Page 91 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

by the central bank. However, ACHs and/or payment card switches still may have access criteria that can be
difficult to meet, especially for smaller PSPs.

Indirect access occurs when a PSP is not itself a direct participant in the system but instead uses another PSP,
which is a direct participant, to act on its behalf—i.e., the first PSP is a customer of the second PSP. For some
PSPs, indirect access may be a better option for using a given payments infrastructure, for example due to
cost reasons and technological limitations.

It should be noted that PSPs as customers of other PSPs are operationally reliant on their chosen intermediary
to make payments on their behalf, and incur credit risk where receipts of funds are held with the intermediary.
In turn, intermediary PSPs incur risks on their customer PSPs where they provide them with any form of credit
as part of the payment (and/or other) services provided.

B. Other variants of access to payment infrastructures for PSPs

In some cases – notably in the area of payment cards - some PSPs may opt out of the inter-PSP clearing and
settlement process. These would normally be PSPs that are card issuers but that do not acquire transactions
made with other cards, or that do not act as acquirers at all. Nevertheless, for their cards to be attractive to their
customers those cards must still be usable throughout the network of ATMs and/or POS terminals (or other
merchant types), for which purpose the PSP card issuer will need access to the payments infrastructure for
transaction switching. In this case, transactions are not exchanged among card issuers and acquirers; instead,
the switch simply routes the transactions associated to the relevant PSP card issuer to him and excludes those
transactions from the general clearing and settlement process. This PSP will then make payments directly to
the merchants that accepted its card.

This type of access for switching purposes only is likely to become popular also for inter-PSP mobile money
payments.
Yet in other cases, some PSPs that are direct participants are able to exchange payment transactions through
the payments infrastructure but need to be "sponsored" into clearing and settlement by another direct
participant (i.e., the former PSPs cannot clear and settle with others on its own behalf, but need to do this
through others). 11

In summary, as noted earlier in sub-section III.a, access to payment infrastructures can be either direct or
indirect. However, in cases like the ones described above access may be a mix of the two: i.e., there may be
"direct access" when it comes to transaction switching/exchanges, but inter-PSP transaction clearing and
settlement may occur under indirect access.

C. Access for operators of other payment systems

Payment infrastructures like ACHs, payment card switches and others increasingly settle their final balances in
an RTGS system operated by the central bank. When this is the case, the operators of those infrastructures
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will need to have some form of access to the RTGS system.
It should be noted that participation by a PSP and by an operator of another payment system are different in
nature, and this is very often reflected in different access criteria for each of them and in the conditions under
which they are allowed to operate in the RTGS system (e.g., the various system functionalities and services
they will have access to).

11 This normally occurs when having an account at the central bank is a condition for becoming part of the clearing and settlement
mechanism. This requirement is discussed in detail in section IV of this document.
12 Some ACHs and/or switches settle in the accounts of a bank which is one of its participants. As will be discussed in section IV,
RTGS systems settles in the accounts held at the relevant central bank. This practice is generally considered safer than settling
through the books of a commercial bank.

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