Taxonomy Archives: Operating Rules

By Glenbrook Partners Executive Summary: Inter-institutional settlement is a key component of interoperable payments systems. The goal of these settlement systems is to provide a mechanism for institutions to settle their obligations while minimizing risks and costs to individual institutions and to the whole system. Operational efficiency is a secondary… Read More

Operating rules cover the types of fees that participants need to pay, either to the scheme or to each other. Rules do not include the fees that participants pay to processors or operators chosen by the participant. Rules specify what the fees are, how they are assessed, collected, and changed. Read More

Operating rules may have separate sections for different transaction types or use-cases. For example, merchant payments may have a discrete rule set, as could payments to a business from a consumer, or from one consumer to another. If the scheme has interchange (see ‘Fees-Interchange’), there may be different rates for… Read More

If the scheme has a common brand or service mark, the operating rules will cover how it may be used. The Financial Inclusion Perspective The operating rules should define and encourage the use of common terminology for the payments services that are using the system. This is not meant to… Read More

Transaction Liability In a real-time credit-push system, it can be assumed that the sending participant is responsible for the sending end-party having the funds necessary for the transaction: this does not need to be specified in the rules. The rules do need to address at what point the transaction is… Read More

Inter-Participant Settlement Operating rules will specify how inter-participant settlement occurs. This may be a scheme-specific settlement process, or it may take advantage of an existing process existing, for example, at the central bank of the country. In either event, the rules will specify when the settlement will occur and how… Read More

Timelines Rules establish the required timelines for submitting transactions, posting transactions to end-users accounts (may vary by transaction type), submitting exception transactions, etc. If participants use a third party (non-scheme) operator there may be additional requirements in the operating circulars of the operator. The industry is undergoing a shift from… Read More

Message Formats: Rules determine data requirements and message formats; some data requirements may be specific to certain transaction types. Schemes may have their own proprietary message formats, or may rely on international standards such as ISO20022. An important aspect of the message format is identifying the transaction type: this is… Read More

Responsibilities to comply with the operating rules Details the participants’ responsibility to comply with the operating rules and cooperate in the running of the scheme (example: Faster Payments, Section 4) Responsibilities as a sending participant (transferring money to another participant) Operating rules will have provisions to specify the responsibility of… Read More

The glossary is a definition of terms within the private operating rules. This includes defining entities who are affected by the rules, including participants (direct, and in some cases, indirect), operators, processors, third parties, etc.As an example, here is a link to the L1P Glossary. Please note, this… Read More