Working in the payments industry for the past eight years and in six different countries I have realised that there is a need for content in this domain as many people who work in this industry struggle with understanding basic payment concepts. This book is an attempt to consolidate the concepts required from an electronic payment processing perspective.
Whether you’re new to learning payments or a payment professional who looks to expand knowledge this book is designed to help you understand the fundamentals of Payments world.
Contents –
1. INTRODUCTION TO PAYMENTS
1.1 Electronic Payments
1.1.1 The Role of Banks in the Payments Ecosystem
1.1.2 Payment Instruments
1.1.3 Exploring Payment Instruments in Today’s Market
1.1.3.1 ACH
1.1.3.2 Real-Time Payments (RTP)
1.1.3.3 RTGS (Real Time Gross Settlement)
1.1.3.4 Card Payments/Plastic Transactions
1.1.3.5 Mobile Payments
1.1.3.6 Crypto Currency Transactions
1.1.3.7 Cross-Border (SWIFT Payments)
1.1.3.8 Check Transactions
1.1.4 Payment Messages Overview
2. PAYMENT PROCESSING PARTICIPANTS AND PAYMENT TYPES
2.1 Key Participants involved in Payment Transfer
2.1.1 Participants – Deep Dive
2.1.1.1 Payer
2.1.1.2 Payee
2.1.1.3 Payer’s Bank
2.1.1.4 Payee’s Bank
2.1.1.5 Payment Initiation Channel
2.1.1.6 Payment Processor
2.1.1.7 Core Banking Applications
2.1.1.8 Clearing Agent and Settlement Agent
2.1.1.9 SWIFT Network
2.1.1.10 Payment Switch
2.1.1.11 Payment Gateway
2.1.1.12 Central Bank
2.1.1.13 Third Party Sender
2.1.1.14 Correspondent Institution
2.2 Types of Payments
2.2.1 Credit Transfer (Push Payments)
2.2.2 Debit Transfer (Direct Debit)
2.2.3 Request for Payment (Pull Payment)
2.2.4 Standing Instruction (SI)
2.2.5 Return Payment
2.2.6 Reversal Payment
3. MESSAGING MAGIC – MESSAGES INVOLVED IN PAYMENT PROCESSING
3.1 Payment Dialogue
3.1.1 Supported Payment Message Types in the Market
3.1.2 The ISO20022 ERA
3.2 Messages Currently Used in the Industry
3.2.1 Generic Message Components
3.2.2 ISO20022 Message Generic Structure
3.2.3 Payment Message Transfer Mechanism and Protocols
3.2.3.1 Synchronous Vs. Asynchronous Methods
3.2.4 Payment Messages – Use Case 1
3.2.5 Payment Messages – Use Case 2
3.2.6 Payment Messages in Blockchain Technology
3.3 Non-STP (NSTP) Payment Messages
3.3.1 Non-Payment Messages in Payment Processing
3.4 Messages and its Transformation (Mappings)
4. ACCOUNTINGS INVOLVED IN PAYMENT PROCESSING
4.1 Accounting History
4.2 Account Types and Account Relationship
4.2.1 Common Account Types
4.2.1.1 DDA Account/Savings Account
4.2.1.2 Checking Account/Current Account
4.2.1.3 Loan Account
4.2.1.4 General Ledger Accounts
4.2.1.5 Suspense Accounts
4.2.1.6 FX Suspense Accounts
4.2.1.7 Nostro Account
4.2.1.8 Vostro Account
4.2.1.9 Mirror Accounts
4.2.1.10 Virtual Accounts
4.2.1.11 Fee/Charges Account
4.2.1.12 Break Accounts
4.2.2 Use Case 1: Basic Accountings on a Standard Credit Transfer Transaction
4.2.3 Use Case 2: Accountings with a Clearing and Settlement Entities Involved in Between
4.2.4 Use Case 3: Cross Border Transaction with FX Involved
4.3 Tokenisation against the Account Numbers
4.4 Physical Vs Virtual Accounts
4.5 ISO Messages Related to the Accounts in Payments World
4.6 Account Statements/Reports
5. PAYMENT LIFECYCLE
5.1 End to End Payment Process Flow
5.1.1 Payment Initiation
5.1.1.1 Payment Initiation Technique: Online Funds Transfer Request
5.1.1.2 Mobile Applications
5.1.1.3 Plastic Transactions
5.1.1.4 Transaction Initiated using a Check
5.1.1.5 Mandates/Standing Instructions
5.1.1.6 Crypto Wallet Transactions
5.1.1.7 Payment Messages while Initiating a Payment
5.1.2 Payment Authorisation
5.1.3 Payments Sent to Gateway/Payment Switch/Transaction Processor
5.1.4 Payment Validation
5.1.5 Payment Execution
5.1.5.1 Debit/Credit Party Identification
5.1.5.2 Perform Fraud Check/Sanctions Check and AML
5.1.5.3 Accountings
5.1.6 Identify Next Hop and Output Generation
5.1.6.1 Deriving Correspondent
5.1.6.2 Raise Alerts/Notification
5.1.6.3 Handling ACK
5.1.7 Reconciliation
5.1.8 FX in Payments
6. THE ERA OF REAL TIME PAYMENTS (RTP)
6.1 Real-Time Payments: A Growing Force
6.2 The Core Structure of RTP
6.2.1 Transaction Time SLA and RTP
6.2.2 Participants Involved
6.3 Real Time Pull Payments
6.4 Cancellation Return and Reversal of RTP Payment
6.5 Advantages of Real Time Payments
6.6 RTP Payments Limitations
6.7 RTP USE CASES
6.7.1 USE CASE 1: Real Time Payment with SEPA Instant Payment (IP)
6.7.2 USE CASE 2: United States Real Time Payments (US RTP)
6.8 Real Time Payments and Future Trends
6.8.1 Advancements in RTP
6.8.2 RTP the Path Forward
6.8.3 RTP Real World Use Cases
7. TRADITIONAL PAYMENT METHODS IN ELECTRONIC PAYMENTS
7.1 ACH Transactions
7.1.1 Nintendo’s Payroll Processing Use Case
7.1.2 Batch Processing in ACH
7.1.2.1 Inbound Vs Outbound ACH Batches
7.1.3 Participants in ACH
7.1.4 Forward and Settle Vs Settle and Forward Model of ACH
7.1.4.1 Settle and Forward
7.1.4.2 Forward and Settle
7.1.5 ACH and its Windows/Cycles
7.1.6 The reason ACH Payments are still relevant in the Industry
7.1.6.1 Recurring Transactions and ACH
7.1.7 ACH Direct Debits (DD)
7.1.7.1 Mandate Setup and DD request initiation
7.1.7.2 Direct Debit Flow
7.1.8 ACH Credit Transfers (CT)
7.1.8.1 ACH Standing Instructions
7.1.9 Limitations of ACH Transactions
7.2 Traditional Cross-Border Payments – SWIFT
7.2.1 SWIFT SIPN
7.2.2 SWIFT Services
7.2.3 FIN (MT Messages)
7.2.4 End to End SWIFT Credit Transfer Flow (Serial)
7.2.5 End to End SWIFT CREDIT Transfer Flow (Serial) with an Intermediary involved
7.2.6 SWIFT DIRECT and COVER Payment Method
7.2.7 CBPR+ and HVPS+
7.2.8 SWIFT SSI
7.2.9 SWIFT RMA and RMA+
7.2.9.1 RMA Vs. RMA+
7.2.10 SWIFT GPI (Global Payments Innovation)
7.2.11 SWIFT Payments Future
7.3 RTGS Payment System (Real Time Gross Settlement)
7.3.1 Participants in RTGS Processing
7.3.2 RTGS Importance in the Current Payments Spectrum
7.3.3 Gross Settlement Vs Net Settlement
7.3.4 RTGS System Operating Windows
7.3.5 RTGS Transaction End-to-End
7.3.6 RTGS and Banks Standing Instructions for Sweeps
7.3.7 Advantages of RTGS System
7.3.8 RTGS Challenges
7.3.9 Real Word RTGS Use Cases
8. NON STP PAYMENT FLOWS
8.1 Common Causes of Failure
8.2 Transaction Validation Failure
8.2.1 Types of Transaction Validations
8.3 Account and Balance-Related Payment Stoppages
8.4 Transaction Fraud, Sanctions and AML (Anti Money Laundering)
8.4.1 Fraud Check
8.4.2 Sanctions
8.4.3 Standard Request Response Format for the Sanctions and Fraud
8.4.4 AML (Anti Money Laundering)
8.5 Payment Return, Reject, Cancellation and Reversal
8.5.1 Transaction Reject
8.6 Transaction Return
8.7 Transaction Cancellation
GLOSSARY
