Equens and Federal Reserve Banks launch international payments service

Last year the US’s Federal Reserve Bank and Europes Equens signed a memorandum of understanding on cross-border payments processing in multiple currencies, including the US dollar and euro.

Since then DZ Bank has joined the project, which enables financial institutions in the US to send payments in dollars, euros and British pounds to 22 countries across Europe via FedGlobal ACH Payments.

Conversely, banks across Europe can send dollar payments via Equens to the United States. DZ Bank serves as the European gateway operator, with Equens acting as the payment processor.

Now, DZ Bank and US Bank have become the first institutions to use the service, which is the first live implementation under the International Payments Framework Association. The association is a collaborative effort among public and private groups in Africa, Europe, North America and South America to standardize and make more efficient the transfer of low-value payments around the world.

Michael Steinbach, chairman, board of directors, Equens, says: "This service fulfils an increasing demand within Europe for the efficient processing of low-value cross-border payments around the world. It is our ambition to extend this service to include other regions, countries and currencies."

SADC plans payments harmonization across South Africa, Namibia, Swaziland & Lesotho

A project run by central banks of the 15-member Southern African Development Community aims to complete a pilot project harmonizing the payment infrastructures of the four Rand Monetary Area countries within two years.

News of the initiative came from Tim Masela of the South African Reserve Bank who was speaking on a panel at Sibos in Amsterdam about SEPA "replicants" - payments initiatives worldwide that are building on the experiences of Europe's migration to a single euro payments area.

"Learning from the experience in Europe is very useful," he says. "Particularly in the area of legal frameworks."

Subsequent project phases propose an extension to the wider SADC group and the creation of a single currency for the region, even though this is unlikely before 2018.

"Although there is a common currency target for the region of 2018, we don't think it's feasible by this date. But we want to make sure that any new payment infrastructure we develop can support it," says Masela

In the first phase of the project, which the central banks led by the South Africa Reserve Bank are planning, the group plans to run a pilot requiring minimal capital investment. It will seek to integrate the existing bank and payments infrastructure across South Africa, Namibia, Swaziland and Lesotho to ensure all cross border transactions can be processed without correspondent arrangements.

Masela says he expects this will take up to two years.

In the second phase, once it's been demonstrated that the integration results and scale of transactions make it worth proceeding, the group will seek to build new shared infrastructure that can serve not only the four pilot countries, but the entire SADC group. This would probably take a further three years, says Masela.

The final phase would seek to completely dismantle barriers to cross-border banking, irrespective of the HQ location of individual banks. Masela cautions that such a move will require considerable legal change and political will to proceed.

MANAGING OPERATIONS RISK - Registrations are closing this Friday

Join us for a 2-day intensive course on Operations Risk Management & Mitigation– from assessment to implementation at the Don III, 125 Pretoria Avenue, Sandton, Johannesburg on the 17 & 18 November 2010.

But you need to act fast as REGISTRATIONS ARE CLOSING this Friday - 29 October. We still have a few spots available.

For more details CLICK HERE.

Registrations for our International Payments course close this Friday (29 October)

Registrations for our intensive 2-day primer on International Payments are closing this week - on Friday 29 October. We still have a few spaces available. Dont be dissapointed.

For more information CLICK HERE.

Safaricom expands M-PESA Mobile Payments to supermarkets

Kenya's Safaricom has expanded its mobile money service, M-PESA to enable payments at all Uchumi and Naivas Supermarket outlets across the country. Speaking at the launch ceremony held at an Uchumi outlet, Safaricom CEO Michael Joseph said the company was leading the way towards a cash-less society where most payments will be made via the telephone or online, hence reducing the risks involved in carrying cash.

"I am extremely excited to be launching Nunua na M-PESA service allowing cashless payments at-the-till for people without a bank account. It resonates with our company?s commitment to lead the way in innovations that provide convenience and security to our subscribers," said Joseph. "Following positive feedback from customers who participated in a pilot, as well as the Central Banks go-ahead to roll-out, we shall now proceed with expanding the merchants that will accept Nanua na M-PESA".

Joseph said Safaricom will continue partnering with organizations to expand the variety of payments that can be made using M-PESA with the aim of providing increased convenience to Kenyans while at the same time maximizing their mobile phone usage.

The Single Euro Payments Area - where do we stand?

In a speech at the European Payments Council offsite meeting held in Brussels, on 14 October 2010, Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECB delivered a wide ranging review of the current status of SEPA and what still remains to be done.

You can read her full remarks in our IN FOCUS section – Click Here.

ECB wants “realistic but ambitious regulatory end dates” for SEPA Migration

The European Central Bank (ECB) has publisged its 7th Progress Report on the Single Euro Payments Area (SEPA).

Currently, 32 European countries are participating in SEPA, more than 4,400 banks have joined the SEPA credit transfer scheme, and more than 3,000 banks have signed up for the SEPA direct debit scheme. Hence, much has been achieved in implementing SEPA.

However, further action by European legislators is needed for SEPA to be completed successfully. In this respect, a mandatory timeline for the migration to SEPA payment instruments will significantly accelerate the pace of transition, enabling SEPA to be completed, preferably, by the end of 2012 for credit transfers and by the end of 2013 for direct debits.

The 7th Progress Report, entitled “Beyond theory into practice”, shows achievements in major areas. For instance, the launch of the SEPA direct debit in November 2009 has made direct debit payments possible for the first time across borders. By 1 November 2010 the reachability of payment accounts for SEPA direct debits will be guaranteed legally, allowing SEPA direct debits to be used effectively throughout Europe.

In addition, the governance structure of SEPA has been improved by the creation of the SEPA Council, which enables a more formalised involvement of high-level representatives of consumers, retailers, corporates, SMEs and public administrations in the SEPA dialogue.

Other areas where progress has been made include: the transposition and implementation of the Payment Services Directive, and standardisation in the area of cards.

Despite this progress, SEPA migration as a self-regulatory process, has not yet achieved the results that were initially expected. The banking industry’s self-imposed deadline of December 2010 for SEPA credit transfers and direct debits to be in general usage will not be met. By August 2010 only 9.3% of all credit transfers processed in the euro area were SEPA credit transfers. Since its launch in November 2009, SEPA direct debits remain at a share well below 1% of all direct debit transactions processed in the euro area. Therefore, the Eurosystem strongly supports the work of European legislators to create the necessary momentum to bring the SEPA project to completion. The envisaged regulation establishing a SEPA migration end date(s), in which the usage of national payments instruments will be discontinued, will be a key element for the timely and smooth adoption of SEPA. The Eurosystem is also confident that concerns raised by market participants on the envisaged regulation on SEPA migration end date(s) will be properly addressed by the European authorities.

Other key elements for the success of SEPA that still need to be addressed include: the provision of innovative payment services (e.g. online and mobile payment services), the creation of an additional European card scheme and the enhancement of the security of card transactions by phasing out the magnetic stripe on European cards.

Ms Gertrude Tumpel-Gugerell, Member of the ECB’s Executive Board, said: “SEPA is progressing from the market-driven phase of design and implementation to the phase of mandatory migration, aiming to ensure that the necessary adoption really takes place. At this stage, SEPA faces a number of specific challenges that only the market and the regulators together can master. I hope that the constructive cooperation between all stakeholders will become even closer in the decisive two to three years ahead, so that our joint efforts help us to achieve the final goal: an attractive integrated and competitive European market for euro payment services.”