While recently researching the payments landscape of a new international market that hyperWALLET is considering entering, it occurred to me that there really is a wealth of information available online nowadays on topics of interest to payments professionals.  I’d like to share a list of my favorite sources and publications  in the hope that  you may find it useful.  All of these items have two things in common:

(1) they are or come from a reliable source; and (2) they are publicly available for free.

While some of these sources may seem self-evident, it is worthwhile actually taking the time to browse through the entire list of publications on their websites, as you can find real gems including a statistic or two that can possible assist you with a payments-related business decision.

1. The Bank for International Settlements (http://www.bis.org/) is an excellent source for research, statistics, and in-depth publications. One of my favorite reports from this site is called Statistics on Payment and Settlement Systems in Selected Countries – Figures for 2008” that was published in December 2009. Prepared by the Committee on Payment and Settlement Systems of the Group of Ten Countries. This report presents a variety of interesting payments related statistics on a per country basis with comparative tables at the end. The focus is on developed countries (13 included). Statistical data include items such as settlement media used by banks and non-banks in each country, electronic money institutions, available payment card functionality and indicators of the use of payment instruments.
2. The World Bank (http://www.worldbank.org/) currently has 913 reports on payment systems and infrastructure available for free download on its site. This is in addition to the country specific reports and other data and research you can find there. I recommend making this site a permanent feature of your radar screen. Some outstanding reports worth mentioning include:
   • Payment Systems Worldwide: A Snapshot, Outcomes of the Global Payment Systems Survey 2008. This report contains extremely valuable information on payments systems and instruments in over 200 countries. Need to find out what retail systems are prevalent in India or what ATM availability is like on Fiji? You can find it here.
   • General Principals for International Remittance Services – if you’re a remittance provider, this report provides useful insight into the aspects of the remittance business that the World Bank suggests in-country regulators focus on.
   • Remittance Prices Worldwide. This is actually a website in and of itself and not a report (http://remittanceprices.worldbank.org/). Here you can find data on the cost of sending and receiving small remittances from one country to another complete with lists of remittance providers, their fees and the average FX margins that they charge.
3. The International Monetary Fund’s site (www.imf.org) contains some payments related data (including their country specific Financial System Stability and Financial Sector Assessments both containing date on payment systems.
4. Regional organizations such as APEC (www.apec.org), EBRD (www.ebrd.com) often publish region specific payments data and reports on their sites.Central Bank websites are excellent sources of free information concerning aspects of the payments industry in their respective countries. More often than not these sites are in English as well as the local language. Examples include Central Bank of Russia (www.cbr.ru), Banco de Mexico (http://www.banxico.org.mx/sitioIngles/index.html) and the People’s Bank of China (http://www.pbc.gov.cn/english/).
5. Local Clearing and Settlement System sites are a good place to browse if you are researching a country’s settlement capabilities or whether you want to know, for instance, if your bank is a member of a particular in-country clearing system. Some examples are MEPS (Malaysian Electronic Payment System) www.meps.com.my, the Korean Financial Telecommunications and Clearing Institute (www.ktfc.or.kr/end), and of course we shouldn’t neglect to mention the Canadian Payments Association (www.cdnpay.ca) or NACHA (www.nacha.org).
6. Last but not least don’t forget to check out professional and industry-related blogs such as the Association for Financial Professional’s “Payments” blog (http://blogs.afponline.org/blog/tag/payments/), Global Treasury News (http://www.gtnews.com/payments/default.cfm), and Payments News (http://www.paymentsnews.com/payments_blogs/index.html).

So we wish you happy information hunting! As you come across new gems during your own research processes, we’d be delighted if you’d care to share them with us.

Recently, hyperWALLET exhibited at Central 1’s “2009 Fall Conference and Tradeshow” event held at the Hyatt Regency Hotel in Vancouver, November 4-6, 2009. This annual Fall Conference and Tradeshow event provides opportunity for business and social networking within the Canadian credit union sector, and offers valuable workshops for key industry participants.

At the event hyperWALLET was pleased to announce an exciting new offering that credit unions in Canada can now offer their members – online global money transfer services.  hyperWALLET was also on hand to introduce attendees to the opportunity that exists for them in the global money transfer services market, and how hyperWALLET can assist with a successful launch of the new remittance service.   

According to Aite Group, “cross-border transfers will grow 8% between 2006 and 2010…. by 2010, global workers’ remittances will amount to US$456 billion, up from US$369 billion in 2007”. With such strong growth statistics being reported, hyperWALLET sees a significant opportunity for the Canadian credit unions to tap into the international remittances market by offering competitive global money transfer products, particularly to ethnic communities that send money home on a regular basis.

Despite strong consumer demand for such services, Canadian credit unions have previously not had a cost-effective way to offer these services in order to compete with similar offerings from the Canadian banks, or even against traditional retail money transfer operators.  Instead, credit union members have been forced to seek out these alternative service providers that are in most cases more expensive and less convenient. 

Through hyperWALLET, any credit union member can now make global electronic funds transfers from their online banking to over 30 countries worldwide for just $7.00 (CAD) per transaction.  The recipient receives instant electronic notification and can direct the payment to the destination bank account of their choice. 

At that price point, the service provides significant cost-savings and convenience for both the sender and recipient compared to wire transfers, remittance services offered by banks (such as Royal Bank’s International Remittance service at $13.50/per transaction) and other retailers of money transfer services. 

Going forward, hyperWALLET will be expanding the reach of the service even further to include more countries and cashout options for recipients on a worldwide basis. Check back with us regularly for more product announcements regarding this and other new services.

NACHA recently hosted its annual Institute of International Payments at the Federal Reserve Bank in Atlanta, Georgia (Nov. 17-19, 2009).

As hyperWALLET’s Director of Treasury, I was delighted to attend this conference to learn from both peers and industry. Despite a rather small group just shy of 60 participants, the session leaders did not disappoint; they provided some excellent presentations with abundant food for thought.

The event understandably focused on international payments from a “US looking out” perspective and offered some unique insight into the issues faced by US based entities seeking to engage in international payments, whether for their customers or for themselves. I’d like to touch on some of the key trends brought up during this event, namely:

1.  Convergence
2.  Continued growth in worldwide remittance
3.  Increasing emergence of non-traditional players and payment channels

Convergence
Convergence is a recurring theme and can be witnessed in everything from payment networks, to the move towards standardization of messaging and file formats to convergence in Travel Rule-like regulatory requirements outside of the US.

The distinction between low value and high value payments systems is blurring with more and more low value payments being settled using traditionally high-value payment networks. Practitioners are now more likely to classify payments systems according to settlement time (urgent versus non-urgent) as opposed to value (low value versus high value).

A good example of convergence in payment systems is the UK’s Faster Payments Service (FPS). FPS is a low value (up to 10,000 GPB per item) settlement network for ACH type payments that utilizes the country’s existing ATM network (i.e. convergence between cards and ACH). Settlement is irrevocable and often same day and clearing is available 24/7. Hence FPS is ‘almost’ a RTGS for low value payments and has many wondering about the future of BACS (the UK’s non-urgent 3-day, with recourse, clearing system).

Corporates in the States and elsewhere are pressuring their banks to adapt the XML ISO 20022 standard as a messaging format.  SWIFT is also utilizing ISO 20022 to gradually replace their existing MT messaging format. Adoption of this standard will reduce the complexity of corporate to bank communications and increase the straight through processing rates.

Regulatory requirements for cross-border payments is another area where convergence is becoming apparent. The essence of the USA’s BSA Travel Rule (requiring originator information to “travel” with a payment ) is spreading to other markets thanks to the FATF’s Special Recommendation VII (wire transfers) requiring all members countries to institute similar requirements. This recommendation, by the way, reads as follows:

http://www.fatf-gafi.org:
“Countries should take measures to require financial institutions, including money remitters, to include accurate and meaningful originator information (name, address and account number) on funds transfers and related messages that are sent, and the information should remain with the transfer or related message through the payment chain. Countries should take measures to ensure that financial institutions, including money remitters, conduct enhanced scrutiny of and monitor for suspicious activity funds transfers which do not contain complete originator information (name, address and account number).”

Continued growth in worldwide remittance
The second trend emphasized during NACHA’s Institute of International Payments was continued strong growth in worldwide worker’s remittances. This market has increased 63% over the past 5 years. In 2008 recorded workers’ remittances totaled nearly $400 billion US. This amount is expected to decrease to $290 billion in 2009 due to the financial crisis and a big drop in remittances from US to Mexico and Latin America. Nevertheless, most agree that significant growth in this sector will resume again going forward.

The main sending countries are the US, Russia, Switzerland, Saudi Arabia, Germany and Spain. The top recipient countries are India, China, the Philippines, Mexico and Poland. Interestingly, banks service only about 10% of this market with the likes of Western Union, MoneyGram and others, dominating.

Increasing emergence of non-traditional players and payment channels
All banks and remittance providers, however, are facing increased competition from the emergence of non-traditional players and payment networks, which is the third trend I wanted to touch upon. Examples of some of these new providers include mobile operators, web-based electronic wallet providers, supermarket chains, and card-based remittance services.

The most fascinating example of non-traditional players I heard about during this event was the case of certain Latin American supermarket chains who accept cash from their customers to make bill payments, cross border remittances and grocery purchases for them.

Instead of utilizing a bank to settle each transaction separately, some of these chains are aggregating individual payments into one single payment per day per supplier, significantly reducing transaction costs (an example would be aggregating all customer payments to a local utility into one payment to that utility and then providing the utility with reams of remittance data for all of the individual entries that make up that particular aggregated payment).

Most of the non-traditional players still rely on the traditional financial service backbone for actual settlement and hence strong banking relationships are a must. However some new players are even breaking away from this by enabling customers to exchange a form of stored value that does not necessarily equate with ‘money’ in the traditional sense of the word. Some examples include remittances of mobile airtime minutes, electronic or mobile vouchers that may be transferred P2P and redeemed for actual goods or services, and Second Life’s Linden Dollars.

Looking Forward
It will be interesting to watch these and other developments going forward. Moreover, it will be great fun to participate in them. For an innovative payments technology provider such as hyperWALLET geared towards enabling low-cost payments to the far reaches of the globe, the trends in international payments outlined above are certainly good news.

Having recently returned from the MMT09 summit in Dubai where hyperWALLET was pleased to be one of the key event sponsors, I couldn’t help but walk away with some observations that I wanted to share.  

As most in the payments space are aware, the concept of mobilizing financial services has been around for many years now, and even successfully deployed in some key markets around the world (Safaricom’s M-Pesa service in Kenya being the most notable).  The dramatic uptake in mobile phone usage the past few years, particularly in consumer markets that are largely “unbanked”, has spurred renewed interest on the part of Mobile Network Operators (MNOs) to investigate the introduction of such services, and has also opened the door to a wide spectrum of suppliers who believe their technology can service the requirements of the industry.  While opinions vary on where we are at in the product lifecycle of mobile financial services to both unbanked and banked demographics, what seems abundantly clear on the supplier side of the industry is that this opportunity is quite possibly the biggest land grab going in the payments space in recent past.  The buzz and interest with this opportunity is reminiscent of the ERP glory days of the late ‘90s when the fear of the Y2K bug was omnipresent, and corporations of all sizes were upgrading their management information systems.     

With the number of technology participants that filled the exhibit hall, each offering the same types of solutions on the surface, I can’t help but think how any MNO embarking upon a solution evaluation process might be challenged with the solution providers to even include in their list of ones to look at.  As most MNOs will realize early on, there is a significant difference between those providers that simply offer a slick mobile application, to those who provide a robust underlying financial services technology platform, to those who bring with them the operational expertise to guide and support the operator in such a capacity once the service is “live”.  The list of viable technology partners out there becomes even more narrow in cases where the financial services model requires sophisticated transaction settlement either between financial service partners (such as partner banks), or other 3^rd party settlement networks. 

These types of solution differentiators also became glaringly apparent in a recent meeting with a large regional MNO.  After spending the best part of a day in a detailed collaborative session on payments with the project team, at the end of it they came to the collective realization that what they are about to embark on has more to do with financial services than it had to do with “mobile specifically”.  As a technology provider that has been delivering payment solutions and infrastructure in the Financial Services industry for as long as hyperWALLET has, it really highlighted the importance and value this background brings to customers who are going down this path for the very first time.

Since returning from Dubai last week, I haven’t even had time to follow up with many of the great people I met up with there. But today I decided to publish my presentation which had a session working title of  “International Remittances: from Paper To Mobile”, complete with voice-over, and hopefully the same anecdotal content as at the conference itself.  Here it is: 

• Direct link: http://www.slideshare.net/secret/ugaxIPUInr07Na
• Download PPT: http://www.slideshare.net/secret/ugaxIPUInr07Na/download

Held October 17-19 in Victoria B.C., Canada, the 7^th annual Money Laundering in Canada Conference boasted a well-rounded list of attendees that included a number of Money Services Businesses (MSBs), Financial Institutions, Credit Unions and Foreign Exchange Brokers, and regulatory authorities such as FINTRAC  (Canada), FinCEN (USA), OSFI (Canada) and the RCMP.

As the Compliance Officer for hyperWALLET Systems Inc., I was looking forward to meeting fellow compliance officers and learning how they are coping with the latest FINTRAC regulation changes, which state:

“Effective June 23, 2008, all reporting entities under Canada’s anti-money laundering & counter-terrorism financing (AML/CTF) legislation must ensure that their “…compliance regime includes an assessment and documentation of risks related to money laundering and terrorist financing [and] … focus resources on where they are most needed to manage [those] risks” on an ongoing basis.”

Over the course of three days, 15 group sessions and 6 plenary sessions were held to discuss these updated regulations, including:

• Assessing the effectiveness of a Risk Management Program.
• Preventing fraud, a proactive guide to controlling its impact on your organization.
• Implementing a risk assessment program for at-risk customers.
• The impacts of Canada’s Market Enforcement Teams.
• Identifying geographic risks for customers living in Canada.
• Compliance with Bill C-25: what have the regulators found since June 2008?
• Case studies — more real life examples of what is emerging from the reports submitted by reporting entities

Dissecting risk to strengthen compliance
This year FINTRAC, OSFI and the RCMP stressed the importance of MSBs maintaining a rigorous risk management regime. To ensure active compliance and provide valuable data to assist with identifying potential money launderers, the regulatory authorities stressed multiple times the importance of MSBs having an effective AML (Anti-Money Laundering) policy, and submitting unusual activity reports to flag suspicious entities.

One of the most informative sessions was ‘Managing Risk: A Two Headed Coin’, which discussed the need for businesses to ensure an organized approach to managing risk and K.Y.C compliance requirements from an MSB’s perspective. The two key takeaways from this session were that a regulated business should:

1. Work with external partners (including corporate partners and banks) to secure compliance information, monitor risks, and perform on-going assessment of all existing client relationships.
2. Assign internal staff the specific tasks and responsibilities (ie, categorization, enhanced due diligence, application reviews) necessary to perform strict KYC on all potential clients, prior to establishing a business relationship. 

Both of these points reinforce the fact that businesses should have internal processes that can identify potentially suspicious customer applications. Once in place, such processes enable potentially suspicious clients to be flagged at an early stage, helping organizations mitigate risk. 

Conclusions
This conference provided insights into how MSBs can implement an organized approach to developing policies and procedures, to effectively manage risk as their client relationships grow. The overall consensus seemed to be that in an ever-changing technology and business environment, an organization’s implementation and modification of compliance procedures is certainly a challenging task, but one that is attainable through disciplined approach to risk management.

For hyperWALLET, it was a great opportunity to meet and learn from regulatory authorities, fellow compliance officers from various financial service industries, and build on established partner relationships with Canadian Credit Unions. We look forward to participating in future events that educate and bring together compliance-minded professionals and related topics.

hyperWALLET is off to MMT09 next week in Dubai where we will be sharing some of our real-world experiences operating  cross-border online and mobile remittance services.

While we are there, I’m looking forward to meeting the operators of next-generation services like M-Pesa and Zap in Kenya,  Wing in Cambodia, and PayMate in India.   These initiatives represent great correspondent partners for hyperWALLET  as we march toward our goal of commerce-enabling humanity.   The banking industry has employed a correspondent-clearer relationship model for decades – its time for electronic and mobile payment services operators to develop similar strategies, which will yield service benefits to their customers and commercial benefit to themselves.

But I’m keen to also meet with technology platform and service competitors as we vie for the attention of the largest multinational mobile operators.  My motivation doesn’t arise from the usual “keep your enemies close” mentality, either.  Its because after 9 years in the payments industry, I’ve come to appreciate that today’s cut-throat competitor is next-week’s RFP collaborator, or could very well be one’s processing saviour when a policy change at a clearing bank leaves one in a lurch.

This blog is intended to be a place of information exchange about payments.

We believe that inclusive and frictionless commerce can improve the lives of billions of people around the world, and that payment service innovations are a basic building block of inclusive and frictionless commerce.

This site is sponsored by hyperWALLET Systems Inc, and although  members of our own staff will be frequent contributors,  we also hope to solicit ideas and commentary from a broad selection of like-minded and contra-minded people.