Payments in Americas

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Payments in Americas
European experiences Henrik Parl Managing
Director

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History of payments in Europe and Eurogiro
General market development
Eurogiro development

• 70s Swift started with bilateral agreements
• Swift closed for Postal organisations
• 90s EBA adding Step2 in new millennium
• 1999 Euro intro
• 1997-2003 EU directive - Regulation
• 2003 SwiftNet
• 2003 SEPA, EPC and PEACH
• 2004 New legal framework in EU

• Giro payments electronic/paper based
• 1989 Eurogiro initiated
• 2000 EURO Single settlement provider
• 2004 FED IACH connected to Eurogiro
• 2004 SWIFTNet CUG by Eurogiro
• 2004 Visa Gateway
• 2004 Eurogiro positioned strongly within EU and
  as gateway to/from EU

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45 connections in 41 countries

• AF Afghanistan International Bank
• AT P.S.K./BAWAG
• BE Financial Post
• BR Empresa Brasileira de Correios e Telégrafos -
  ECT
• CA National Bank of Canada
• CH PostFinance/Swiss Post
• CV Cape Verde Post
• CN China Post
• CS Postal Savings Bank
• CZ CSOB
• DE Deutsche Postbank
• DK Sydbank
• EG CIB (Egypt) S.A.E.
• ES BBVA
• ES Correos y Telegrafos
• FI ING/Postbank (EUR transfers)
• FR La Poste
• GB Alliance Leicester Commercial Bank plc
• GB Visa

• IE An Post
• IL Israel Postal Authorities
• IS Póstgíró
• IT Poste Italiane
• JP Japan Post, Postal Savings Business
  Headquarters
• LU P T Luxembourg
• LV Latvia Post
• MA Barid Al Maghrib
• NL ING/Postbank
• NO ING/Postbank (EUR NOK transfers)
• PL ING/Bank Slaski
• PT CTT Correios de Portugal
• RO Banc Post
• RO Posta Romana
• SE ING/Postbank (EUR SEK transfers)
• SI Postna Banka Slovenije
• SK Postova Banka
• SN La Poste, Senegal
• TG Societe des Postes du Togo

Shareholder
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Geographical Overview
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Monthly transactions
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Eurogiro products

• Payment transfers
• standard (max. 3 days) and urgent
• to accounts with members
• to accounts with 3rd banks
• Money orders
• standard
• TMO, semi urgent cash
• Western Union urgent cash
• Bulk and pension payments
• Gateways alliances

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The Eurogiro strategy 2003 - 2008
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Eurogiro providing connectivity

• Gateway of business opportunities for Eurogiro
• Members and partners
• The Eurogiro SWIFTNet Closed User Group
• Only one IT platform needed
• Exchange transactions in FileAct format with any
  SWIFTNet member and any Eurogiro member on the
  same system
• Access from SWIFT system to (postal) members with
  ELS systems and access from ELS system to
  (banking) members with SWIFT system
• The Eurogiro/Visa Direct solution
• Receive payments from Visa card holders
  additional volume and revenue to the Eurogiro
  members

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Eurogiro providing connectivity (cont.)

• The FED-Eurogiro Partnership
• Incoming traffic (from potentially any US bank)
  with fee and foreign exchange income
• Only one bilateral agreement required (with FED)
• Eurogiro/UPU The Tele Money Order (TMO)
• New revised two-day cash product based on the
  traditional Money Order, mixing Track Trace
  techniques and Eurogiro bulking principles
• Can be exchanged electronically between the
  UPU/IFS network and the Eurogiro network
• Eurogiro/Western Union Urgent Cash
• Eligibility for a special Eurogiro/Western Union
  performance bonus (bonus based on growth in
  transactions)
• Option to connect to Western Union through the
  Eurogiro ELS interface

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Why is Eurogiro relevant for you?

• Eurogiro was started as a pan-European (Postal)
  initiative to create cross border connectivity
• Could a similar initiative be relevant for
  Americas?
• Can something be learned from the Eurogiro
  experiment?

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Some potential solutions for cross border payment
solutions in Americas

• A1) Many-to-many solutions
• A2) Many-to-one solution
• B1) Own solution
• B2) Share with existing solution
• C2) Low value
• C2) High value

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Example 1 Many-to-one solution
Transatlantic gateway
Eurogiro Network
FED ACH
FED/ Eurogiro Format- converter
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Value Proposition to U.S. Banks

• Gateway between Europe and USA giving access to
  all account holders in participating countries
• Enable US Banks to access US ACH with
  international payments as if they were domestic
  payments (including non-Fed customers)
• Full transparency and low cost for STP
  transactions
• Three value day transfer in USD

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Value Proposition to U.S. Banks (cont.)

• Fixed to variable currency option
• Guaranteed maximum spread on FX
• Certainty of payment
• Limited production covering Austria, Germany,
  Netherlands, Switzerland and United Kingdom
• Blended fee of 2.00 to U.S. originator to send
  payment to any of the five countries (not
  including FX)

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Example 2 Swift Eurogiro Closed User Group
Eurogiro SWIFT Gateway
Eurogiro Network
Eurogiro CUG
SWIFTNet
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Lessons to be learned from forming payment
co-operations

• Do not try to solve all things for everyone
• Run projects in small groups with clear decision
  authority
• Select limited number of pilot countries
  preferably with largest volumes
• Use standard technology, procedures and formats
• Pool investment, volumes, contract to get
  critical mass and low costs
• Secure global connectivity
• Secure commitment beforehand