Page 46 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

• Agent-level interoperability: Permits agents of one service to serve customers of another service.

• Customer-level interoperability: Permits customers to access their account through any subscriber
identity module (SIM) card.

These forms of interoperability entail e-money services in one market interworking with each other. It is also
possible for e-money operators to interwork with other platforms outside their country and industry. Such
forms of interoperability include:
• E-money interconnection: two PSPs, each offering two commercially and technically independent
e-money services, interconnect their respective technical platforms to enable a customer affiliated with
one service to send money from his or her e-money wallet to the e-money wallet of a customer affiliated
with another service.

Box 5. Terminology
• Interconnection with financial institutions: one PSP, operating its own commercially and
technically independent e-money service, interconnects its technical platform with the technical
platform of a traditional financial PSP to enable interaction between the two platforms (i.e., a
customer sending money from a mobile account to a bank account).
• Interconnection with other payment networks: one PSP, operating its own commercially and
technically independent e-money service, interconnects with a separate payment system (i.e.,
connecting with the Visa or MasterCard payment networks).

Other definitions of interoperability include the following:
• Scheme interoperability: a feature of payment schemes, which consumers and businesses
access through their relationships with their banks or other PSPs. Payment schemes are sets of
rules and technical standards for the execution of payment transactions that must be followed
by adhering PSPs. Banks or other PSPs join a scheme and agree to be bound by the rules set
by the scheme. Payments flow from an end user that is the customer of one bank to an end
user that is a customer of another bank; both banks are “in the scheme”. Cheques, Electronic
Funds Transfer schemes, as well as open-loop debit and credit card schemes are examples of
this type of interoperability.

• Network interoperability: when one payment scheme negotiates an exchange agreement
with another scheme. This is typically the case of cross-border or cross-regional payments
acceptance arrangements, which allow the holder of a domestic credit card to use that card
in another country. Network interoperability is rarely used when bank network members
compete for business within a single market, since network interoperability would facilitate
out-of-network banks competing for business with local banks.
• Parallel system interoperability allows the merchant or agent accepting payment from
a consumer to participate in multiple schemes. A commercial PSP acts as an intermediary
between the various schemes and the merchant. Although the merchant is technically
separately accepting payments in the various schemes, doing so achieves some of the effects
of interoperability. In many markets around the world, for example, merchants accept multiple
card brands (Visa, MasterCard, American Express, etc.). These brands do not interoperate, but
the experience for the merchant is essentially the same.

Source: Davidson N. and P. Leishman, “The case for interoperability: Assessing the value that the interconnection of mobile
money services would create for customers and operators,” GSMA, Annual Report 2012, pp.13-24; “Interoperability in Elec-
tronic Payments: Lessons and Opportunities,” CGAP, 2012.

36