How do Payment Systems Standards enable faster and cheaper payments?

1 What are payment systems standards?

Payment systems standards are the rules, protocols, and specifications that govern how payment systems operate and interact. They define the technical, operational, and legal aspects of payment systems, such as data formats, message types, security measures, transaction flows, and dispute resolution. Payment systems standards aim to ensure that payment systems are reliable, efficient, secure, and compatible with each other.

2 Why are payment systems standards important?

Payment systems standards have several benefits for users and providers, such as reducing cost and complexity, increasing speed and convenience, enhancing security and trust, and promoting innovation and competition. These benefits are achieved by simplifying processes, reducing the need for intermediaries and proprietary systems, enabling faster processing and real-time settlement, creating common safeguards, encryption methods, and authentication mechanisms, fostering interoperability, and enabling new products and services.

3 What are the main types of payment systems standards?

Payment systems standards can be divided into three main types: international, national, and industry standards. International standards, developed by global organizations such as the ISO or FATF, are intended to harmonize payment systems across countries and regions and to enable cross-border transactions. National standards, created by national authorities like central banks or regulators, are designed to meet the needs of local payment systems and guarantee their stability and efficiency. Lastly, industry standards, set up by private entities like payment service providers or fintech companies, are meant to address the challenges of the payment industry and offer competitive and innovative solutions.

4 What are some examples of payment systems standards?

There are many payment systems standards in use or in development around the world, covering various aspects and domains of payment systems. Examples of the most widely used or recognized standards include ISO 20022, EMV, and Open Banking. ISO 20022 is an international standard that defines a common language and format for EDI between financial institutions, supporting multiple payment instruments such as credit transfers, direct debits, cards, and e-wallets. EMV is an industry standard that specifies the technical requirements and security features for chip-based payment cards and terminals, enhancing protection and verification of card transactions. Open Banking is a concept and set of standards to share financial data and services between authorized third parties such as banks, fintechs, and customers. It gives customers access to their financial information and a wider range of products and services.

5 How to implement and comply with payment systems standards?

Implementing and complying with payment systems standards can be a complex and costly process, but there are some general steps and best practices that can help facilitate the transition. This includes assessing the current state and gaps of the payment systems, developing a roadmap for implementation, engaging with stakeholders, and testing and monitoring performance. Payment systems standards are the key enablers of faster and cheaper payments, as they improve efficiency, security, interoperability, and innovation. By understanding and applying the payment systems standards, businesses can enhance their payment experience and competitiveness while contributing to the development of the payment industry.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?