No distinction between high and low value
• No interactive clearing as combined with settlement
• No 24x7, but close
• Interactive Bank-to-Bank clearing • Settlement separated from
clearing and performed by CB as a Fast Settlement Service (FSS)
• 24x7
RTGS
Hub Clearing
Settlement
A B
Bank A
Bank B
RTGS A B
Bank A
Bank B
Central Bank
Bank A
Bank B
Clearing
Settlement
A’ B’
A B
FSS
RTGS
Acc
ou
nts
Acc
ou
nts
Acc
ou
nts
A
cco
un
ts
or or
RT-RPS – Update – Apr15
Australian NPP Project SWIFT Solution
Beneficiary Customer
Central Bank
Ordering Customer
Orderer’s Participant Bank
Branch
Mobile
Phone
Internet
Services
Applications
SWIFT Payment Gateway
Beneficiary’s Participant Bank
Branch
Mobile
Phone
Internet
Services
Applications
SWIFT Payment Gateway Clearing / Confirmation
Settlement
Payment Details
Payment Details Confirmation
Domestic Messaging Channel
Settlement
Settlement Confirmation
Settlement Confirmation
1
2
3
4 4
Key Features • Clearing & Settlement - use of a new domestic
point-to-point channel catering for low latency and 24x7 availability
• Leverages ISO 20022 standards • Increased resiliency through a distributed model
SWIFT Payment Gateway
Addressing Database ICS
Overlay services
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