Usa payments systems recommedation


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This was presented to a select audience at the helm of the USA CHIPS, FED-WIRE and ACH through e-mail. The presentation states some recommendations which stemmed from trends presented at the Annual IFSA Payment Systems Conference, New York 2008.

When confronted with SEPA - SWIFT - UNIFI or UK Faster Payments Model, United States' payment systems looked so barren or outdated that I was inspired to put up this comments ( During the breaks I had the pleasure and honour to talk with Hank Farrar from Chips and attend presentations by the NACHA and FEDWIRE).

That's all folks!

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Usa payments systems recommedation

  1. 1. USA PAYMENTS SYSTEMSRECOMMENDATIONAn Outsider’s ViewIntended Main Audience:Fedwire, CHIPs and ACH representativesBy:Jose 243-5468 Office(809) 330-5784 Mobile
  2. 2. Prelude Following these preliminary notes immediate you will find recommendations regarding the USA Payments Systems as a very surface-scratch conclusion stemming from recent trends presented at IFSA Global Payments Conference in New York in march 2008… The views of this person, located outside of the “system” are intended, with all due respect and consideration, to be creative in the wake of all the information and trends presented at the IFSA Conference.
  3. 3. Item I – Who’s Talking g I am from small country but I like to think of me as a creative person who is smart enough to capture trends whenever I have the opportunity to be presented with enough information, as has recently happened while attending the aforementioned IFSA Conference (March 2008).
  4. 4. Item II – Market Assessment In the wake of the trends presented to us by IFSA, pertinently to my comments, let s consider the following comments let’s facts: 1. The fact that SEPA and TARGET2 are coming so fast into place, becoming a unique and very advanced payments platforms for Europe. 2. 2 The ineludible fact that SWIFT is NOT ONLY driving SEPA but is at the heart of SEPA, TARGET2 and considering it is also the de facto platform for international communications among more than 8,000 banks worldwide. i. SWIFT is also driving the UNIFI and ISO 20022 initiatives, becoming the unique “registrar” for these standards and assuring a preeminent position on the FUTURE payments Market Place. Place ii. Last but not less important SWIFT is the underpinning technology driving TARGET 2 which is already operative from November taking the RTGS for Europe to new levels of performance. iii. TARGET 2 will be based in an advanced and flexible MX (XML) standard also provided by SWIFT and a very advanced and streamlined model to include Indirect Participants on the systems thru a Bank Gateway Bank-Gateway. 3. Due to the United States Economy being an “Enclave”, self-sustained and self- contained, it has neglected even their most proximate neighbors, leaving a virgin market untapped for SWIFT to conquer (Latin America).
  5. 5. Item II – Market Assessment 4. I was wandering for sometime now where was the U.K. heading, keeping th i economy somewhat “d t h d” f k i their h t “detached” from th rest of E the t f Europe, by not surrendering to the “Euro initiative”…Well, they are breaking the news with a “big entrance”: This U.K. Faster Payments Model, if official, is really striking from many points of view. Formerly, they show tremendous determination to overhaul the “establishment” which, establishment hi h usually pervades and avoid any kind of disruptive innovation like the one presented in IFSA. Secondly, It shows the UK Regulators are not only bold and courageous but they are capable of re-engineering the economy if they have a vision (as they have done before with the LEAP Project in their e-government initiative). They go where no other economy dare even to think going… They are going to redress an entire economy, comprehensively rebuilding their payments systems as if none had existed until this point a kind of strategy I myself deem point, as an Inter-Economic Bridge Strategy. Thirdly, they are making sure to take a quantum leap while technologically enabling the economy, much ahead of what I was wandering was possible for an ongoing economy> Food For Thought I would deem to say!
  6. 6. Item III: Is innovation possible from inside anongoing,ongoing established economy So, now let me stop beating around the bush and pin myself down to what is really my point of view and wherefrom my comments are stemming from: But, just before delving definitively into the subject of these , j g y j comments, let me also scratch the surface of another peripheral issue, a bit of another digression, even assuming some risk of sidetracking my main argument. I deem this paragraph extremely important. Let’s talk about Innovation: I I ti Innovation is a very d ff l process b difficult because at some point it threatens the dearest feelings that our souls protect, that meaning, those overarching principles that hold together the underpinnings of our own existence. But there are d fi i moments i an i d t where a bi country lik defining t in industry h big t like yours can not rest in its “laurels” and just let a trend past them by without acting on and out decisively …
  7. 7. Item III Well Mr. Farrar, my final words and the real recommendations are forthcoming along these lines: So, with due consideration and reiteration of respect to what I might not be aware of at the time of these writings, let me please state my surface- g p y scratch recommendations beginning on next slide:
  8. 8. Item IV - RecommendationsI.I United States Payments Systems should be comprehensively re-engineered in the wake of international trends, standards and technology to , gy fully integrate all available knowledge and technologies, to conceive new payment processes and infrastructures that will be flexible and capable of accommodating all future developments. d l t
  9. 9. Item IVII.II This Payments System Reengineering should start with careful diagnosis of available knowledge and technologies and an in depth assessment of g p the needs of the ultimate customer which is, to put a very simple spin on it: The Entire Economy.III. By dealing with these important issues competitiveness for the entire country will be raised by doing away with, to mention just a thing, “paper”.
  10. 10. Item IVIV. In so doing the Payments Systems Regulators, g y y g , Technocrats, and the legal bodies entitled to protect the financial system that supports the economy, should be committed to a single purpose: Designing and implementing payments systems that will comply with all current needs of the economy, and I am talking seriously here, all economy agents should be satisfied in the new conception: Individual and Corporations; C p Compliance Agents; Channel Operators; Service g ; C Op ; S v Management Agents; International Payments Systems and others…
  11. 11. Item IVVI. Main issues to deal with might be shortlisted superficially:VII. High d Low Value Payments systems i Hi h and L V l P integration. iVIII. Payments and Settlements risks should be comprehensively been dealt with from all current standpoints.IX. Compliance should be at the heart of the System.X. A single infrastructure and architecture model should be a MUST. Dealing with several systems impose such an unnecessary burden to the economy…XI. Channel Management should be at the heart of the re-conception to deal with the fact that new technologies and media will continue to evolve;XII. An Integrative System conception to manage the obsolescence and asynchronic connection to any single partner or instance;XIII. Institutional restructuring must be considered if necessary.XIV. E-Money must finally come to live enacting an e-Money Act that would define what will be e-currency in these new environment: Payment Finality, the absence of Paper, emulation of current processes and everything should be handled in the new e-economy processes.XV. While many other issues should be considered these are some those which pop up to my mind at the time of these writings.
  12. 12. Item IVxvi. From a Service Management Standpoint the Payment System should be Financial Value Chain model supporting all domestic and cross border transactions and seamlessly integrating the physical and virtual value chain with a common new mantra: The Financial Industry should be entitled with handling all financial content originating by the commercial transactions of the g g y economy. Where there are physical exchange of goods the Payments infrastructure should accurately reflect these exchanges of information, because, in fact, Money in the E-conomy, becomes an information item tied to Payment Finality by-laws of the reengineered financial system of the USA.xvii. This aspect will also comprise e-invoicing and all related procedures. And because “channels” are natural to the new system an invoice might become, in fact, information presented in terms of “obligations” in the new Payment Finality Model. That said, an e-invoice would be related more to the content than to the media the information would be presented In such a perfect virtual world presented. world, payments and invoices will be so naturally intertwined that presenting the invoice and executing the consequent payment will just be a digital signature activity away.
  13. 13. Item IV SO GUYS… This is good-bye for now: I have to beg your pardon for being so direly bold to propose such a daring undertaking to such prestigious constituency as you are. I just like to express myself whenever anything dawns on me and while being exposed to such a good deal of information these ideas just came up. Also: Bear in mind I still has some trouble understanding the differences of CHIPS and Fed Wire, but please, don’t crucify me for being bold… I will finally accept a mild feedback on my comments from you, but just a “Thanks, we have received your comments…” will do to get my effort compensated. With due respect and consideration Jose Payano Attendee to IFSA Global Payments Conference 2008 New York