The increased use of mobile phone-based money transfers to pay for goods and services is promising to really get electronic commerce going in Kenya. Read this thought provoking article by Victor Juma in AllAfrica.com.
allAfrica.com: Kenya: Mobile Money Beats Credit Cards in the Retail Market (Page 1 of 1)
Wednesday, 16 December 2009
Fraud & Operational Risk High on 2010 Forecast
"10 Faces of Fraud for 2010" is an interesting forecast for the coming year in terms the ten most predominant types of fraud that institutions and their customers can expect to see in 2010, according to industry experts. The fraud “hit parade” includes ACH and Wire Transfer Fraud, ATM Skimming, Phishing Schemes and their Variations, Cheque Fraud, Mobile Phones, “Insider” crimes.
Read the full article from From Bank Info Security at;
10 Faces of Fraud for 2010
Read the full article from From Bank Info Security at;
10 Faces of Fraud for 2010
Thursday, 10 December 2009
RTGS Payment System Glitch – Operational Risk Vulnerabilities in India
A snarl in the real-time gross settlement (RTGS) system this past Monday, saw a few banks face a near default-like situation. This has yet again raised questions on the value and the soundness of the infrastructure supporting the Indian financial system.
RTGS, for the uninitiated is an almost instantaneous funds-transfer and settlement system. In the Indian RTGS system, it’s possible to transfer money to another bank account within a maximum of two hours. RTGS is mainly used for high-value clearing.
When contacted, a Reserve Bank of India (RBI) spokesperson said, “There was a glitch (in the system) on Monday, after we upgraded the RTGS software over the weekend.” She clarified that RBI had rectified the problem on the same day.
Bankers familiar with the RTGS system said that while clustering of payments is an often-enough occurrence (four to five times a year) this is the first instance of such large-scale malfunction. One large state-owned bank, in particular, faced an acute payment crisis that forced it to request assistance from other banks, to meet its obligations. After a considerable delay, funds were arranged.
“Many of the counterparties did not receive payment till as late as 1.00 am the next morning. And by virtue of one critical fund or counterparty not paying up, it would have had a cascading effect on other banks,” said the head of treasury at one foreign bank.
Customer payments can be processed through the RTGS facility only up to 4.30 pm on weekdays while inter-bank transactions are possible up to 6.00 pm.
People familiar with the matter maintain that central bank officials and computer staff worked towards moving the entire RTGS load to the back-up site of the system vendor. It was only after this switch that RTGS operations could be brought back on an even keel.
While some say, the incident highlights the inadequacy of the RTGS infrastructure, others were too quick to commend RBI for the promptness with which it acted to restore order. “Any system is open to the occasional risk. However, there should always be a fallback arrangement to cater to such eventualities,” said an irate banker who had to soothe quite a number of ruffled clients.
However, a section of the industry terms it as just a blip on account of the fact that RTGS users have grown many-fold. “RBI and several banks are still in the process of enhancing their servers to cater to the excess load. This has occurred, because banks have crossed normal threshold limits, hence, the bunching up of payments. However, in such times, the National Electronic Fund Transfer (NEFT) system can provide an alternate. The only difference is that the window would be slightly larger than 4-6 hours,” said a senior staff member of a leading public sector bank.
Under NEFT, the transfer takes place either on the same day or on the next day, depending on the time of instructions given. Yet, senior private sector bankers disagree. “NEFT can’t be an alibi for RTGS. The bottom-line is that any robust infrastructure should have a fall back. If this had occurred during the month end, we would have had a virtual stampede,” a senior private sector banker said.
RTGS, for the uninitiated is an almost instantaneous funds-transfer and settlement system. In the Indian RTGS system, it’s possible to transfer money to another bank account within a maximum of two hours. RTGS is mainly used for high-value clearing.
When contacted, a Reserve Bank of India (RBI) spokesperson said, “There was a glitch (in the system) on Monday, after we upgraded the RTGS software over the weekend.” She clarified that RBI had rectified the problem on the same day.
Bankers familiar with the RTGS system said that while clustering of payments is an often-enough occurrence (four to five times a year) this is the first instance of such large-scale malfunction. One large state-owned bank, in particular, faced an acute payment crisis that forced it to request assistance from other banks, to meet its obligations. After a considerable delay, funds were arranged.
“Many of the counterparties did not receive payment till as late as 1.00 am the next morning. And by virtue of one critical fund or counterparty not paying up, it would have had a cascading effect on other banks,” said the head of treasury at one foreign bank.
Customer payments can be processed through the RTGS facility only up to 4.30 pm on weekdays while inter-bank transactions are possible up to 6.00 pm.
People familiar with the matter maintain that central bank officials and computer staff worked towards moving the entire RTGS load to the back-up site of the system vendor. It was only after this switch that RTGS operations could be brought back on an even keel.
While some say, the incident highlights the inadequacy of the RTGS infrastructure, others were too quick to commend RBI for the promptness with which it acted to restore order. “Any system is open to the occasional risk. However, there should always be a fallback arrangement to cater to such eventualities,” said an irate banker who had to soothe quite a number of ruffled clients.
However, a section of the industry terms it as just a blip on account of the fact that RTGS users have grown many-fold. “RBI and several banks are still in the process of enhancing their servers to cater to the excess load. This has occurred, because banks have crossed normal threshold limits, hence, the bunching up of payments. However, in such times, the National Electronic Fund Transfer (NEFT) system can provide an alternate. The only difference is that the window would be slightly larger than 4-6 hours,” said a senior staff member of a leading public sector bank.
Under NEFT, the transfer takes place either on the same day or on the next day, depending on the time of instructions given. Yet, senior private sector bankers disagree. “NEFT can’t be an alibi for RTGS. The bottom-line is that any robust infrastructure should have a fall back. If this had occurred during the month end, we would have had a virtual stampede,” a senior private sector banker said.
Monday, 30 November 2009
Remittances and Europe - Moldova
Remittances are a worldwide issue. All too often people associate “Remittances” with Africa or Asia. But remittances are a feature in any country where economic conditions are poor and where there are too many people for the jobs available. In these circumstances people migrate in the hope of finding work and being able to send money home to help feed and clothe family members who have remained behind.
This short video from the World Bank highlights conditions in Moldova, the poorest country in Europe. Its economy relies on money sent home by the hundreds of thousands of Moldovans who work outside the country. In the current global economic environment, it is inevitable that remittances will fall. Although it is still too early to tell by exactly how much, it is clear that declining remittances could have a large impact on families trying to cope with the economic downturn.
This short video from the World Bank highlights conditions in Moldova, the poorest country in Europe. Its economy relies on money sent home by the hundreds of thousands of Moldovans who work outside the country. In the current global economic environment, it is inevitable that remittances will fall. Although it is still too early to tell by exactly how much, it is clear that declining remittances could have a large impact on families trying to cope with the economic downturn.
Saturday, 28 November 2009
Payment Systems - Do you know how a cheque works?
Market research in the UK has confirmed that that consumer understanding of the oldest payment system, the cheque clearing process is still very low. To counter this, the UK’s Cheque and Credit Clearing Company (C&CCC) has launched an interactive online film that helps explain the different stages involved in clearing a cheque. It is educational, informative and very clearly presented.
Cheque clearing processes are basically universal, so even if you don’t live in the UK the principles covered are still valid. You can watch this online movie at: http://www.chequeandcredit.co.uk/files/candc/flash_files/candc_animationv6.swf
Cheque clearing processes are basically universal, so even if you don’t live in the UK the principles covered are still valid. You can watch this online movie at: http://www.chequeandcredit.co.uk/files/candc/flash_files/candc_animationv6.swf
Friday, 27 November 2009
Payment Systems in India – A Vision for the Future
Recently the Reserve Bank of India released a report entitled ‘Payment Systems in India - Vision 2009-12‘. In this the Indian central bank discusses initiatives it has taken and what it plans to do to improve security of cards, make ATMs more accessible to the public, make banking more accessible to the public, improve its efficiency, timings and reduce risks. It notes that the future is in mobile payments and offers its outlook on alternate methods to improve the Indian payments industry.
This succinct summary of the Reserve Bank of India’s proposal MEDIANAMA is a “must read”. Access it at RBI’s Vision For Mobile & E-payments, Major Projects | MediaNama
This succinct summary of the Reserve Bank of India’s proposal MEDIANAMA is a “must read”. Access it at RBI’s Vision For Mobile & E-payments, Major Projects | MediaNama
Thursday, 26 November 2009
The Cheque is More than a Payments Instrument
Stanley Epstein, Principal Associate, Citadel Advantage
So the venerable old cheque has been singled out and “tapped” for termination – in the UK at least. Of course, in the new world of electronic payments and instantaneous communications, the demise of the cheque was inevitable. A payment instrument devised in a simpler time, the cheque representing a negotiable claim on the bank account of the drawer, was a major innovation in its day. It represented a new way to make payments in a manner that avoided the actual transfer of cash or bullion. The humble cheque as a payment instrument spawned other major innovations such as the clearing and settlement processes that are major features of all electronic payment, clearing and settlement systems to this very day.
As a payment and a financial instrument, the cheque reigned supreme for over two centuries and spread across the face of the globe. But, as with all empires, the cheque’s star must eventually set. The cheque has become an anachronism in today’s high-tech, high-speed world. It is an expensive system to operate and worst of all its “flow” is all the wrong way.
In a technology driven, high-speed, risk averse world the way in which the cheque operates is a barrier to the smooth high-speed payments processing operation that puts all the right checks and balances in the right places and in the right sequence.
All other payment types flow from the payer to the payee (now that is a simple word for the receiver that today seems to have gone out of fashion). The opposing flow of the cheque from the recipient (payee) to the payer’s bank is just a hindrance to modern processing practices as well as a huge source of risk.
Of course the cheque is more than a payment instrument, though many people do not know this. The cheque served (and still does in many places) a multiplicity of financial roles, vital in day-to-day business activities.
Just consider four of these.
1. A means of commercial and consumer credit,
2. An access point to commercial bank lending,
3. A medium of exchange, and
4. A payment instrument.
In many countries, even today, the cheque still serves as a credit and loan instrument. Post dated cheques give buyers credit extended by a merchant or store, while the self-same cheques with their legal basis and their negotiability give that same merchant immediate access to discount facilities (i.e. the cash) at commercial banks.
During the six and a half month bankers strike in Ireland in 1970 the humble cheque served as a medium of exchange too, with very little default once the banks got back to operating again.
Until recently in most countries the only “payment” law in existence was that relating to the cheque. Cheque laws and banking laws run hand-in-glove. The legal corpus surrounding other types of payment instruments is, with a few exceptions, sketchy and in some cases nonexistent. Within the realms of the law the cheque or “Bill of Exchange”, which it really is, still has a lot of life left in it. Most countries created significant laws and legal principles based on the cheque/ bill of exchange.
The bill of exchange still remains the basic instrument of international trade and finance. While the UK may well abolish the use of the cheque for day-to-day payments purposes it is unlikely that the instrument will suffer an ignominious end. Trade practices and international conventions will ensure that the cheque/ bill of exchange will still be with us for a long time to come.
So the venerable old cheque has been singled out and “tapped” for termination – in the UK at least. Of course, in the new world of electronic payments and instantaneous communications, the demise of the cheque was inevitable. A payment instrument devised in a simpler time, the cheque representing a negotiable claim on the bank account of the drawer, was a major innovation in its day. It represented a new way to make payments in a manner that avoided the actual transfer of cash or bullion. The humble cheque as a payment instrument spawned other major innovations such as the clearing and settlement processes that are major features of all electronic payment, clearing and settlement systems to this very day.
As a payment and a financial instrument, the cheque reigned supreme for over two centuries and spread across the face of the globe. But, as with all empires, the cheque’s star must eventually set. The cheque has become an anachronism in today’s high-tech, high-speed world. It is an expensive system to operate and worst of all its “flow” is all the wrong way.
In a technology driven, high-speed, risk averse world the way in which the cheque operates is a barrier to the smooth high-speed payments processing operation that puts all the right checks and balances in the right places and in the right sequence.
All other payment types flow from the payer to the payee (now that is a simple word for the receiver that today seems to have gone out of fashion). The opposing flow of the cheque from the recipient (payee) to the payer’s bank is just a hindrance to modern processing practices as well as a huge source of risk.
Of course the cheque is more than a payment instrument, though many people do not know this. The cheque served (and still does in many places) a multiplicity of financial roles, vital in day-to-day business activities.
Just consider four of these.
1. A means of commercial and consumer credit,
2. An access point to commercial bank lending,
3. A medium of exchange, and
4. A payment instrument.
In many countries, even today, the cheque still serves as a credit and loan instrument. Post dated cheques give buyers credit extended by a merchant or store, while the self-same cheques with their legal basis and their negotiability give that same merchant immediate access to discount facilities (i.e. the cash) at commercial banks.
During the six and a half month bankers strike in Ireland in 1970 the humble cheque served as a medium of exchange too, with very little default once the banks got back to operating again.
Until recently in most countries the only “payment” law in existence was that relating to the cheque. Cheque laws and banking laws run hand-in-glove. The legal corpus surrounding other types of payment instruments is, with a few exceptions, sketchy and in some cases nonexistent. Within the realms of the law the cheque or “Bill of Exchange”, which it really is, still has a lot of life left in it. Most countries created significant laws and legal principles based on the cheque/ bill of exchange.
The bill of exchange still remains the basic instrument of international trade and finance. While the UK may well abolish the use of the cheque for day-to-day payments purposes it is unlikely that the instrument will suffer an ignominious end. Trade practices and international conventions will ensure that the cheque/ bill of exchange will still be with us for a long time to come.
Subscribe to:
Posts (Atom)
