International Payments Understanding.
Published: 2023-04-07 12:01:00

My Greeting to Functional people! My name is Piyush Srivastava, and I’m working as in functional/Automation for more than 5 years on various projects with respect to Banking and payment domain as a Senior Consultant and SME. Now I’m working in *Luxoft * where I got great chance to upskill myself in better way. I wanted to share some Banking concepts for the Functional people.

With the help of this article, I wanted to encourage you to start using this basic concept in your daily work or at least give it a try it will increase your Banking and payment domain concepts for sure once you start using and looking deep dive with this basic as I will keep adding my knowledge with this type of post which I gathered with my experience in this domain.

**Canada: 

Instant Pay (Canada): **

Similar to RTP in the US, Canada has Instant Pay. Interac acts as a clearing agent for Instant Pay in Canada. 
Instant Interac e-Transfer allows recipients to deposit the funds in real-time. Available for select financial institutions and subject to transaction limits. It is 24*7 Transaction and Low value payments upto 10000 CAD. Payee details are linked to email id and hence no need to provide the payor account number in such transactions. It uses ISO 20022 message format for exchange of messages. 

Interac e-Transfer (formerly Interac Email Money Transfer) is a funds transfer service between personal and business accounts at participating Canadian banks and other financial institutions, offered through Interac Corporation. An e-Transfer resembles an e-check in many respects. The money is not actually transferred by email. Only the instructions to retrieve the funds are.
 
●	The sender opens an online banking session and chooses the recipient, the amount to send, as well as a security question and answer. The funds are debited instantly, usually for a surcharge. The sender sends the security answer separately to the recipient, usually through another medium outside of the email as a secondary security measure. 

●	An e-mail or text message is then sent to the recipient, with instructions on how to retrieve the funds and answer the question, via a secure website. 

●	The recipient must answer the security question correctly. (If the recipient fails to answer the question correctly after three tries, then the funds will automatically be returned to the sender.) 

●	If the recipient is subscribed to online banking at one of the participating institutions, the funds are deposited instantly at no extra charge. 

●	If the recipient's deposit account is not at one of the participating institutions or not subscribed to online banking at all, the funds are deposited within three to five business days, and a surcharge (currently $4.00) is deducted from the amount received. 

The Auto deposit feature allows senders to send money and be received by the recipient without the recipient having to answer a security question. The recipient must enable this feature in their account settings. Not all banks offer this feature. 
When an eTransfer has not been accepted after a certain period of time the transfer will not go through. The transfer duration depends on the bank and/or on the person's settings. Some eTransfers can be automatically canceled after 24 hours or for a period of up to 30 days depending on bank/user. Banks like TD, CIBC and RBC have a set 30 day limit until an eTransfer is cancelled, while other banks have shorter durations and set limits. 

**Faster Payment or Real Time Payments:** 

The emphasis on data and messaging capabilities, in addition to real-time settlement, has positioned the U.S. RTP system is the most advanced system in the world. Real-time payment systems offer significant benefits to all stakeholders in the ecosystem. 

To realize the advantages and tremendous opportunities that remain unlocked in the U.S., banks are urged to participate in the shift away from legacy systems early.  

RTP offers ubiquity, speed of payment, extensive data exchange, real-time messaging, and 24/7/365 availability. With such capabilities, real-time payments can help improve cash flow, operational efficiencies, customer engagement, data transparency and accuracy. Unlike other markets, the real-time payment system in the U.S. has a strong emphasis on data and messaging. 

With the adoption of ISO 20022, there are several message types supported. ISO 20022 is an international framework that enables a real-time, common language for global financial communications across debtors, creditors, and their financial institutions. 

While it’s easy to see speed as a key benefit, the richer value of RTP lies in its robust data and messaging capabilities that far exceed earlier payment methods. When real-time payments are made, there is so much more data that can be attached to the transactions, including remittance data. By coupling data with the transaction, there is an abundance of data and insights, which can help to improve business performance, enhance operational efficiencies, monitor fraud and manage risks. With such robust data and messaging functionality, banks are not only able to offer their customers a real time settlement option, but are able to innovate around customer pain points and inefficiencies. 

**RTP messaging types: **

●Credit transfer: Basic multipurpose payment message including remittance information 
●Request for payment: To support e-invoice or e-billing 
●Payment acknowledgement by receiver: Real-time status messages from the receiver to the sender regarding payment disposition 
●Request for information and response: Receiver requests additional information about a payment 
●Remittance advice: Extensive remittance detail is included in addition to the credit transfer message  


**The Large Value Transfer System (LVTS):**

The LVTS is a real-time, electronic wire transfer system that processes large-value, time-critical payments quickly and continuously throughout the day. Owned and operated by Payments Canada. The system provides participants and their customers with the certainty that, once a payment message has passed the system’s risk-control tests, it is final and irrevocable in real time. These transactions will settle on the books of the Bank of Canada at the end of the day. Payments Canada sets the requirements that financial institutions must meet to be direct participants in the LVTS. An institution must: 

●be a member of Payments Canada 
●use the SWIFT telecommunications network 
●have adequate backup capability for its LVTS operations 
●have a settlement account at the Bank of Canada 
●enter into agreements relating to taking loans from the central bank and to pledging eligible collateral,LVTS participants provide their customers, which include other financial institutions as well as commercial and government entities, with indirect access to the system.