Page 34 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

Executive Summary

Payment systems have become a vital component of the economic life of contemporary societies. The
smooth functioning of payment systems is essential to the overall efficiency and stability of the market
systems of which they are core parts. To ensure such smooth functioning, and to facilitate the development
of sound payment system infrastructures and services, central banks worldwide have been entrusted with the
responsibility to oversee national payment systems. Payment system oversight is essentially about controlling
risks in payment systems and promoting payment infrastructure and service development.

As part of their oversight responsibilities, central banks have recently placed increasing emphasis on retail
payment systems. Developing efficient and safe retail payment infrastructures has become a key strategic
objective of payment system oversight. Critical in this context is the interoperability of payment systems, which
allows two or more proprietary payment platforms to interact seamlessly, enabling users to make electronic
payment transactions with any other user in a convenient, affordable, fast, and secure way.

Interoperability represents both an important feature of payment system efficiency and, at the same time,
an important source of risk. For this reason, pursuing it requires public authorities to adopt suitable oversight
provisions, and system operators and payment service providers to implement adequate standards covering
legal, organizational, technical, procedural, and business practices.
This report focuses on payment system oversight and the interoperability of payment systems as an
increasingly emerging feature of retail payments. The report describes the foundations of payment system
oversight and considers how oversight policy should apply to interoperability in retail payment systems. Building
on existing international standards for financial market infrastructures, the report elaborates policy principles
for public authorities, payment system operators, and payment service providers to ensure that the risks
associated with interoperability are managed effectively. Important in this context is the cooperation between
relevant authorities, both domestically and internationally, and their effort to cooperate effectively not just in
normal circumstances, but, especially, during crisis situations.
The scope of the principles provided in this report extends to several aspects of payment system oversight
and interoperability. Besides an opening principle covering the general area of risk identification, monitoring,
and management, the other principles are specifically designed to address legal, operational, and financial
aspects of interoperability, as well as issues relating to their governance, access, efficiency, and effectiveness.
The principles build on international best practices. They assume that the responsibility for managing the
risks associated with interoperability lies first and foremost with the operators of and the participants in
interoperable systems. The oversight authorities should consider implementing these principles.
This report is not intended to be a regulatory document. Its main aim is to provide policy advice,
recommendations, and indications to country authorities, payment system operators and service providers.
A companion report on “Payment System Interoperability and Oversight: The International Dimension”
elaborates complementary principles for the oversight of interoperability between internationally linked or
shared payment system infrastructures.

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