Payments and payment systems - Revision history

imported>Doug Williamson: Removed surplus text about Paym. However, other information on this & other Treasurer's Handbook pages has not been reviewed for up to date-ness.

2022-12-07T12:12:02Z

Removed surplus text about Paym. However, other information on this & other Treasurer's Handbook pages has not been reviewed for up to date-ness.

← Older revision		Revision as of 12:12, 7 December 2022
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	Payment systems and the ways in which they offer services to users continue to evolve, driven by advances in technology and consumer demand and expectation. Following the lead of the UK, which introduced the Faster Payments Scheme in 2008, many other countries/regions, including the US and the Eurozone, are seeking ways of introducing faster payment schemes to improve value dating and remove any float from the existing clearing system. The UK Faster Payments Scheme is now used extensively to make payments and standing orders up to GBP100k in just a few seconds on a 24/7 basis. Annual volumes of FPS in the UK now exceed one billion per annum; more than double the annual volumes of cheques issued.		Payment systems and the ways in which they offer services to users continue to evolve, driven by advances in technology and consumer demand and expectation. Following the lead of the UK, which introduced the Faster Payments Scheme in 2008, many other countries/regions, including the US and the Eurozone, are seeking ways of introducing faster payment schemes to improve value dating and remove any float from the existing clearing system. The UK Faster Payments Scheme is now used extensively to make payments and standing orders up to GBP100k in just a few seconds on a 24/7 basis. Annual volumes of FPS in the UK now exceed one billion per annum; more than double the annual volumes of cheques issued.


	In April 2014, Paym was introduced in the UK to allow member banks and building societies to provide mobile phone payment capability, using only a mobile phone number. While this service at the time of writing is predominantly "Person-to-Person" (P2P), it can also be used by small businesses, providing its bank offers that service. However, some banks are already providing corporates and other organisations with bespoke mobile phone payment and collection services. Together and over time, it can be expected that the Paym scheme will only increase the potential of this becoming a significant payment mechanism within the UK.

imported>Doug Williamson: Remove superseded material.

2022-02-15T16:46:40Z

Remove superseded material.

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	Changes across the Single Euro Payments Area (SEPA) have been substantial. Following the introduction of SEPA Credit Transfers (SCT) in 2008 and SEPA Direct Debits (SDD) in 2009, SCT and SDD have effectively replaced local clearing systems across the countries within the Eurozone although local differences do still apply. A number of local niche payment systems with a market share of <10% and a number of country specific systems have EU agreement to continue until 1st February 2016. For non-EUR countries within the SEPA, the migration date for domestic EUR payments and collections has been set as 31 October 2016. To provide the legal foundation for the creation of an EU-wide market for payments, the European Payment Services Directive (PSD) has been adopted into national law across all of the 34 countries within the SEPA, including the Principality of Monaco. The PSD was a prerequisite for the introduction of SEPA Direct Debits. The most recent country to join the EU was Croatia, which joined on 1 July 2013 and has adopted the PSD, although, initially at least, it will continue to use the Croatian Kuna (HRK).		Changes across the Single Euro Payments Area (SEPA) have been substantial. There are other significant developments which may lead to further changes to global payment systems. These include blockchain technology and distributed ledgers, which have the potential to clear and settle globally in real time. However, these are at an early stage of development and it is not anticipated that these will have a major impact in the short term.


	In July 2013, the European Commission issued the proposal for a Directive of the European Parliament and of the Council of the European Union on payment services in the internal market, commonly referenced as the revised Payment Services Directive (PSD2). Following consultation, the proposal is expected to be approved by the EU Parliament by the end of 2015, following which Member States will have to implement into their national legislation by the end of 2017. There are other significant developments which may lead to further changes to global payment systems. These include blockchain technology and distributed ledgers, which have the potential to clear and settle globally in real time. However, these are at an early stage of development and it is not anticipated that these will have a major impact in the short term.

imported>Doug Williamson: Typo correction: 'systems'.

2020-11-25T02:45:42Z

Typo correction: 'systems'.

← Older revision		Revision as of 02:45, 25 November 2020
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	A third option is a hybrid of these two: intra-day net settlement. This is practised by a number of ~~system~~, such as the US Clearing House Inter-bank Payment System (CHIPS) and the Faster Payments Scheme in the UK.		A third option is a hybrid of these two: intra-day net settlement. This is practised by a number of systems, such as the US Clearing House Inter-bank Payment System (CHIPS) and the Faster Payments Scheme in the UK.

imported>Doug Williamson: Standardise date.

2018-06-05T10:39:16Z

Standardise date.

← Older revision		Revision as of 10:39, 5 June 2018
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	There are three important points to note. Firstly, SEPA euro payment schemes are now available in 34 countries – the 28 EU countries, the European Economic Area (Iceland, Lichtenstein and Norway), San Marino, Switzerland and Monaco. These additional non EU countries have agreed to operate the EPC SEPA euro payment schemes in accordance with the legal provisions of the PSD. The SEPA will continue to expand – Andorra will join in 2016 and Jersey is expected to submit its application to join the SEPA by the beginning of 2016. Guernsey and the Isle of Man are also considering whether to join the SEPA. Secondly, the PSD impacts the provision of sterling payment services in the UK, as well as other non-eurozone countries within the EU such as Denmark and Sweden, with regard to maximum processing times and harmonisation of obligations and responsibilities. Thirdly, the PSD framework provides for binding integration of the provisions contained in previous directives and regulation on low-value payments. These have enabled a single SEPA market to be created for the pricing of euro payments and a current requirement to use SWIFT Bank Identifier codes (BIC) and International Bank Account Numbers (IBANs). BICs are not required for national transactions in most EU countries. The regulator has stated that BICs will not be required for cross-border transactions after 1 February 2016. The euro countries that currently have a waiver in relation to this must comply by ~~1st~~ February 2016. Payments Service Providers (PSPs) in non-euro countries must permit the BIC to be optional for their clients by 31 October 2016. There is no maximum value on transactions that can be processed through SEPA, although payments in excess of €50,000 may attract additional charges if there is any additional reporting or regulatory requirements in place in any country within SEPA.		There are three important points to note. Firstly, SEPA euro payment schemes are now available in 34 countries – the 28 EU countries, the European Economic Area (Iceland, Lichtenstein and Norway), San Marino, Switzerland and Monaco. These additional non EU countries have agreed to operate the EPC SEPA euro payment schemes in accordance with the legal provisions of the PSD. The SEPA will continue to expand – Andorra will join in 2016 and Jersey is expected to submit its application to join the SEPA by the beginning of 2016. Guernsey and the Isle of Man are also considering whether to join the SEPA. Secondly, the PSD impacts the provision of sterling payment services in the UK, as well as other non-eurozone countries within the EU such as Denmark and Sweden, with regard to maximum processing times and harmonisation of obligations and responsibilities. Thirdly, the PSD framework provides for binding integration of the provisions contained in previous directives and regulation on low-value payments. These have enabled a single SEPA market to be created for the pricing of euro payments and a current requirement to use SWIFT Bank Identifier codes (BIC) and International Bank Account Numbers (IBANs). BICs are not required for national transactions in most EU countries. The regulator has stated that BICs will not be required for cross-border transactions after 1 February 2016. The euro countries that currently have a waiver in relation to this must comply by 1 February 2016. Payments Service Providers (PSPs) in non-euro countries must permit the BIC to be optional for their clients by 31 October 2016. There is no maximum value on transactions that can be processed through SEPA, although payments in excess of €50,000 may attract additional charges if there is any additional reporting or regulatory requirements in place in any country within SEPA.

imported>Doug Williamson: Make 'euro' singular.

2017-11-21T14:50:31Z

Make 'euro' singular.

← Older revision		Revision as of 14:50, 21 November 2017
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	===International direct debits===		===International direct debits===
	An international direct debit service operates in much the same manner as its domestic equivalent as detailed above. Items are delivered into each country's clearing system, either by a local branch of the service provider or one of its correspondents to a local account. Funds collected can be remitted either to a currency account held in the originator's home currency or converted to the receiver's base currency and repatriated. Companies must send a file of transactions to its bank providing this service. The items are then reformatted into the receiving country's local ACH format and either transmitted via a private data network or SWIFT (using a file transfer service) to the appropriate bank in each country. Some banks offer a guaranteed availability schedule for each country. Of course, with the advent of SEPA, companies can collect direct debits across the Eurozone in ~~euros~~ (see below) without the specific need to utilise an International Direct Debit service, unless such direct debits are part of a wider country direct debit requirement by the originator.		An international direct debit service operates in much the same manner as its domestic equivalent as detailed above. Items are delivered into each country's clearing system, either by a local branch of the service provider or one of its correspondents to a local account. Funds collected can be remitted either to a currency account held in the originator's home currency or converted to the receiver's base currency and repatriated. Companies must send a file of transactions to its bank providing this service. The items are then reformatted into the receiving country's local ACH format and either transmitted via a private data network or SWIFT (using a file transfer service) to the appropriate bank in each country. Some banks offer a guaranteed availability schedule for each country. Of course, with the advent of SEPA, companies can collect direct debits across the Eurozone in euro (see below) without the specific need to utilise an International Direct Debit service, unless such direct debits are part of a wider country direct debit requirement by the originator.

imported>Jeeten.patel@thinkpublishing.co.uk at 13:59, 13 November 2015

2015-11-13T13:59:42Z

← Older revision		Revision as of 13:59, 13 November 2015
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	The SCT was introduced on 28 January 2008, initially with a maximum settlement period of D+3 although this was reduced to D+1 at the end of 2011. The SDD was introduced in November 2009 and EC regulation required that all banks that offered domestic euro Direct Debits commercially were obliged to offer SDD as a debtor bank (i.e. a bank that maintains the account of the payor) by November 2010. In practice, this was achieved by August 2014. SDD offers a Core and B2B Scheme. In addition a Cor-1 Scheme has been developed and is currently only widely used in Austria, Germany and Spain. The Cor -1 Scheme has the same characteristics as the Core Scheme except that it has a faster cycle time. Both the B2B and Cor–1 Scheme are optional in the SEPA countries unless specified by a country’s regulator. Changes are planned to the Core scheme from November 2016. As of that date, all collections can be presented on a D-1 basis; the same as the Cor-1 Scheme. Key components of these schemes are detailed in Figure 3 above. These initiatives resulted in all non-urgent euro payments and direct debits across the SEPA being made in compliance with the SEPA scheme as at August 2014. The exception to this is for local domestic instruments with a market share below 10%, which can continue to be used until 1 February 2016, and other local schemes for which a waiver has been obtained, such as Pagares in Spain. Banks in non-euro member states must be able to receive SCT and SDD by 31 October 2016.		The SCT was introduced on 28 January 2008, initially with a maximum settlement period of D+3 although this was reduced to D+1 at the end of 2011. The SDD was introduced in November 2009 and EC regulation required that all banks that offered domestic euro Direct Debits commercially were obliged to offer SDD as a debtor bank (i.e. a bank that maintains the account of the payor) by November 2010. In practice, this was achieved by August 2014. SDD offers a Core and B2B Scheme. In addition a Cor-1 Scheme has been developed and is currently only widely used in Austria, Germany and Spain. The Cor -1 Scheme has the same characteristics as the Core Scheme except that it has a faster cycle time. Both the B2B and Cor–1 Scheme are optional in the SEPA countries unless specified by a country’s regulator. Changes are planned to the Core scheme from November 2016. As of that date, all collections can be presented on a D-1 basis; the same as the Cor-1 Scheme. Key components of these schemes are detailed in Figure 3 above. These initiatives resulted in all non-urgent euro payments and direct debits across the SEPA being made in compliance with the SEPA scheme as at August 2014. The exception to this is for local domestic instruments with a market share below 10%, which can continue to be used until 1 February 2016, and other local schemes for which a waiver has been obtained, such as Pagares in Spain. Banks in non-euro member states must be able to receive SCT and SDD by 31 October 2016.


	Cross-border direct debit interchange fees have been abolished, but interchange fees for domestic direct debits will remain until February 2017. However, interchange fees will still be permitted for "R” transactions (Returns and Rejects). Following full adoption, the European authorities’ expectation is that SEPA will allow payments to be made throughout the whole SEPA area from a single bank account, using a single set of payment instruments, as easily, cost effectively and securely as is the case in any of the individual SEPA countries today. With migration to harmonised SEPA payment schemes largely complete, the EPC has changed its structure to further enhance governance and stakeholder involvement. A number of newly created bodies have been established, responsible for managing the administration and evolution of the SCT and SDD schemes.		Cross-border direct debit interchange fees have been abolished, but interchange fees for domestic direct debits will remain until February 2017. However, interchange fees will still be permitted for "R” transactions (Returns and Rejects). Following full adoption, the European authorities’ expectation is that SEPA will allow payments to be made throughout the whole SEPA area from a single bank account, using a single set of payment instruments, as easily, cost effectively and securely as is the case in any of the individual SEPA countries today. With migration to harmonised SEPA payment schemes largely complete, the EPC has changed its structure to further enhance governance and stakeholder involvement. A number of newly created bodies have been established, responsible for managing the administration and evolution of the SCT and SDD schemes.

	There are three important points to note. Firstly, SEPA euro payment schemes are now available in 34 countries – the 28 EU countries, the European Economic Area (Iceland, Lichtenstein and Norway), San Marino, Switzerland and Monaco. These additional non EU countries have agreed to operate the EPC SEPA euro payment schemes in accordance with the legal provisions of the PSD. The SEPA will continue to expand – Andorra will join in 2016 and Jersey is expected to submit its application to join the SEPA by the beginning of 2016. Guernsey and the Isle of Man are also considering whether to join the SEPA. Secondly, the PSD impacts the provision of sterling payment services in the UK, as well as other non-eurozone countries within the EU such as Denmark and Sweden, with regard to maximum processing times and harmonisation of obligations and responsibilities. Thirdly, the PSD framework provides for binding integration of the provisions contained in previous directives and regulation on low-value payments. These have enabled a single SEPA market to be created for the pricing of euro payments and a current requirement to use SWIFT Bank Identifier codes (BIC) and International Bank Account Numbers (IBANs). BICs are not required for national transactions in most EU countries. The regulator has stated that BICs will not be required for cross-border transactions after 1 February 2016. The euro countries that currently have a waiver in relation to this must comply by 1st February 2016. Payments Service Providers (PSPs) in non-euro countries must permit the BIC to be optional for their clients by 31 October 2016.

	There is no maximum value on transactions that can be processed through SEPA, although payments in excess of €50,000 may attract additional charges if there is any additional reporting or regulatory requirements in place in any country within SEPA.		There are three important points to note. Firstly, SEPA euro payment schemes are now available in 34 countries – the 28 EU countries, the European Economic Area (Iceland, Lichtenstein and Norway), San Marino, Switzerland and Monaco. These additional non EU countries have agreed to operate the EPC SEPA euro payment schemes in accordance with the legal provisions of the PSD. The SEPA will continue to expand – Andorra will join in 2016 and Jersey is expected to submit its application to join the SEPA by the beginning of 2016. Guernsey and the Isle of Man are also considering whether to join the SEPA. Secondly, the PSD impacts the provision of sterling payment services in the UK, as well as other non-eurozone countries within the EU such as Denmark and Sweden, with regard to maximum processing times and harmonisation of obligations and responsibilities. Thirdly, the PSD framework provides for binding integration of the provisions contained in previous directives and regulation on low-value payments. These have enabled a single SEPA market to be created for the pricing of euro payments and a current requirement to use SWIFT Bank Identifier codes (BIC) and International Bank Account Numbers (IBANs). BICs are not required for national transactions in most EU countries. The regulator has stated that BICs will not be required for cross-border transactions after 1 February 2016. The euro countries that currently have a waiver in relation to this must comply by 1st February 2016. Payments Service Providers (PSPs) in non-euro countries must permit the BIC to be optional for their clients by 31 October 2016. There is no maximum value on transactions that can be processed through SEPA, although payments in excess of €50,000 may attract additional charges if there is any additional reporting or regulatory requirements in place in any country within SEPA.


	===Continuous linked settlement (CLS)===		===Continuous linked settlement (CLS)===
	A number of the world's largest foreign exchange banks have joined together in 2002 to form a company: CLS Services Limited. This company is based in the UK but owns CLS Bank Inc, a US-based "Edge Act” bank. Banks that operate under the "Edge Act” can only undertake international business in the US. They are not allowed to compete for US domestic banking business. CLS Bank is regulated by the Federal Reserve Bank, the US Central Bank, and can handle transactions denominated in 17 currencies: GBP, USD, JPY, EUR, CHF, CAD, AUD, DKK, NOK, SEK, SGD, HKD, NZD, KRW, ZAR, MXN and ILS. This bank acts as the common counterparty between all participating banks and settlement between the bank and members takes place throughout the working day. This system, even more than RTGS systems, has the ability to eliminate Herstatt risk (see above) from the international bank-to-bank foreign exchange markets. The system also reduces the risks and costs associated with settling high-value foreign exchange transactions using international funds transfers. Like any netting system, it considerably reduces the number of bank-to-bank payments and settles on a NSS basis throughout the working day.		A number of the world's largest foreign exchange banks have joined together in 2002 to form a company: CLS Services Limited. This company is based in the UK but owns CLS Bank Inc, a US-based "Edge Act” bank. Banks that operate under the "Edge Act” can only undertake international business in the US. They are not allowed to compete for US domestic banking business. CLS Bank is regulated by the Federal Reserve Bank, the US Central Bank, and can handle transactions denominated in 17 currencies: GBP, USD, JPY, EUR, CHF, CAD, AUD, DKK, NOK, SEK, SGD, HKD, NZD, KRW, ZAR, MXN and ILS. This bank acts as the common counterparty between all participating banks and settlement between the bank and members takes place throughout the working day. This system, even more than RTGS systems, has the ability to eliminate Herstatt risk (see above) from the international bank-to-bank foreign exchange markets. The system also reduces the risks and costs associated with settling high-value foreign exchange transactions using international funds transfers. Like any netting system, it considerably reduces the number of bank-to-bank payments and settles on a NSS basis throughout the working day.


	Each day prior to settlement in each currency, CLS calculates the funding required of each Settlement Member on a multilateral netted basis for each currency, after taking into consideration all payment instructions of the Settlement Member that are due to settle that day in that currency. Settlement takes place to a strict timetable, which is based largely on the working day in the currency centre of each currency. To take full advantage of the benefits of the system, banks have been required to re-engineer their systems and working practices around the CLS timetable. They have also built new or modified existing systems to be able to pass on the benefits of lower risk settlements to their customers (mainly other banks, but also some larger companies). Members also have the opportunity to re-engineer their liquidity management to take advantage of the fact that less funds are tied up in the system either as collateral in the form of money market instruments or Central Bank balances. CLS has a proven operational record and has effectively reduced settlement risk across the currency markets and is actively encouraging global corporates to use the system, although they will have to join via an existing member bank. CLS membership can assist corporates to comply with increased regulatory requirements, while at the same time improving their cash and liquidity management through better forecasting and multilateral netting.		Each day prior to settlement in each currency, CLS calculates the funding required of each Settlement Member on a multilateral netted basis for each currency, after taking into consideration all payment instructions of the Settlement Member that are due to settle that day in that currency. Settlement takes place to a strict timetable, which is based largely on the working day in the currency centre of each currency. To take full advantage of the benefits of the system, banks have been required to re-engineer their systems and working practices around the CLS timetable. They have also built new or modified existing systems to be able to pass on the benefits of lower risk settlements to their customers (mainly other banks, but also some larger companies). Members also have the opportunity to re-engineer their liquidity management to take advantage of the fact that less funds are tied up in the system either as collateral in the form of money market instruments or Central Bank balances. CLS has a proven operational record and has effectively reduced settlement risk across the currency markets and is actively encouraging global corporates to use the system, although they will have to join via an existing member bank. CLS membership can assist corporates to comply with increased regulatory requirements, while at the same time improving their cash and liquidity management through better forecasting and multilateral netting.

imported>Jeeten.patel@thinkpublishing.co.uk at 13:58, 13 November 2015

2015-11-13T13:58:21Z

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	==Clearing and settlement systems==		==Clearing and settlement systems==
	There are two basic ways that domestic clearing systems settle:		There are two basic ways that domestic clearing systems settle:


	* end-of-period net settlement; and		* end-of-period net settlement; and
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	A third option is a hybrid of these two: intra-day net settlement. This is practised by a number of ~~systems (eg~~ the US Clearing House Inter-bank Payment System (CHIPS) and the Faster Payments Scheme in the UK.		A third option is a hybrid of these two: intra-day net settlement. This is practised by a number of system, such as the US Clearing House Inter-bank Payment System (CHIPS) and the Faster Payments Scheme in the UK.


	===Net settlement systems===		===Net settlement systems===

imported>Jeeten.patel@thinkpublishing.co.uk at 13:56, 13 November 2015

2015-11-13T13:56:26Z

Show changes

imported>Jeeten.patel@thinkpublishing.co.uk at 13:18, 13 November 2015

2015-11-13T13:18:26Z

← Older revision		Revision as of 13:18, 13 November 2015
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	===SWIFT (The Society for Worldwide Inter-bank Financial Telecommunications)===		===SWIFT (The Society for Worldwide Inter-bank Financial Telecommunications)===
	Established in 1973, SWIFT is a telecommunications network owned and used exclusively by over 9,000 financial institutions in 200 countries for the exchange of financial data between members. It is not a payment system, clearing system, or a settlement system. SWIFT uses a set of strict standards which enables standardised messages, when correctly formatted, to be generated, received and interfaced by banks and local clearing systems in a fully automated way. The concept of automated messages passing all the way from the originator of the payment through to the receiver is known as "straight through processing” (STP). To improve efficiency, most countries have built electronic links between SWIFT and the local RTGS clearing system. For example, most members of Clearing House Automated Payment System (CHAPS) in the UK and CHIPS in New York have installed a direct link between SWIFT and their internal systems which enables a correctly formatted incoming payment, received from an overseas branch or correspondent, to be streamed directly into the local clearing. SWIFT standards are used extensively in international cash management (and international banking in general). SWIFT has developed sets of standards covering various types of bank transactions (see Figure 2 below).		Established in 1973, SWIFT is a telecommunications network owned and used exclusively by over 9,000 financial institutions in 200 countries for the exchange of financial data between members. It is not a payment system, clearing system, or a settlement system. SWIFT uses a set of strict standards which enables standardised messages, when correctly formatted, to be generated, received and interfaced by banks and local clearing systems in a fully automated way. The concept of automated messages passing all the way from the originator of the payment through to the receiver is known as "straight through processing” (STP). To improve efficiency, most countries have built electronic links between SWIFT and the local RTGS clearing system. For example, most members of Clearing House Automated Payment System (CHAPS) in the UK and CHIPS in New York have installed a direct link between SWIFT and their internal systems which enables a correctly formatted incoming payment, received from an overseas branch or correspondent, to be streamed directly into the local clearing. SWIFT standards are used extensively in international cash management (and international banking in general). SWIFT has developed sets of standards covering various types of bank transactions (see Figure 2 below).


	{\| border="1" cellpadding="5" cellspacing="0" class="infotable" style="float:right; background:#fff; min=width:100%; width:100%"		{\| border="1" cellpadding="5" cellspacing="0" class="infotable" style="float:right; background:#fff; min=width:100%; width:100%"
	\|-		\|-
	! colspan="4" style="color:#48001f; font-size:18px; background:none" \| '''Figure 2: Standards covering various types of bank transactions'''		! colspan="4" style="color:#48001f; font-size:18px; background:none" \| '''Figure 2: SWIFT Standards covering various types of bank transactions'''
	~~{\| border="1" cellpadding="5" cellspacing="0" class="infotable" style="float:right; background:#fff; min=width:100%; width:100%"~~
	\|-		\|-
	\| '''Message series'''		\| '''Message series'''

imported>Jeeten.patel@thinkpublishing.co.uk at 13:11, 13 November 2015

2015-11-13T13:11:21Z

← Older revision		Revision as of 13:11, 13 November 2015
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	This article has already referred to the Paym capability in the UK, enabling money to be transferred simply using a mobile number linked to a participating bank account. Other initiatives, for example M-Pesa in Kenya, provide mobile phone users with a mobile “wallet” linked to the mobile, from which payments can be made and received. These types of payment services do, of course, need to pass items through the existing bank systems, but they are gaining in popularity as users have more confidence in the security and control of the functionality. Currently, the majority of mobile phone payments are made on a Consumer to Consumer (C2C) basis, but it is expected that this will extend to Business to (and from) Consumer (B2C) as technological advancements make this more readily available and corporates adopt developing payment methodologies. Similar to debit and credit cards, mobile payments can be made using “wave and pay”, making it simple for the consumer to pay and for the company to receive the payment.		This article has already referred to the Paym capability in the UK, enabling money to be transferred simply using a mobile number linked to a participating bank account. Other initiatives, for example M-Pesa in Kenya, provide mobile phone users with a mobile “wallet” linked to the mobile, from which payments can be made and received. These types of payment services do, of course, need to pass items through the existing bank systems, but they are gaining in popularity as users have more confidence in the security and control of the functionality. Currently, the majority of mobile phone payments are made on a Consumer to Consumer (C2C) basis, but it is expected that this will extend to Business to (and from) Consumer (B2C) as technological advancements make this more readily available and corporates adopt developing payment methodologies. Similar to debit and credit cards, mobile payments can be made using “wave and pay”, making it simple for the consumer to pay and for the company to receive the payment.

	==Facilitation of cross border payments==		==Facilitation of cross-border payments==
	Cross border payments are executed using the same basic instruments as are used for domestic payments. However, there are some additional complexities in the use of these payment mechanisms in a cross border context. Some key points are considered below.		Cross-border payments are executed using the same basic instruments as are used for domestic payments. However, there are some additional complexities in the use of these payment mechanisms in a cross-border context. Some key points are considered below.


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	===International direct debits===		===International direct debits===
	An international direct debit service operates in much the same manner as its domestic equivalent as detailed above. Items are delivered into each country's clearing system, either by a local branch of the service provider or one of its correspondents to a local account. Funds collected can be remitted either to a currency account held in the originator's home currency or converted to the receiver's base currency and repatriated. Companies must send a file of transactions to its bank providing this service. The items are then reformatted into the receiving country's local ACH format and either transmitted via a private data network or SWIFT (using a file transfer service) to the appropriate bank in each country. Some banks offer a guaranteed availability schedule for each country. Of course, with the advent of SEPA, companies can collect direct debits across the Eurozone in euros (see below) without the specific need to utilise an International Direct Debit service, unless such direct debits are part of a wider country direct debit requirement by the originator.		An international direct debit service operates in much the same manner as its domestic equivalent as detailed above. Items are delivered into each country's clearing system, either by a local branch of the service provider or one of its correspondents to a local account. Funds collected can be remitted either to a currency account held in the originator's home currency or converted to the receiver's base currency and repatriated. Companies must send a file of transactions to its bank providing this service. The items are then reformatted into the receiving country's local ACH format and either transmitted via a private data network or SWIFT (using a file transfer service) to the appropriate bank in each country. Some banks offer a guaranteed availability schedule for each country. Of course, with the advent of SEPA, companies can collect direct debits across the Eurozone in euros (see below) without the specific need to utilise an International Direct Debit service, unless such direct debits are part of a wider country direct debit requirement by the originator.


	==Clearing and settlement systems==		==Clearing and settlement systems==
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	A third option is a hybrid of these two, intra-day net settlement. This is practised by a number of systems (eg the US Clearing House Inter-bank Payment System (CHIPS) and the Faster Payments Scheme in the UK.		A third option is a hybrid of these two: intra-day net settlement. This is practised by a number of systems (eg the US Clearing House Inter-bank Payment System (CHIPS) and the Faster Payments Scheme in the UK.

	===Net settlement systems===		===Net settlement systems===
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	The issue with net settlement in high-value same-day clearing systems is that it can give rise to intra-day exposures between participating banks. Funds received and credited to a customer's account by a clearing bank do not become "final” until settlement occurs at the period end. Through using NSS methods it is possible to build a large exposure to a clearing participant that may be unable to settle at the end of the period, leaving the receiving bank and beneficiary with a potential loss. Some NSS do insist that participants lodge collateral to support these intra-day exposures. While NSS traditionally settle at the end of the day, in order to overcome settlement and collateral issues, some NSS now undertake intra-day net settlement at agreed times during a day, and to that extent have become a hybrid NSS without the need to move to full RTGS.		The issue with net settlement in high-value, same-day clearing systems is that it can give rise to intra-day exposures between participating banks. Funds received and credited to a customer's account by a clearing bank do not become "final” until settlement occurs at the period end. Through using NSS methods it is possible to build a large exposure to a clearing participant that may be unable to settle at the end of the period, leaving the receiving bank and beneficiary with a potential loss. Some NSS do insist that participants lodge collateral to support these intra-day exposures. While NSS traditionally settle at the end of the day, in order to overcome settlement and collateral issues, some NSS now undertake intra-day net settlement at agreed times during a day, and to that extent have become a hybrid NSS without the need to move to full RTGS.