At Infosys Cards and Payments, we help our clients harness the power of technology-led innovation across the entire payments ecosystem encompassing payment networks, merchant services, stored value, FI payment services, and payment aggregators. Our thought leadership and a design thinking approach helps us co-create solutions with our clients to address their business problems.

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July 20, 2015

Retail Payments Systems are becoming Faster - How Payment Organizations can be future-ready

Real-time Retail Payment Systems or Faster Mass Payments Schemes are gaining popularity across the globe. More than 20 countries have adopted or soon planning to adopt this type of Payments scheme (including some big markets such as UK, Singapore, Australia, US & Canada). Adoption of Faster Payments is natural to today's real-time commerce needs - Faster Payments help grow GDP at faster pace due to increased velocity of money (improved liquidity and credit effectiveness). Typical use cases for Faster Payments are Person-to-Person (sending money to a friend in emergency), business-to-business (just in time supplier payments), person-to-business (time sensitive bill-payments) and business-to-person (temporary worker payroll) payments.

Some of the characteristics of Faster Payments Systems are:

• Speed and Finality - Real-time access to Good Funds - no future revocation
• Availability and Timely Notification - Should be available 24X7X365. Payment Status readily available
• Ubiquity - These are Domestic Push Payments/Credit Transfers which should be available for all stakeholders
• Overlay Services - Value-added Services on top of Payments Platform (optional but highly recommended)
• Simpler Addressing Alternate addressing with mobile number or email id (e.g. Paym in UK)
• Interoperability & Open Standards e.g. use of ISO 20022 - Most new Faster Mass Payments schemes are using ISO 20022 standards


Operational Challenges of Faster Payments:

• Fraud Management and compliance in a real-time environment
• Managing counterparty risk if settlement is not done real-time
• Keeping systems and support processes available 24X7X365
• Handling Payments mix transition from 'slow schemes' to 'fast schemes' including infrastructure and customer support


Best Practices for Transition:

• To control Fraud try multi-factor authentication and train support stuff
• Prudent Exception handling & SLA management processes should be in place
• Plan for swing in capacity - may try Adaptive architectures
• Right pricing of services - may demand premium pricing but that should be balanced against demand drop

Transformation Roadmap:

• Manage the Transformation with a Centralized Program Management Office and Architecture Board for roadmap alignment, resource optimization, governance and control
• Build Platform for Capacity growth and 24X7 availability(very high initial growth is historically expected as transactions from slow payments systems move to faster payments schemes)
• Extensive end-to-end testing is required - plan for automation and reuse from early on
• Plan to explore latent demand and monetize new innovative value-added overlay services - plan to explore opportunities of ISO20022
• Plan for changes in future - Plan for multi-provider environment in large markets (e.g. US), Cross-border Faster Payments (multi-currency) and no upper limit schemes

July 17, 2015

Can distributed ledger technology and public review of transactions help improve the performance of government policy and resource allocations?

I read a fantastic BloombergView article today morning which shows governments across the world manage an estimated $75 trillion worth of commercial assets -- roughly 50 percent more than the $54 trillion in global public debt -- and these assets are typically quite poorly managed. In some cases, governments have actively tried to hide their value, often so that government officials can personally benefit from handing out favors. The study suggests a 2 percent-point increase can fetch additional $1.5 trillion - equivalent to global spending on research and development. If we consider the developing or poor countries the scenario is far grave. Lot of countries are managed by criminal politicians who use most of foreign aid or tax revenues to fund their own personal assets (using cash for money laundering to Tax heavens, Terrorist financing, luxury apartments etc.) when most of their citizens live a poor, hopeless life. There are misallocation of public resources even in advanced countries - citizens are not always aware of all the transactions, lobbying efforts by rich companies exploit tax loopholes or gain undue competitive advantage in terms of government subsidies etc. The centralized ledger system followed by central bodies today is built on trust of the government - many think this helps powerful bankers manipulate the global financial system and add undue systemic risks. The payment transactions of today does not have built-in traceability- there is no way to trace how the cash changed hands and moved from NYC to Washington and back!


The latest breakthrough in blockchain or distributed ledger technologies has power to disrupt this nexus. The historical trace capability of distributed ledger and public analysis of the transactions can potentially reduce money laundering. This can increase the trust of common people in the financial system and improve global commerce. If use of cash is banned over time and use of distributed ledger technologies get enough traction we many see a much efficient and corruption free world in future. We can dream of a world where government performances can be validated by the effectiveness of the public money they manage (we have seen the use of Sovereign Fund or TARP ETF) and crowdsourcing best ideas for use of public money becomes the norm. It will take time but we probably will see it in our lifetime.