Page 69 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

Figure 3 – Interoperability scenarios at the national level

21. Central interoperability solutions usually rest on a hub and spoke model. Here, individual PSPs or PSIs
are linked to a central switch for the execution of transactions between them, following a common scheme of
multilaterally agreed rules. The adoption of a central switch is not a strict necessity, however, since individual
PSPs or PSIs can still use their own processing platforms as long as they are technically interoperable. The real
improvement of the central hub solution over the bilateral agreement approach derives from the adoption
of a common scheme of multilateral rules. Bilateral interoperability is often considered to be an interim step
before migrating to centralized solutions (arrows 1, 2 and 3, or arrows 1 and 4). In fact, bilateral interoperability
might be skipped altogether and a country may leapfrog from the non-interoperable scenario to centralized
solutions, either by moving to a hub and spoke solution (arrow 5), and eventually from here to a central
platform (arrow 3), or by moving directly to the latter (arrow 6).

B. International interoperability: At the regional level

22. With increasing regional economic integration and/or regional migration, cross-border payments
(including international remittances) have gained importance. Again, the baseline scenario is a situation
with non-interoperable solutions, this time offered in different countries within a region. In fact, these solutions
might or might not be interoperable at the national level, and regional interoperability might be pursued even
in the absence of national interoperability. Furthermore, the type of interoperability achieved at the national
level may affect the degree of complexity of regional interoperability, with the centrally interoperable or single
provider scenario on the national level being a less complex starting point than the bilaterally interoperable
scenario. The other possible baseline scenario features one single PSI operating in several countries in the
region or an international service provider that is present in various countries of the region. In such a scenario,
payment service users are likely to benefit from being able to send and receive payments from the transaction
account held with a service provider participating in the single PSI.

23. Several paths to regional interoperability are possible in a digital payments ecosystem, starting from
the baseline scenario and featuring a number of non-interoperable PSIs operating in different countries
(Figure 4). This is similar to national interoperability discussed above. A handful of PSIs might take the lead and
establish bilateral interoperability agreements, while other PSIs would follow through at a later stage either
in pursuance of their own business strategic objectives. First movers might also be individual PSPs that are
active in different countries of the region seeking to establish interoperability. More direct paths to regional
interoperability could be envisioned as a result of international agreements between governments in a region,
whereby centralized interoperability solutions would be achieved more directly as part of economic or financial
regional integration programs.

59