Visa spent some money and commissioned Dr. Yoon S. Park, an expert on global financial markets and Professor of International Finance at the School of Business at George Washington University, to examine the current challenges of the cross-border payments process and how a combination of forces are influencing the future of payment processing. See his report here.
In itself quite a nice study that identifies the following trends:
1: Transnational payment systems are growing
2: Government-led initiatives and mandates are increasing
3: Risk and liquidity are being closely managed
4: Multinational banks and businesses are expanding
5: Operational efficiencies are being sought through outsourcing.
Case examples by trend 2 relate to the interference and further regulation of payment regulations such as OFAC rules and the FATF-rules to send payers information with a payment message as an anti-terrorist measure. Indeed a pain, but some necessary evil. Interestingly on page 15, professor Park describes SEPA as another case example:
SEPA is a government-led initiative as defined by the European Payments Council that is having a significant impact on both banks and corporations that make euro-zone payments.
Here we see that being on the other side of the ocean does help in putting things in perspective. Here in Europe bankers and regulators may still be pointing at each other when the discussion is about the Single European Payments Market. Regulators say the the banks, organised in the European Payment Council, asked them for further regulation in the payments domain, to support the market led initiative towards harmonized payments. And some bankers insist that the EPC is a market driven proces.
Yet in its essence it is regulation 2560 and the continued nagging and threats of regulators that kickstarted this 'market driven' SEPA-process out of fear from further intervention by government. Which is probably one of the reasons why Mr Park views the SEPA-thing in Europe as a government driven project rather than a business-driven activity.
Rightly so, I would add, although I would also agree with his conclusion:
The volume and velocity of cross-border payments is made all the more complex by the differing standards of domestic payment systems, increase of international regulations and the changing landscape of emerging transnational and global systems. Market pressures and the expansion of multinational banks and businesses are driving the search for operational efficiencies.
