Page 98 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

In other cases, the principal may set disproportionate criteria for opening accounts and providing payment
services to customer PSPs – or may even decide not to provide such services at all. This is currently being
observed in several markets worldwide. 18
On the other hand, it must be recognized that for a (probably large) share of non-bank PSPs, gaining direct
access to a payments infrastructure may not be cost effective. This could be the case for many smaller and
newer non-bank PSPs that process a relatively small volume of transactions. For them, the costs of joining a
payments infrastructure as direct participants (e.g., initial and monthly membership fees, internal IT and other
investments to meet the essential system access criteria, etc.) could be greater than if they were operating as
customer PSPs through another direct participant PSP.

Best practice for payment system operators would therefore be adhering strictly to the spirit of international
standards and other relevant international guidance. As per the discussion in sub-section IV.b, this would entail
establishing risk-based and objective access criteria and ensuring that any PSP that wishes to gain direct access
and meets such criteria is able to join the system as a direct participant. Operators must nevertheless also
ensure that the risk-based criteria they set also consider the potential risks that a participant may bring into
the payments infrastructure through its direct participation, and that such criteria are clear and are publicly
available.

Lastly, in a related though at the same time different matter, in some markets it has been observed that
certain MNOs that are also involved in the payments business as PSPs for mobile payments have restricted
access to the mobile telecommunications network that they themselves operate to other PSPs. Although
different from restricting access to clearing and settlement infrastructures, restricting access to the mobile
telecommunications network is likely to have similar overall effects in terms of limiting interoperability and
competition in the market place.

B. Implications for central banks and other authorities

Several institutions around the world have called upon payment system regulators, in particular the central bank
in its role as payment system overseer, to ensure that all PSPs are able to gain fair access to payment services.

As regards direct participation, as already mentioned international standards require central banks to ensure
that a payment system’s participation requirements allow for fair and open access. This applies both to
infrastructures operated by the central bank as well as to those operated by other parties.

However, emphasis has also been placed on ensuring effective access to payment services for PSPs for which
direct access is not a possibility based on overall cost-benefit considerations.
In this last regard, for example, the CPMI-World Bank "General Principles for International Remittance Services"
state, as part of the possible actions to implement the principles, in particular General Principle 4, that:

"The relevant authorities may want to check that RSPs without direct access to core payment systems can
obtain fair indirect access. Institutions with direct access should be encouraged to provide relevant payment
services, including foreign exchange services, on an equitable basis to RSPs." 19

Other entities have specifically stressed the risk that certain requirements, like those associated to AML/CFT,
be used inappropriately by PSPs acting as principals (i.e., they have direct access to payment infrastructures)
to discriminate against other PSPs when providing payment services to them.

18 As part of the so-called “de-risking" trend, many banks that are cancelling or denying these services to PSPs such as non-bank
remittance service providers (RSPs), especially at the cross-border level. Some large global banks are even denying these services
to foreign banks which depend on the former for all sorts of cross-border transactions. For more information see CPMI (2016)
and The World Bank (2015).
19 Moreover, with regard to direct access CPMI and the World Bank (2007) state “Payment system operators and their overseers
may want to check whether their direct access requirements are consistent with international principles to ensure payment
system safety and soundness. Access criteria should be clear, well defined and fair; and access should be granted to all entities,
including RSPs, which comply with such requirements".

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