Zero cost option
- 1. 1www.rtpay.org The potential for government e-accounts to increase inclusion A zero cost payments program?
- 2. 2www.rtpay.org E-payments vs cash Advantages • Track data on all transactions • Checks for fraud and suspicious transactions • Transparency in financial flows • Administrative costs much lower • Speed and efficiency of transfers • Financial inclusion • Access to new markets and populations Disadvantages • Traditional views and methods • Required technology infrastructure and hardware • Cost of equipment • Cost of transactions • Lack of trust in the banks and financial institutions • Vested interest of fraudsters and criminals
- 3. 3www.rtpay.org Imperatives for adoption To move from cash, e-payments must be: • Easier • Fairer • Trusted • Reliable • More convenient • Just as fast • At least as cheap And offer something more – the chance to gain!
- 4. 4www.rtpay.org Government e-accounts: Banking for the unbanked A central clearing facility for the citizens the banks don’t want Distribution of benefits Free P2P transfers Payment card or phone app Incentives for keeping funds on account Fee for converting to cash
- 5. 5www.rtpay.org Operation of the account Accounts may be operated via a mobile phone e- account The government can issue a specific local debit card Issuing of a card could be carried out in conjunction with e-identity card (see example from Russia) Merchants can be issued with mobile phone readers to accept these (and commercial) cards
- 6. 6www.rtpay.org Free processing for merchants Moving from cash should not cost the small merchant Provision of a mobile phone card reader Simple free online accounting service Real time collection of VAT for larger merchants Link to incentives and promotional tools Ability to accept bank cards (less a fee)
- 7. 7www.rtpay.org Benefits for account holders Get transfers for free from family members No danger from carrying cash Extra bonus (interest) on saved funds Method to show accounts to justify investment in small business Reliable, trustworthy payments on time No queues to pay utility bills etc Incentives and commercial partners
- 8. 8www.rtpay.org What are the costs? Set-up costs – initial software development Clearing software Servers Debit cards/ national ID cards Mobile phone card reader / POS hardware Mobile phone app development Ongoing costs: new cards, call center support, admin service, fraud control, transfer costs
- 9. 9www.rtpay.org How can the system be afforded? RTpay provides much of the initial software for free Card production and distribution can be financed by third parties International organizations may provide support for such a program Government could help from increased tax collection Charge a fee for conversion to cash? Benefits settlement will save money from administrative savings
- 10. 10www.rtpay.org Central Message Hub Stored Value Management System Mobile Management System POS Data Management System Taxation Hub IVR integration to GPS/CMH Web Based integration to GPS/CMH PC / tablet application interface to GPS/CMH Government Central Accounts System (GCAS) Optional components
- 11. 11www.rtpay.org Acquiring bank Issuing bank Card Associations Customer Merchant Funds transaction reports / chargeback reports Settlement files Card billing statements Authorization & Settlement Purchase transaction Settlement files Traditional POS Model
- 12. 12www.rtpay.org Acquiring bank Issuing bank Card Associations Customer Merchant Funds transaction reports / chargeback reports Settlement files Settlement files Card billing statements Purchase transaction Payment Gateway Authorization & Settlement Authorization Authorization E-commerce Model
- 13. 13www.rtpay.org Merchant’s account Customer’s account Card Associations Customer Merchant Payment Gateway Central Government Payments Hub, Tax Calculation Engine, Virtual e-accounts Local Switch Mobile Money Operators Data and transfer instructions Data and transfer information Data and transfer instructions Central Server Model
- 14. 14www.rtpay.org E-Gov virtual accounts Receipts FREE • Settlement of wages • Settlement of benefits • Receipt of P2P transfers • Income for merchants from sales Payments FREE • Payment by national card at merchants • Transfer to other account holders • Payment of bills by standing order FEES • Transfer to and from bank account • Drawing out of cash at ATM
- 15. 15www.rtpay.org The role of banks, card associations, commercial partners and other stakeholders Clearing system can incorporate all payment types Merchants using mobile phone card readers can accept credit cards as well Banks can learn from account data of non-banked citizens – and add services Unbanked individuals can build credit record to take advantage of banks and other financial services Commercial companies can target individuals, regions with focused marketing (potential for fees) Mobile phone operators get more connectivity fees
- 16. 16www.rtpay.org Risk Analysis • Potential roadblocks • Timescales • Internal resource requirements • Changing technology • Conflicts of commercial interest • Conflicts of political interest
- 17. 17www.rtpay.org RTpay A not-for-profit group promoting Real-Time Payments for governments Email rgray@rtpay.org or call +44.7809.524300 Our websites: www.rtpay.org and www.rtvat.eu Richard Gray, Chris Williams RTpay