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Payments systems models

Payments systems models. Open loop systems. Agenda. The two models of payments systems Focus on open loop models Few examples. Payments systems models Open loop models. Payments systems operate essentially on two types of models : Open loop models Closed loop models

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Payments systems models

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  1. Paymentssystemsmodels Open loopsystems

  2. Agenda • The twomodels of paymentssystems • Focus on open loopmodels • Few examples

  3. PaymentssystemsmodelsOpen loopmodels • Paymentssystemsoperateessentially on two types of models: • Open loop models • Closed loop models • Open loopmodels are by far the mostwidespread and mostinterestingmodels. • Theyshouldbestudied and analyzedcarefully.

  4. End party End party PaymentssystemsmodelsOpen loopmodels • Open loop systems can be compared with a hub-and-spoke model. • The system is connected to Banks, Payments Services Providers (PSP) or similar institutions which act as intermediaries. • The banks/PSPs are connected to end parties, the senders and receivers of funds. • Onlyintermediarycanbecomemembers or participants of the paymentssystem. • The system scales and becomesbiggerwhen new intermediarywiththeir end parties joins the system.  That iswhyitiscalled open. End party End party Bank / PSP Bank / PSP End party End party Bank / PSP End party Bank / PSP End party Payments system Paiementor Bank / PSP Bank / PSP End party End party End party Bank End party End party End party No direct connectionbetween end parties and the paymentsystems.

  5. Open loopmodelsPaymentssystemsanatomy Bank / PSP • Payments system(s) are in generalcomposed of : • Interbank exchanges systems • Central bank system(s) • Banks / PSPscanbecomeparticipants of one or many Interbank exchanges systems • Les banques / PSP must becomemembers of central bank system(s). • A bank / PSP canjoininterbanksystems or central banksystems as direct or indirect participant. End party End party Bank / PSP Bank / PSP Interbank system 2 Bank / PSP Interbank system 1 Bank / PSP Interbank system 3 Central Bank System Paiementor Bank / PSP Bank / PSP Interbank system 4 Interbank system n Bank / PSP Paymentssystems Bank / PSP End party End party Bank / PSP

  6. Open loopmodelsPaymentssystemsanatomy Bank / PSP • Interbank transfersystemsusuallyimplement clearing mechanism and are connected to the central banksystems. • Central banksystemsimplementsettlementmechanism. In some countries, theyimplementboth clearing and settlementmechanism. • Clearing and settlementmechanismwillbeanalyzed in future videos. End party End party Bank / PSP Bank / PSP Interbank system 2 Bank / PSP Interbank system 1 Bank / PSP Interbank system 3 Central Bank System Paiementor Bank / PSP Bank / PSP Interbank system 4 Interbank system n Bank / PSP Paymentssystems Bank / PSP End party End party Bank / PSP

  7. The corepaymentssystems in France • CORE • Cheques • SEPA Credit transfers (classic) • SCT instant • Direct debits • Cards (Domestic) • Bills of exchange • Promissory notes Bank / PSP End party End party Bank / PSP Bank / PSP CORE • e-RSB • Authorisations for withdrawals and payments by cards Bank / PSP EBA EURO1/ STEP1 Bank / PSP EBA STEP2 (SCT, SDD) Paiementor TARGET2 operated by the ECB • EURO1/STEP1 • Credit transfers • Fi Market Direct Debits • Collections (advise of payments) Bank / PSP e-RSB EBA IPS (SCT Instant) Bank / PSP Visa Master Card Bank / PSP Payments systems Bank / PSP Main International systems End party Bank / PSP End party SWIFT

  8. The corepaymentssystems … in your country • System 1 • Xxxx • Xxxx Bank / PSP End party End party Bank / PSP Bank / PSP xxx • System 2 • Xxxx • Xxxxx Bank / PSP xxx Bank / PSP xxx Paiementor xxxxx • System 3 • Xxxx • Xxxxx Bank / PSP xxx xxx Bank / PSP xxx xxx Bank / PSP Payments systems Bank / PSP Main International systems End party Bank / PSP End party SWIFT

  9. Useful ressources to check out In French

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