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Payment and Clearing Systems

Payment and Clearing Systems. Payment and Clearing Systems What is important?. Float Value dating Availability Finality Cost Security. Payment and Clearing Systems Value Dating.

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Payment and Clearing Systems

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  1. Payment and Clearing Systems anb

  2. Payment and Clearing SystemsWhat is important? • Float • Value dating • Availability • Finality • Cost • Security anb

  3. Payment and Clearing SystemsValue Dating • Value is the time when a payor ceases to be able to use the funds in the sense of accruing interest or making a payment and is the time when a beneficiary is able to use the funds in the sense that they may be used to pay down an overdraft, accrue interest or be used to make a payment. anb

  4. Payment and Clearing SystemsValue Dating • Forward Value Dating The time between a bank being notified of a transaction in favor of a customer and the customer receiving future value for the item • Back Value Dating The time between a bank being notified of a transaction to the customer’s account and the item being valued on a date prior to the date of the transaction anb

  5. Payment and Clearing SystemsAvailability • Availability The time when the beneficiary actually has access to the funds i.e. to use to make a payment anb

  6. Payment and Clearing SystemsFinality The time after which a payment is considered to become irrevocable and cannot be returned without the permission of the beneficiary account holder. anb

  7. Payment and Clearing SystemsCost • Different payment systems have different features as to Value, Float, Finality and security. • Because of this they also have different costs • The Cash Manager therefore has to be careful to use the most cost effective method to get the job done anb

  8. Payment and Clearing SystemsSecurity We need security to avoid Theft Fraud Loss Error Contamination These issues will be considered later but first consider types of Clearing systems anb

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