RiskTech Forum

Misys: Making Payments Pay - Competition And The Power Of Modernisation

Posted: 20 September 2013  |  Source:


New payments infrastructures are paving the way for banks to grow their payments business and level the playing field. Banks of all sizes can be competitive, even in the face of increased regulatory pressures and the entrance of new, non-bank players. Where there is change, there is opportunity; banks can seek new ways to realise the potential of their payments business.

Blame the system

The payments business is undergoing a fundamental transformation; preconceived notions of who will survive and flourish in the new payments landscape are being challenged. Financial regulators across the globe are opening payments up to competition. At the same time, standards such as ISO 20022 are levelling the playing field for payments industry participants. By harnessing modern payments infrastructures banks of all sizes can compete in this new world of payments.

Despite the mission critical nature of payments in enabling commerce and trade, the current global payments landscape is characterised by ageing legacy systems. Occasionally these systems have failed causing panic among consumers and bringing business to a halt. This chaos has attracted the attention of senior politicians and financial regulators who believe the answer lies in opening up competition to new players. In the UK, the
Chancellor of the Exchequer, George Osborne, announced plans in February 2013 to open up the country’s payment system to competition and put pressure on banks to accelerate cheque clearing.

Meanwhile, at the European level, competition is being promoted via the Payment Services Directive (PSD), which created a new category of payment system participant, the Payment Institution, a less regulated Payment Service Provider (PSP).

The PSD aims to harmonise payment services across the EU and provides the necessary legal framework within which all payment services providers will operate. It is crucial to the success of the Single Euro Payments Area (SEPA).

Elsewhere regional payments infrastructures are changing the global payments landscape, creating harmonised and standardised environments in which payments transactions can be made.

Efficiencies created by these systems will continue to drive down costs per payment and promote further competition. Other regions and countries are following the SEPA model and devising new ways to streamline payments. Singapore’s launch of a payments modernisation project for example, recognises that a refreshed and innovative infrastructure, capable of supporting the online economy, will be key to attracting business to the country.

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