How Governments Steer Payments Innovation

By Adams, John | American Banker, October 16, 2012 | Go to article overview

How Governments Steer Payments Innovation


Adams, John, American Banker


Byline: John Adams

One number leaps off of the 56-page World Payments Report released by Gapgemini (CAP) and Royal Bank of Scotland (RBS) on Monday: 1073.

That number's not a dollar figure for global payments, or a measurement of how many banks have adopted mobile banking, or even a projection for near field communication (NFC) volume in 2016. Rather, it's a Section of Dodd Frank (yes, Dodd Frank has more than 1,000 sections) that includes a February 2013 deadline for a raft of requirements for remittance transfers. Dodd Frank 1073, which covers remittances and U.S. initiated international payments, is one of more than two dozen payments related rules or regulations either issued in 2012 or with a pending deadline during the next year, which cover most payment types. The rules call for banks or other money transmitters to guarantee delivery (or receipt) of funds, fully disclose fees and exchange rates, provide post-transaction cancellation options, and resolve errors.

This portends substantial investment in reporting, tracking, and document population and management technology to ensure accurate processing and reporting, particularly since most countries have some local equivalent of Dodd Frank Section 2013. Capgemini RBS' report counts more than two dozen such regulatory payments regulations in 2012. That includes HM Treasury in the UK's July launch of national payments services industry reform, Canada's Code of Conduct for Cards and Hong Kong Multi-Currency Clearing. Other laws and regulations such as Basel III also include tighter liquidity requirements, which will likely lead to substantial reconstructions of balance sheets and expanded scope of payments reporting.

"One area that is of particular importance [in these regulations] is the intraday liquidity, there's a value being placed on that. There needs to be an increasing amount of sophistication about how it's tracked and analyzed. It's an area where the regulations are around systemic risk reduction, but it's triggering a lot of changes form a technology perspective," says Simon Newstead, head of financial institutions market and business strategy for RBS. …

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