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Countering Payment System Fragmentation
- 1. TerraPay Poster Text CounteringFragmentation with Open Networks Interoperability across Payment Platforms
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- 3. DFS Providers Telecom operators Payment companies Banks Remittance ecosystem Proliferation ofproviders of different types and sizes MTOsSocial networks Lack of market-wide interoperability
- 4. High investment – infrastructure,set-up, distribution Limited first and last mile access High incidence of cash usage Duolicated investments Access Fragmentation & proprietary functioning Impact on industry Diseconomies of scale Expensive products Formal market Informal market US$ 64B 3X? 7% 12% Costs Global Costs Africa
- 5. CUSTOMER ACQUISITION CUSTOMER EXPERIENCE PRODUCT PRICING PAYMENT PROCESSING PAYMENTS CLEARING PAYMENTS SETTLEMENT . COLLABORATE COMPETE Compete or Collaborate?
- 6. Current interoperability modelsare limited in scale Commercial • Time to market • OPEX intensive – Set-up costs / Higher liquidity requirements Regulatory • Licensing / Bank Accounts / AML & Compliance Technical • Proprietary deployments • Lack of standards • Varying levels of digital adoption and maturity 18-24 weeks to on-board a single partner Challenges
- 7. New payment railsto carry transactions
- 8. Mobile is thebiggest opportunity infrastructure MIDDLE EAST & NORTH AFRICA 35.8 million Registered Accounts 1.9 million Active Accounts LATIN AMERICA & CARIBBEAN 17.3 million Registered Accounts 8.2 million Active Accounts SOUTH ASIA 101.9 million Registered Accounts 27.2 million Active Accounts EAST ASIA AND PACIFIC 26 million Registered Accounts 3.5 million Active Accounts SUB-SAHARAN AFRICA 229 million Registered Accounts 84.1 million Active Accounts EUROPE & CENTRAL ASIA 1.7 million Registered Accounts 0.2 million Active Accounts 271live mMoney deployments 411million registered mMoney accounts 52%increase in IMT traffic 3.2 million access points
- 9. What is anopen payment network? Universal accessMobile –first Neutral processor Open APIs Shared utility Standardization Common scheme rules Compliance with regulation Any instrument , any carrier Risk controls Uniformity in practices Lower Capex and Opex Transparency; collective empowerment Immediate global reach ; lower integration costs
- 10. • Credit transfers •Direct debit • Mobile Wallet • Credit /Debit card • Bank account • SWIFT • ISO 20022 • GSMA • RTGS • Domestic ACH … • Branch instructions • Online • Mobile • ATM • Retail • Other FIs • Government • Outgoing payments • Incoming payments • Batch • Single real-time • Refund • Rejection • … X X X X Instrument type Standard/ scheme Channel Customer Transaction types Customer notification and reconciliation ExecutionAuthorisation Clearing preparation Validation, compliance Instruction receipt, payment object creation and prioritisation 1 2 3 4 5 6 1 2 3 … delivered as a service … with ability to customise workflow by any dimension of A or payment characteristics … and with sophisticated monitoring and alerting capabilities 4 … reliably at large volumes and throughput 5 … with appropriate security, access control and audit trails A B C Ability to manage, on a single platform, any… and deliver core payment functionality under key conditions Platform powering open network
- 11. Asks Regulatory support Licensing policies for hubs Promote market-wide domestic interoperability Open and collaborative mindset
- 12. Payment interoperability Economiesod scale and costs Fully compliant service Open Network Benefits Partners Customers Regulators Easy to access Lower costs Simple to use Instant payment 24x7 Secure Earn forex Promote competition Deepen financial inclusion Effective policy decisioning
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