National Payment Switch

D. THAKOOR
23 APRIL 2019 1
ASSISTANT DIRECTOR – PAYMENT SYSTEMS
Agenda
› Concept of Payment Switch
– Retail Payments
– The current payment landscape
– The case for a National Payment Switch
› Key Benefits
– For Customers
– For Operators
› Value added services
What is a switch?
› It is not a power switch

› It has a network switch connotation

A device where messages are centrally routed

A Switch is a central domestic point where all electronic
payment messages will be routed from one bank to
another.
National Payment Switch

National Payment Switch

Card Payment System Instant Payment System

(CPS) (IPS)
Retail payments
› Cash, cheques, cards and mobile payments
› Cash in circulation
– Rs 36.4 billion
› Cheques
– 4.1 million cheques for value Rs254 billion per year
› Card payments
– At POS: Rs69 billion per year
– Cash withdrawal at ATM: Rs 102 billion per year
 N
Bank in
Mauritius
?

non-bank
Approval
processor

3rd party
Approval
processor

International
Payment Approval
Approval
Gateway

our N
Card?

POS
 The current card payment landscape

3rd party 3rd party

processor processor

Acquiring/
Issuing
Acquiring/ Bank
Issuing With ATM
Bank Core
With ATM New Core
Banking
Bank Banking
With
ATM
Current retail payment setup
 Silo Approach
 Institutions operate on a ‘stand-alone’ setup
 Multiplication of resources: network, terminals as well as
support services
 Fees are paid to card schemes for MUR transactions in USD
 Direct involvement with card schemes result in royalty fees
being paid multiple times
 Barriers to entry for new banks
 Does not cater for the integration of electronic payments
made through other means
 Challenging for Government bodies to offer card payment
facilities to the public
 The current card payment landscape
The SWITCHED card payment landscape

National Payment SWITCH

Local transactions

E-commerce 3rd party 3rd party

processor processor
Mobile

Acquiring/
Issuing
Acquiring/ Bank
Issuing With ATM
Bank Core
With ATM New Core
Banking
Bank Banking
With
ATM
 N

Mobile
switch

WEB
portal

International
Payment
Gateway
N NBP Approval

MUR
Approval SWITCH
Tx?
Y TPP Approval

Y
our N Approval
Card?

POS
The digital payment landscape
Remittances

Domestic and
ATM and POS
Regional
Value added Deployment
interchange
services EFT Managed services
Govt
Payt Bill Pay

Internet Payment
Backend Gateway
Process Fraud detection
and prevention
ATM/Debit/ Merchant &
Credit/SMART Acquiring SWITCH
cards services
Reconciliation
Journal
Mobile Payments

RTGS
&
ACH
National Payment Switch Concept

› Streamlined process
› Economies of scale
› Optimized use of resources
› Level playing field for banks and new players
› Switching of mobile payment transaction and e-payment
gateways
› Increase electronic transactions and reduce cash issuance
› Low cost sharing of ATMS
› Room for added services (National Card, Pre-paid cards,
pension cards, fidelity cards, etc.)
The National Payment Switch – Instant
Payment System
› One of the objectives of the NPS - inter-bank switching
platform for various payment channels
– Switch was designed on the ISO 8385 message format (card
messages)
– Demand from banks to have direct interface with core banking

Bank’s Bank’s
Core internal
Banking Switch
ISO
API 8583

Payment Channel Payment Channel (card

(mobile and non-card) and card emulated

Bank of Mauritius
Current landscape

Interbank Interface Interface Interbank

real time 1 MACSS real time
1

Interbank Interface Interface Interbank

batch 2 2 batch
Bank’s Interface Bulk
Bank’s
Interface
Core cheque 3 Clearing 3
cheque Core
Banking (cycle Banking
Interface based, Interface
EFT 4 EFT
8x5) 4

Direct Interface Interface Direct

Debit 5 5 Debit

Bank of Mauritius
Proposed landscape

Interbank Interface MACS Interface Interbank

real time 1 S 1 real time

Interbank Interbank
batch batch
Bank’s Onmibus
Bulk
Onmibus
Bank’s
Core cheque Clearing cheque Core
channel channel
+ Instant
Banking Unified
Payment
Unified Banking
EFT interface interface EFT
System
(Middlewa (Middlewa
(IPS)
re) with re) with
Direct Real Direct
integratio integratio
Debit Time Debit
n to CB n to CB
24x7
Inst. Fund Inst. Fund
transfer transfer

Instant D D Instant D
D

Bank of Mauritius
Main features
› Real time, 24x7 instant fund transfer system
› Standard interface with all banks to ensure standard
response times.
› Real time direct debit and direct credits
› Payment by alias
› An implementation of the European PSD2
› Rapid integration with any Core Banking to be carried
out by the service provider

Bank of Mauritius
National Payment Switch – complete picture
National Payment
Switch

Card Payment Instant Payment

System (CPS) System (IPS)

Currently under pilot

Under pilot with 2 banks
operation with 2 banks
and one mobile operator
On-boarding of other banks
On-boarding of all banks
to start as from June 2019
expected end of June 2019
Benefits of the NPS
› Common state of the art technology
› Direct interface with Bank’s Clearing System (reduce
concomitant floats)
› Unified interface to International Payment Networks
› Differential pricing for Debit and Credit cards
– Standardised fee structure
– Standard operating rules set by BOM
– Reduce infrastructure acquisition, ownership or participation costs
for all players
– Reduction in merchant fees and POS installation costs
Value added services of the NPS

› Revenue Generation opportunities

– POS become active devices and merchants to propose switch
supported payment services such as phone cards, gift card
trees
› Administrative efficiencies
– Centralized reporting, integrated POS
› Low cost sharing of ATMs
› National Cards and Store Value
– Pension cards, transport cards and other social benefits
› Digital integration services
Benefits to corporates

› Shift from a product centric to customer centric

approach
› Ability to choose the service of another operator without
changing bank
› Wider choice of payment options – Direct Credit and
Direct Debits, Instant Credit and Debits
› Bill payments, Person to Person payments
› Wider choice of payment acceptance options (POS, QR
code, online payment gateways)
› Avenue for other players such as POS providers, network
providers, value added switch enabled services
Thank you

› Questions