de nederlandsche bank eurosysteem oversight on retail payments paul osse conference financial sector...
TRANSCRIPT
De Nederlandsche Bank Eurosysteem
Oversight on Retail Payments
Paul Osse Conference Financial Sector of Macedonia on Payments and Securities Settlement Systems
Ohrid 25 June 2008
De Nederlandsche Bank
De Nederlandsche Bank Eurosysteem
Content
Objective presentationObjectsInfluence of developmentsNon banksOversight on retail payments;
the role model
De Nederlandsche Bank Eurosysteem
Objective presentation
Not to detail how oversight is performed
BUTTo high light organisational structure for
inter-institution paymentsTo discuss the impact of changes on this
organisational structureTo high light effect on oversight
De Nederlandsche Bank Eurosysteem
PayeePayer
*Debtor’sCommercial Bank
*CreditorsCommercial Bank
National Central Bank
*
AutomaticClearing Houses
*OwnerInterbankPaymentProducts
Legend:. payment order. order flow info. owner relation. payment products. goods/services. owner payment * product relation
Objects of oversight System of retail payments in NL
ElectronicMoney
Institutions
De Nederlandsche Bank Eurosysteem
Oversight on the paymentsystem: the role model
Object of oversight:
The whole payment chain
Paymentinstrument
Channel/medium
Transaction Processing
Clearing Settlement
De Nederlandsche Bank Eurosysteem
Objects (general)
Retail Payment Systems
Payment Instruments
De Nederlandsche Bank Eurosysteem
Objects (2)
The objects are systems and instruments, but
it is inevitable to look at the actors/roles
involved:
system/instrument owner
operator/processor
issuer/acquirer
etc.
De Nederlandsche Bank Eurosysteem
Objects (3)
More and more non-banks involved in the
payment system.
Not (yet) regulated by banking supervision
acts (in NL).
Payment Services Directive.
De Nederlandsche Bank Eurosysteem
Objects (4)
Starting point and so far mainly inter bank
systems and instruments, however:
correspondent banking
systems of large banks/consortia
instruments of one bank (or
payment service provider)
De Nederlandsche Bank Eurosysteem
New technologies and retail payments
De Nederlandsche Bank Eurosysteem
Influence of developments (1)
Trends retail payments: European Consolidation TARGET SEPA
Specialisation/Unbundling Multiple operators/owners: card schemes,
transaction networks, etc
De Nederlandsche Bank Eurosysteem
Influence of developments (2)
Market developments New technologies contactless, mobile payments internet biometrics New providers of payment services telecom providers public transfer etc etc
De Nederlandsche Bank Eurosysteem
Non banks in the payment system
Outcome recent survey: >125 non banks Non banks are active in the whole payment chain
Payment instrument
1. Cheque
2. Credit transfer
3. Debit transfer
4. Card payment
5. Money remittance
6. E-money and other stored value
7. Other/innovative
Payment initiation channelCapturing device
1. POS
2. Internet
3. M-phone
4. Other card-not present
5. EBPP
Clearing Post-payment
services
1. Sorting of “on-us” transactions
2. Bilateral (bank) clearing
3. ACH
4. Other retail clearing systems
5. Card networks
Settlement
1. Internalisation of “on us” transactions (e.g. some card transactions, some e-money products like PayPal,…)
2. Correspondent banking (bilateral) (e.g. money remittance)
3. Retail Payment systems (commercial or central bank money) e.g. ACH, some card schemes
4. In the books of a (commercial bank) settlement agent (e.g. some card schemes)
1. E-reconciliation
2. Other e-products (confirmation of settlement via sms,…)
Strict Payment
C& S process
Post-payment services
Payment instrument processing provides input (often batches) for the clearing and settlement process
Many ways to use a payment instrument (to initiate the payment transaction)
De Nederlandsche Bank Eurosysteem
Oversight on the paymentsystem: the role model
General approach oversight:Licensing or moral suasionAssessments of systems and products
against standardsRegular oversight
De Nederlandsche Bank Eurosysteem
Oversight on the paymentsystem: the role modelOversight based on standards like: Wholesale systems (e.g. Core principles for
systemically important payments systems, SIPS) Retail systems (e.g. Oversight standards for Euro retail
payment systems and (Subset of) Core Principles Payment products (e.g. Recommendations for payment
products) Securities settlement systems (CPSS/IOSCO
Recommendations) Technical standards (ISO, ECBS, NVB,...)
De Nederlandsche Bank Eurosysteem
Oversight on the paymentsystem: the role model
Disadvantage of current basis:No legal instrumentsStandards pay to less attention to:
the control of the system operator/product owner
other participants in the chain
In addition:Supervision/oversight is split up over
several authorities
De Nederlandsche Bank Eurosysteem
PayeePayer
National Central Bank
AutomaticClearing Houses
*OwnerInterbankPaymentProducts
Legend:. payment order. order flow info. owner relation. payment products. goods/services. owner payment * product relation
Overview supervision on the non cash payments
*CreditorsCommercial Bank
AFM
DNB Prudential Supervision
DNB Oversight
*Debtor’sCommercial Bank
*Electronic Money Institutions
De Nederlandsche Bank Eurosysteem
Oversight on the payment system
Consequences. The risk exists:
Gaps in control aren’t detected
Risks introduced by current other players
aren’t (timely) detected
Risks introduced by new players aren’t
(timely) detected
De Nederlandsche Bank Eurosysteem
Oversight on the paymentsystem: the role model
To solve these problems our
oversight approach is changed to:
A role based approach
De Nederlandsche Bank Eurosysteem
Legal Owner
Issuer
Clearing Institution
Acquirer
Issuing processor
Clearing processor
Acquiringprocessor
Settlement processor
Settlement Institution
Merchant/acceptant Consumer
Networkprocessor
Acceptant Payment Service Provider
Scheme oriented organisation retail payments
Service Providor
Retailer
Acquirer
De Nederlandsche Bank Eurosysteem
Oversight on the paymentsystem: the role model
Scheme owner
Issuer
Issuing processor
Acquirer
Acquiring processor
Network processor
Clearing institution
Clearing processor
Settlement institution
Settlement processor
Consumer
Merchant
Card manufacturer
Card personalisation
Card destroyer
SAM manufacturer
SAM personalisation
SAM destroyer
POS manufacturer
Acceptant Payment Service Provider
Possible roles in the payment scheme
De Nederlandsche Bank Eurosysteem
Oversight on the paymentsystem: the role model
Advantages role based approach:
Alignment with the scheme oriented
organisation of the retail payments
More efficient approach
Improvement in the process of defining
standards
Tie-up to new developments will be more easy
De Nederlandsche Bank Eurosysteem
QUESTIONS?
De Nederlandsche Bank Eurosysteem
Time’s up………
Thank you for your attention
P.W. Osse RE RA CISADe Nederlandsche Bank N.V.+31 20 - 524 [email protected]