The conference was notably more low key than previous events in Dubai, but my impression is that the potential to tap into the enormous USA-Mexico remittance flows through the mobile channel is bringing more than just ‘the usual suspects’ to the table.

I decided to speak on the lack of correlation between a project’s budget and its ultimate impact, using our field experiences with unbanked people here in Canada.

The flash movie (with audio) is below:

(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.

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.

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.