Electronic Payment[1]

Electronic Fund Transfer SystemsElectronic Fund Transfer Systems

Program Pascasarjana, Universitas Gunadarma, Magister Management , Budi Hermana-1

Electronic Clearing RTGS International Fund Transfer Intro.to FISCAM

Electronic Fund Transfer SystemElectronic Fund Transfer System




1BarangCEK

Bank A

22

CEKBank A

BANK X

Pak U mempunyai tabungan di Bank X

BANK APak E mempunyai giro di Bank A

BI 3

Penyerahan warkat kliring(Session I)

CEKBank A

4CEKBank A

Penerimaan Warkat(Pertemuan I/pagi)

5

Penerimaan/PenolakanWarkat (Session II)

6

Sistem Kliring Elektronik




Warkat KliringWarkat Kliring

• Cek

• Bilyet Giro

• Wesel Bank Untuk Transfer

• Surat Bukti Penerimaan Transfer

• Nota Debet

• Nota Kredit

Sistem KliringSistem Kliring

• Manual

• Semi Otomasi

• Otomasi

• Elektronik

Penyelesaian Akhir(Settlement)

Pemindahbukuan rekening giromasing-masing Bank di

BANK Indonesia





MAKER (DRAWER) DATE CHEQUENUMBER

AMOUNT

CURRENCY

AUTHORIZEDSIGNATURE OF

MAKER’S AGENT

DRAWEEBANK

PAYEE

DRAWERACCOUNTNUMBER

DRAWEE BANKNUMBER

The paper cheque is justa carrier of information.

Electronic transmission isbetter.

We dematerialize the cheque(remove the paper).

0 6 1 3 0 0 1 8 1 8 4 3 1 0 1 4 3 7 0 0 0 0 0 0 0 0 0 1 0 0 0 0 U S D 0 6 5 2 0 0 3 5 6 4 2 5 0 2 0 0 1 0 1 3 0DRAWER

ACCOUNTNUMBER

DRAWEEBANK

NUMBER

CHEQUENUMBER

AMOUNT CURRENCY PAYEEBANK

NUMBER

PAYEEACCOUNTNUMBER

DATE

Only the information is sent to the clearing house





Diagram Sistem Kliring ElektronikSistem Kliring Elektronik




1. Pemisahan warkat per jenis transaksi (debet atau kredit), stempel kliring, dan pencantuman MICR

2. Bank pengirim merekam data ke sistem dengan menggunakan reader encoder atau data entry

3. Mengelompokkan warkat dalam batch4. Mengirimkan batch DKE secara elektronik melalui jaringan

komunikasi data ke penyelenggara, Fisik warkat dikirim juga untuk dipilah berdasarkan bank tertuju dengan menggunakan mesin baca berteknologi image

5. Peserta dapat melihat status DKE (sukses atau gagal)6. SPKE memproses DKE setelah waktu transmit DKE berakhir7. SPKE mem-broadcast informasi hasil kliring sehingga

peserta bisa melihat secara on line posisinya

MekanismeSistem Kliring Elektronik




ACH Credit Transaction

BUYER SELLER

SELLER’SBANK

BUYER’SBANK

CLEARINGHOUSESETTLEMENTBANK

1. BUYER SENDS AN ORDER TO BUYER’S BANK TO CREDIT $X TO SELLER’S ACCOUNT IN SELLER’S BANK 6. SELLER’S BANK

CREDITS SELLER’S ACCOUNT WITH $X

3. CLEARINGHOUSE DETERMINES THAT BUYER’S BANK OWES SELLER’S BANK $Y (ALL TRANSACTIONS ARE NETTED)

4. BUYER’S BANK PAYS $Y TO SETTLEMENT BANK

5. SETTLEMENT BANK PAYS $YTO SELLER’S BANK

2. BUYER’S BANK SENDS TRANSACTION TO AUTOMATED CLEARINGHOUSE





ACH Debit Transaction

BUYER SELLER

SELLER’SBANK

BUYER’SBANK

CLEARINGHOUSESETTLEMENTBANK

1. BUYER AUTHORIZES SELLER TO DRAW $X FROM BUYER’S ACCOUNT IN BUYER’S BANK

4. CLEARINGHOUSE DETERMINES THAT BUYER’S BANK OWES SELLER’S BANK $X (ALL TRANSACTIONS ARE NETTED)

5. BUYER’S BANK PAYS $X TO SETTLEMENT BANK

6. SETTLEMENT BANK PAYS $X TO SELLER’S BANK

7. SELLER’S BANK CREDITS SELLER’S ACCOUNT WITH $X

2. SELLER ASKS HIS BANK TO SEND TRANSACTION TO AUTOMATED CLEARINGHOUSE

3. SELLER’S BANK SENDS TRANSACTION TO AUTOMATED CLEARINGHOUSE

8. BUYER’S BANK ADVISES BUYER OF PAYMENT





1. Memberikan pelayanan sistem transfer dana antar peserta, antar nasabah peserta dan pihak lainnya secara cepat, aman, dan efisien

2. Memberikan kepastian pembayaran3. Memperlancar aliran pembayaran (payment flows)4. Mengurangi resiko settlement baik bagi peserta maupun

nasabah peserta (systemic risk)5. Meningkatkan efektifitas pengelolaan dana (management

fund) bagi peserta melalui sentralisasi rekening giro6. Memberikan informasi yang mendukung kebijakan

moneter dan early warning system bagi pengawasan bank7. Meningkatkan efisiensi pasar uang

Real Time Gross Settlement Tujuan




Sender

Bank

Receiving Bank

A B C D Ammount of Liability

A - 90 40 80 210

B 70 - 0 0 70

C 0 50 - 20 70

D 10 30 60 - 100

Total Claim 80 170 100 100 450

Internet Bank Gross Payment Before Netting

Net Claims (+) or Liabilities (-) of Each Bank

Bank A B C D Net

Total -130 100 30 0 0

Net VS GrossNET SETTLEMENT

Real Time Gross Settlement




Net VS GrossGROSS SETTLEMENT

BANK A

BANK B

BANK C

BANK D

(40)

(90) (70) (10)

(80)

(60) (20)

(50)

(30)





1. V Shaped Structure2. Transfer mechanism3. Window Time4. No Money No Game5. Capping6. Queue Management and Gridlock Resolution7. Intraday Liquidity Facility8. Bye-Laws9. Information Technology Security and Disaster

Recovery Plan10.Future Plan

Real Time Gross Settlement Karakteristik




V Shaped Structure

SenderBank

ReceivingBank

2. Settlement

RCCBI-RTGS

1. Full Payment Message

3. Full Payment Message





Transfer Mechanism

1. Sender Bank enters credit transfer input into RTGS Terminal which will be further transmitted to RCC at Bank Indonesia

2. RCC will process the credit transfer with the following mechanism:• To verify whether the checking account balance of the

sender bank is higher or equal to the nominal ammount of credit transfer

• When the sender bank’s checking account is adequate, a posting in the sender bank and receiving bank checking accounts will be executed simultaneously

• When the sender bank checking account is not adequate, the credit

transfer will be placed in queue within the RTGS machine

3. Settled credit transfer information will be transmitted automatically to RCC to RTGS terminal to receiving bank





Window Time

No Money No Game

Capping

06.30 a.m. to 5.00 pmProlong time for certain cases

Only credit other participant accountNot Allowed to Debit other participant account

• To minimize vairous payment system risk

• In the beginning, Rp 1 Billiun





Real Time Gross Settlement Queue Management and Gridlock Resolution

1. The queue in BI-RTGS system based on priority level and first in first out (FIFO)

2. The queue modul in BI-RTGS system shall be completed with bypass FIFO facility which automatically operates when the queue reaches a certain ammount, for the purpose of reducing the number of queues

3. The priority level in queue module in BI-RTGS system is as follows:• First priority Coverage of clearing result• Second priority Bank transaction with BI/the government• Third priority Credit transfer originating from BI-RTGS

participant banks4. When BI-RTGS detects gridlock, gridlock resolution facility will be

operated automatically as well as manually based on the criteria of balance adequacy or using First Available First Out (FAFO) method




Real Time Gross Settlement Intraday Liquidity Facility

1. BI-RTGS participant banks shall file application to obtain FLI with BI2. Banks shall pledge SBI and or government bonds as collateral so that FLI

facility is fully secured3. BI will determine the maximum FLI that could be withdrawn in a certain

period within 1 day. The FLI used by BI-RTGS participant banks as required by the bank’s real need in an intraday (provided when needed)

4. When a bank receives incoming transfer, the incoming transfer will automatically be used to reduce FLI balance used

5. On certain limitation, FLI facility shall be returned to BI at the end of a day. If the bank could not return it on time, the FLI facility will be transfermed into FPJP overnight

6. On T+1, BI will claim all the bank liabilities by using “super priority” transaction which will be settled before other transactions

7. At certain time in the morning, if the bank has not settled the payables, the bank will be suspended from BI-RTGS




• Real-time gross settlement system of the Federal Reserve• Used by any institution that has an account at the Federal

Reserve• Used mainly for large transfers (average: $3.5M)• On-line connection (7800 institutions, 99% of transfers)

– Direct connection– Computer dialup

• Off-line connection (1700 institutions, 1% of transfers)– Telephone instructions with codeword

• FedLine access from PCs• Some services over the Web (not funds transfer yet)

Fedwire (US RTGS)




Participants

• Depository institutions • Agencies and branches of foreign banks • Member banks of the Federal Reserve System • U.S. Treasury and authorized agencies • Foreign central banks, foreign monetary authorities,

foreign governments, and certain international organizations; and

• Any other entities authorized by a Reserve Bank

Fedwire (US RTGS)




INTERDISTRICTSETTLEMENT FUND

ATLANTA FED

BOSTON FED

CLEVELAND FED

. . .

SAN FRANCISCO FED

How Fedwire Works

PNC BANK(PITTSBURGH)

EVERGEEN BANK(SEATTLE)

SAN FRANCISCO FED(SEATTLE BRANCH)

CLEVELAND FED(PITTSBURGH BRANCH)

CLEVELAND FED

DOLLAR BANK

MELLON BANK

. . .

PNC BANK

SAN FRANCISCO FED

EVERGREEN BANK

. . .

WELLS FARGO

WESTERN BANK

PNC WANTS TO TRANSFER$1M TO EVERGREEN BANK

1. PNC SENDS TRANSFER ORDER TO PITTSBURGH BRANCH OF CLEVELAND FED

2. PITTSBURGH BRANCH SENDS ORDER TO CLEVELAND FED

3. CLEVELAND FED SUBTRACTS $1M FROM PNC ACCOUNT

4. CLEVELAND SENDS ORDER TO ISF

5. ISF SUBTRACTS $1M FROM CLEVELAND, ADDS $1M TO SF

6. ISF NOTIFIES SF FED

7. SF FED ADDS $1M TO EVERGEEN ACCOUNT

8. SF FED NOTIFIES SEATTLE BRANCH

9. SEATTLE BRANCH NOTIFIES EVERGREEN. PAYMENT IS NOW IRREVOCABLE.

Fedwire (US RTGS)




• In 2000,– 108 million Fedwire transfers

– Value $380T (11 times the World Economic Product)

– New York Fed: 40 million transfers, $209T

• “Instantaneous” (within minutes) irrevocable settlement

• Payment guaranteed by Fed• Operates 18 hours/day on business days• No minimum dollar amount• Daylight overdrafts permitted (intraday peak: $70B)

– Fee charged if not collateralized ($6.94 per million)

Fedwire (US RTGS)




• (Clearing House Interbank Payments System)– Private, owned by NY Clearing House Association– U.S. dollar leg of foreign exchange (90% share)– 128 banks, 29 countries– Continuous multilateral netting

• Each bank’s position v. every other bank constantly recalculated

– Irrevocable transactions, end-of-day settlement– $1.44T per day, average transaction $6.6M– Cost per transaction: $0.13 - $0.40

CHIPS




CHIPS CHIPS Operation

• London Bank L has an account in a NY Bank A• Wants to transfer $1M to the account of Bank J in NY Bank

B (A and B are on CHIPS)• Bank L sends Bank A a SWIFT message• Bank A verifies the message, enters it into CHIPS (Bank A

has the $1M; doesn’t rely on L’s credit)• CHIPS verifies that the transaction is within A’s debit limit

and the B-A bilateral limit; otherwise rejects• CHIPS notifies Bank B that $1M is being deposited from

Bank L through Bank A for Bank J• Bank B notifies Bank J that $1M has been added to its

account




CHIPS

• CHIPS closes at 4:30 p.m. NY time• Each settling bank gets a settlement report showing

net amount owed or owing• Settling banks have until 5:30 to challenge the total

or must pay into the CHIPS account at the NY Federal Reserve by Fedwire (US RTGS)

• Banks with net credit positions are paid by 5:45• All payment orders are final and irrevocable• Fedwire is a payment system• CHIPS is a clearing system• SWIFT is a messaging system

CHIPS Operation




CHIPS

SWIFT

LONDON BANK L JACKSONVILLE BANK J

NEW YORK BANK B(J’S CORRESPONDENT)

FEDERAL RESERVE

A’s ACCOUNT

B’s ACCOUNT

CHIPS SETTLEMENT ACCOUNT

1. BANK L TELLS BANK A TO PAY $1M TO J’s ACCOUNT IN BANK B

SWIFT

CHIPS

2. BANK A VERIFIES FUNDS, ENTERS CHIPS TRANSACTION

CHIPS

A’S ACCOUNT

B’S ACCOUNT

3. CHIPS VERIFIES CREDIT LIMITS, ADJUSTS ACCTS INTERNALLY4. AT 4:30, CHIPS TELLS

BANK A HOW MUCH TO PAY VIA FEDWIRE

CHIPS

FEDWIRE

5. BANK A MUST PAY BY 5:30

6. FED MOVES $$ INTO CHIPS ACCT

7. BY 5:45, CHIPS MAKES PAYMENT TO B

8. FED DEBITS CHIPS ACCOUNT; CREDITS B’S ACCOUNT

CHIPS

9. CHIPS ADVISES B OF CREDIT AMT

10. B CREDITS J WITH $1M

NEW YORK BANK A(L’S CORRESPONDENT)

CHIPS Operation




SWIFT

A major international interbank network, transmitting instructions and other information, NOT a fund transfer network. Settlements are conducted through Fedwire, CHIPS, etc.




SWIFT

• Society for Worldwide Interbank Financial Telecommunication (non-profit, Brussels)

• Financial messaging system, not a payment system– Settlement must occur separately

• 7125 institutions, 193 countries• 1.27 billion messages per year: $5 trillion per day• Cost ~ $0.20 per message• X.25 packet protocol• CCITT X.400 store-and-forward standard• Moving to full IP network in 2002• swiftML

– interoperable with ebXML




SWIFT

There are five central requirements of network security:

(1) Confidentiality: Data should not be disclosed to unauthorized persons;

(2) Access control: Operation of the system is under some control mechanism to prevent illegal access of data;

(3) Integrity: Message information should remain original to carry designated transaction details.

(4) Data origin authentication: Some way is used to prove the source of data;

(5) Nonrepudiation: System should provide some features to ensure that nobody can deny involvement in an electronic transaction so that the legal effect of an EDI transaction can be relied on.

Security Control




SWIFT Security Control

End-to-end authentication

SWIFT provides secret-key and end-to-end authentication; i.e. authentication between two banks detecting any bogus payment message.

Sequence number control

Authentication control does not prevent a message from being replicated, deleted, or stored and retransmitted at a later date. The sequence numbering of messages handles these requirements. A payment message is transmitted with an input sequence number, output sequence number, and transaction reference number. They must be in order separately. The format and the input sequence number are checked by the SWIFT operating center and those messages with format errors or wrong sequence numbers are rejected by operating centers.




SWIFT

User access controlTerminals logging into the system must verify their identity using a password issued by SWIFT. The password is sent in two parts in the form of a table.

Encryption between operating centersTo preserve the privacy of the banks' messages, the international lines that connect operating centers and join them to regional processors are protected by encryption.

SIPN level core security solutions

• IP Packet filtering• IP Encryption Authentication and Integrity• Router Authorization• Firewalls




Others Fund Transfer System

CHAPS was developed in 1984, and is one of the largest real-time gross settlement systems in the world, second only to Fedwire in the US. CHAPS offers its Members and their participants an efficient, risk-free, reliable same-day payment mechanism.

CHAPS

CHAPS (Clearing House Automated Payment System) is an electronic transfer system for sending same-day value payments from bank to bank. It operates in partnership with the Bank of England in providing the payment and settlement service.




Others Fund Transfer System••

CHAPS Sterling Volumes and Values 1990,1997,1999 & 2000

Q1 1990

Q1 1997

Q1 1999

Q1 2000

Average daily volume

31,000 62,000 72,000 81,738

Average daily value

£78 billion

£139 billion

£169 billion

£189 billion

Average transaction value

£2.5 million

£2.2 million

£2.3 million

£2.31 million

Minimum transaction value

£5,000 0 0 0





TARGET, which stands for the Trans-European Automated Real-time Gross settlement Express Transfer system, is the real-time gross settlement system for the euro.

TARGET consists of fifteen national real-time gross settlement (RTGS) systems and the ECB payment mechanism (EPM), which are interlinked so as to provide a uniform platform for the processing of cross-border payments.

TARGET is more than simply a payment infrastructure; it will offer a premium payment service which will overcome national borders between payment systems in the EU.

TARGET is a real-time system: under normal circumstances payments will reach their destination within a couple of minutes, if not only a few seconds, of being debited from the sending participant's account; all payments will receive the same treatment, regardless of their value.

TARGET





TARGET is a gross settlement system in which each payment will be handled individually. Acknowledgement of the successful execution of each individual payment order will be sent to the sending national central bank in real time.

TARGET provides intraday finality: settlement will be final once the funds have been credited. The money received will be central bank money. It will be possible to re-use these funds several times a day. Liquidity will be tied up only for the length of time necessary for real-time settlement to take place.

TARGET is accessible to a large number of participants. Hence, most credit institutions will be able to use TARGET to make payments on their own behalf, independently of other participants.

TARGET is very easy to use. To initiate a cross-border payment via TARGET, participants will simply send their payment orders to the euro RTGS system in which they participate using the domestic message format with which they are familiar.

TARGET will take care of the rest.

TARGET





Diskusi

Documents

Electronic Payment[1]