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Payments Integration - Qualifier for cross-lane traffic

“Payments Rails" across the world were created on need basis, so specifically not considering the existing / proposed rails in parallel payment business and market. This was rational till a point where the boundaries between parallel payment methods were definable, discrete and distinguishable. Market is into a natural convergence track. Reverting to scientific fundamentals, law of Entropy has proved that external forces are required to maintain order, without which the natural trend in any status will be towards an increased entropy state. There is no longer a "Chinese Wall' to distinguish a payment. Market talks of interoperability.

UK market refers to inter-change ability of a failed payment in FPS to BACS, US Market refers to migration of cheque payments to ACH. Europe with enhanced Mandate related information and taking more "pre-authorized" debits thro' ACH, is in a course for interchange of cheque information as an authorization information. FPS, though a low value payment system envisages immediate funds reachability to counterparties. The linkage of low value to slow payments or rather high value to fast payments has undergone paradigm change here. 

Payment vendors offer intelligent routing capabilities, which in turn directs to scenario where multiple "similar" payment methods are available for a single payment open for selection based on predefined business logics. All these points to the case that going ahead payments is a payment and scheme/method to finally carry information and settle is only a carrier without striking distinguishable features.

Can banks' or payment service providers' current applications handle this "cross-lane traffic" ? Interoperability or inter-change ability of payment rails are intended in Cross-Lane Traffic. If distinguishing attributes of payment methods are fading out and move towards “Unified” state, inter-change ability itself is not a required external force, it is an internal driver which maintains cross-lane traffic. Getting back to Entropy theory, then schemes are in similar entropy status and hence no external force is required to maintain order.

Integration becomes an inevitable transformation journey now, for all those with disparate multiple systems who could not integrate because of incongruence. Business needs such an integration largely from customer, operations and administration as point of benefits. Evidently foreseeable limitations in the archaic systems, which were under incessant repair mode for every business imperative, make this journey more critical. More than the technical capabilities of such systems, an integrated knowledge pool within the organization of the entire eco-system seems to be very scarce in real terms. A need to envelope the payment system with an objective vision and to ensure enveloped sub systems to align with the vision achieving dynamic business requirements, meeting disruptive competitive landscape and unified customer view is the compulsion existed already. Race has begun, and is continual. Transformation journey is the qualifying round for the race with definitive qualifying levels on integration, convergence and hence a "Cross-Lane Traffic".



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Rajeev Nair

Rajeev Nair

Managing Director- Accenture Technology - Banking


Member since

26 Jun 2007



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