Page 90 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

processes on their behalf. Higher levels of interconnectedness increase the positive network externalities to
the benefit of customers, i.e. with the same payment card they are able to use the funds (or credit) in their
account at numerous service points and channels
Moreover, in many cases a switch may be able to process transactions with payment cards from card issuers
that are not members of the switch, and/or that were made at merchants affiliated to acquirers that are not
members of that switch. Typically, this is possible if these payment cards have been issued under - and the
8
switch is enabled to process transactions made with - one or more of the payment card brands/schemes with
nationwide or international acceptance (e.g., Visa and MasterCard, among others).

3 Types of access to payment infrastructures

A. Access for PSPs

To provide "off us" payment services to end-users, a PSP will need to be able to make use of the domestic
payment infrastructures. This is necessary for the PSP to be able to exchange customer payment orders with
other PSPs, and on this basis proceed with the clearing and settlement of such payment orders.

Access to payment infrastructures is generally considered as being of either a "direct" or an "indirect" nature.
Nevertheless, there is also the possibility that direct access be obtained for some specific processes or sub-
processes only, while others will need to be carried out through indirect access (i.e., through another direct
participant). For example, some non-banks that are direct participants of an RTGS system may not be able
to access some of the features of that system, like central bank intraday and/or overnight liquidity. Other
possibilities (e.g., access for transaction switching only) are discussed in sub-section III.b below.

In principle, both direct access and indirect access could be capable of providing PSPs with suitable payment
services for the purposes they pursue. As will be discussed in the following paragraphs, advantages and
disadvantages of direct access versus indirect access vary according to specific circumstances.

In essence, direct access means that a PSP is itself a direct participant in the system, submits its payment
instructions directly to the system, and is responsible vis-à-vis the system and other direct participants for
the settlement of its (debit) positions.

Criteria for having direct access to a payments infrastructure includes technical and financial requirements, and
in some cases other types of requirements. The latter often refer to aspects such as the need to have a specific
legal or regulatory standing (e.g., having a specific license, such as a banking license, or being regulated by
the central bank or financial supervisor). Technical, financial and other access criteria are explained in further
detail in section IV of this document.

Complying with such criteria, especially when it comes to the national clearing and settlement backbone (i.e.,
the RTGS system that is operated by the central bank), will normally entail substantial internal investments from
the applicant. This is because the RTGS system is almost always considered systemically important. Hence, for
10
9
some PSPs, direct access to an infrastructure like the RTGS system might be overly expensive and/or complex.
From the technical and financial standpoints, the criteria for gaining direct access to payment systems like
an ACH or a payment card switch are generally not as demanding as they are for the RTGS system operated

8 This is relevant, for example, when payment card switch only have regional rather than national coverage, or for payment card
transactions made in a foreign country.
9 These investments are in addition to the initial, per transaction and maintenance fees usually required by the operator of the
payments system.
10 ACHs and payment card switches are only rarely considered systemically important. Nevertheless, in an increasing number of
countries these infrastructures are being considered as "system wide important payment systems" (or similar term), based on
their importance for the real economy and the confidence in the domestic currency.

80