Irish Payment Services Organisation

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The Irish Payment Services Organisation Limited (IPSO) was established in June 1997. [1] IPSO was a company limited by guarantee owned by its member banks. [2]

Contents

Its primary objective was to preserve the integrity and security of the bank payment system in Ireland - the systems used for the settlement of physical cheques as well as ATM transfers and debit and credit card purchases.

History and functions

Domestic cheques had been cleared for almost 150 years by the Dublin Bankers' Clearing Committee, sending only cheques drawn on British banks for clearing in London. [3] However, once it became clear that Ireland would join the Euro and that the United Kingdom would not do so, a formal domestic mechanism was needed to promote Irish payments interoperability and assist in the design of payment systems development, both for legacy paper instruments such as cheques and for electronic transfers such as ATM withdrawals, card payments, and internet payments. In particular IPSO was responsible for implementing rapid, and later real-time, Irish payments clearing in the transition period during which Euro area payments were being modernised. [3] [4]

Ireland's clearing entities — including Irish Paper Clearing Co Ltd (IPCC), which cleared paper payment instruments such as cheques, and the Electronic Funds Transfer clearing system operated by the Irish Retail Electronic Clearing Company (IRECC) — operated under the IPSO umbrella. [2] [3] [5] [6] Each company had its own board of directors. [7] Each bank that was a member of one or more clearing entity had a right to membership of IPSO. [8]

IPSO also provided central programme management for key national and banking-industry policy initiatives such as the National Payments Implementation Programme (the Department of Finance's initiative to move Ireland to universal acceptance of electronic payments and migrate from cash and cheques), [9] [10] Ireland's implementation of SEPA (the Single Euro Payments Area, which enables customers to make cashless Euro payments to any bank account located anywhere in the Eurozone), Chip and PIN card adoption, [11] and electronic fraud prevention. [12]

Controversy over competition

In the late 1990s, drawn by the Irish economy's rapid growth, non-domestic banks such as Bank of Scotland, KBC Bank, and National Australia Bank started to enter the Irish banking market through acquisitions as well as organic development. [13] [14] These banks needed access to the clearing organisations to settle payments to and from the bank accounts they opened for Irish customers. [15] Both bankers and the media, most notably the Bank of Scotland, alleged that the IPSO made it difficult for new banks to enter the Irish market by making it slow and expensive to join the clearing organisations. [2] [15] [16] The Irish competition authority, the Competition and Consumer Protection Commission, began an investigation into Ireland's market for retail banking services. [17] [18] This resulted in changes in the structure and governance of IPSO's clearing entities, amendments to banking regulations in Ireland, and voluntary reforms by the existing Irish banks. [7] A parallel and similar complaint was brought against the Belfast Bankers' Clearing Committee, which cleared payments in Northern Ireland. [19] The United Kingdom's Competition Commission found that banks in Northern Ireland must improve their personal current account services, including by lowering bank charges. [20]

Merger into BPFI

IPSO was integrated with the Irish Banking Federation (IBF) in 2014, which became the Banking and Payments Federation Ireland (BPFI). [21]

Related Research Articles

A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is available to the account owner "on demand" and is available for frequent and immediate access by the account owner or to others as the account owner may direct. Access may be in a variety of ways, such as cash withdrawals, use of debit cards, cheques (checks) and electronic transfer. In economic terms, the funds held in a transaction account are regarded as liquid funds. In accounting terms they are considered as cash.

Cheque clearing

Cheque clearing or bank clearance is the process of moving cash from the bank on which a cheque is drawn to the bank in which it was deposited, usually accompanied by the movement of the cheque to the paying bank, either in the traditional physical paper form or digitally under a cheque truncation system. This process is called the clearing cycle and normally results in a credit to the account at the bank of deposit, and an equivalent debit to the account at the bank on which it was drawn, with a corresponding adjustment of accounts of the banks themselves. If there are not enough funds in the account when the cheque arrived at the issuing bank, the cheque would be returned as a dishonoured cheque marked as non-sufficient funds.

Real Time Gross Settlement, abbreviated as RTGS systems are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a "real-time" and on a "gross" basis. Settlement in "real time" means a payment transaction is not subjected to any waiting period, with transactions being settled as soon as they are processed. "Gross settlement" means the transaction is settled on a one-to-one basis, without bundling or netting with any other transaction. "Settlement" means that once processed, payments are final and irrevocable.

Wire transfer, bank transfer or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash office.

A giro transfer, often shortened to giro, is a payment transfer from one bank account to another bank account and initiated by the payer, not the payee. The debit card has a similar model. Giros are primarily used in Europe; although electronic payment systems such as the Automated Clearing House exist in the United States and Canada, it is not possible to perform third party transfers with them. In the European Union, there is the Single Euro Payments Area (SEPA) which allows electronic giro or debit card payments in euros to be executed to any euro bank account in the area.

The Australian financial system consists of the arrangements covering the borrowing and lending of funds and the transfer of ownership of financial claims in Australia, comprising:

Cheque Method of payment

A cheque, or check, is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing the cheque, known as the drawer, has a transaction banking account where their money is held. The drawer writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated.

Clearing (finance) All activities from the time a commitment is made for a financial transaction until it is settled

In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. This process turns the promise of payment into the actual movement of money from one account to another. Clearing houses were formed to facilitate such transactions among banks.

A payment system is any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, instruments, people, rules, procedures, standards, and technologies that make its exchange possible. A common type of payment system is called an operational network that links bank accounts and provides for monetary exchange using bank deposits. Some payment systems also include credit mechanisms, which are essentially a different aspect of payment.

A Direct Debit or direct withdrawal is a financial transaction in which one person withdraws funds from another person's bank account. Formally, the person who directly draws the funds instructs his or her bank to collect an amount directly from another's bank account designated by the payer and pay those funds into a bank account designated by the payee. Before the payer's banker will allow the transaction to take place, the payer must have advised the bank that he or she has authorized the payee to directly draw the funds. It is also called pre-authorized debit (PAD) or pre-authorized payment (PAP). After the authorities are set up, the direct debit transactions are usually processed electronically.

Sort codes are the domestic bank codes used to route money transfers between financial institutions in the United Kingdom, and historically in the Republic of Ireland. They are six-digit hierarchical numerical addresses that specify clearing banks, clearing systems, regions, large financial institutions, groups of financial institutions and ultimately resolve to individual branches. In the UK they continue to be used to route transactions domestically within clearance organisations and to identify accounts, while in the Republic of Ireland they have been deprecated and replaced by the SEPA systems and infrastructure.

Malaysian Electronic Payment System

The Malaysian Electronic Payment System (MEPS) is an interbank network service provider in Malaysia. In August 2017, MEPS has merged with Malaysian Electronic Clearing Corporation Sdn Bhd (MyClear) to form Payments Network Malaysia Sdn Bhd (PayNet).

Cheque and Credit Clearing Company

The Cheque and Credit Clearing Company Limited (C&CCC) is a UK membership-based industry body whose 11 members are the UK clearing banks. The company has managed the cheque clearing system in England and Wales since 1985, in all of Great Britain since 1996 when it took over responsibility for managing the Scottish cheque clearing as well, and in the whole of the United Kingdom since the introduction of the Image Clearing System in 2019.

Payment and settlement systems in India are used for financial transactions. They are covered by the Payment and Settlement Systems Act, 2007, legislated in December 2007 and regulated by the Reserve Bank of India and the Board for Regulation and Supervision of Payment and Settlement Systems.

The Clearing House Automated Transfer System, or CHATS, is a real-time gross settlement (RTGS) system for the transfer of funds in Hong Kong. It is operated by Hong Kong Interbank Clearing Limited, a private company jointly owned by the Hong Kong Monetary Authority (HKMA) and the Hong Kong Association of Banks. Transactions in four currency denominations may be settled using CHATS: Hong Kong dollar, renminbi, euro, and US dollar. In 2005, the value of Hong Kong dollar CHATS transactions averaged HK$467 billion per day, which amounted to a third of Hong Kong's annual Gross Domestic Product (GDP); the total value of transactions that year was 84 times the GDP of Hong Kong.

Cheque truncation

Cheque truncation is a cheque clearance system that involves the digitalisation of a physical paper cheque into a substitute electronic form for transmission to the paying bank. The process of cheque clearance, involving data matching and verification, is done using digital images instead of paper copies.

A bankers' clearing house is an organization that transfers money between member banks, originally to clear checks. For more than a century, this service has been expanded to include several other banking services now done electronically.

Sampath Bank Sri Lankan commercial bank

Sampath Bank PLC is a licensed commercial bank incorporated in Sri Lanka in 1987 with 229 branches and 373 ATMs island wide. It has won the "Bank of the Year" award by "The Banker" of Financial Times Limited – London, for the second consecutive year and the "National Business Excellence Awards 2010". It has become the third largest private sector bank in Sri Lanka with Rs. 453 billion in deposits as of 30 June 2016.

Vocalink is a payment systems company headquartered in the United Kingdom, created in 2007 from the merger between Voca and LINK. It designs, builds and operates the UK payments infrastructure, which underpins the provision of the Bacs payment system and the UK ATM LINK switching platform covering 65,000 ATMs and the UK Faster Payments systems.

EBA Clearing is a provider of pan-European payment infrastructure wholly owned by shareholders that consist of major European banks.

References

  1. ↑ "IRIS — Aachen UCD Workshop on the Shape of Inter-Organisational Information Systems". UCD School of Business.
  2. 1 2 3 Keena, Colm (7 December 2001). "Payments system entry 'transparent'". The Irish Times . IPSO has nine shareholders. They are: AIB; Bank of Ireland; NIB; Ulster Bank; Permanent/TSB; First Active; the EBS; Bank Nationale de Paris; and the Central Bank.
  3. 1 2 3 Bergin Cross, Caroline (2013). "The Irish Clearing System". Commercial Law Practitioner – via www.academia.edu. The Irish Real-Time Interbank Settlement Co Ltd (IRISCo) —the owner of the original Irish Real-time Gross Settlement system (RTGS)— was also originally part of the overall IPSO structure, but this company was wound up following the migration of the Irish banking community to the Eurosystem's TARGET2 RTGS system in February 2007Cite journal requires |journal= (help)
  4. ↑ "EBA Clearing, Irish Payment Services Organisation launch STEP2 Irish service". thepaypers.com. 12 October 2011.
  5. ↑ "Indecon Report on Benchmarking of Ireland's Payments Industry" (PDF). Indecon International Economic Consultants. December 2018 – via Department of Finance.
  6. ↑ "Companies and Schemes". Irish Payment Services Organisation Limited. 18 April 2010. Archived from the original on 18 April 2010 – via web.archive.org.
  7. 1 2 "Competition in the (non-investment) banking sector in Ireland" (PDF). Competition and Consumer Protection Commission. September 2005. The management and operation of all payment systems and payment schemes under the Irish Payment Services Organisation (IPSO) umbrella should be combined into one entity having a single unified Board of Directors
  8. ↑ "Ireland". The Blue Book: Payment and securities settlement systems in the European Union (PDF). European Central Bank. August 2001. Archived from the original (PDF) on 7 June 2003 – via web.archive.org.
  9. ↑ Slattery, Laura (13 January 2006). "Ipso chief aims to close off Ireland's paper trail". The Irish Times.
  10. ↑ "National Payments Implementation Programme". Irish Payment Services Organisation Limited. 30 July 2010. Archived from the original on 30 July 2010 – via web.archive.org.
  11. ↑ "AIB's Comment on IPSO". AIB Group. 21 January 2014.
  12. ↑ "The Irish Payment Services Organisation issues ATM security warning to retailers". Shelflife Magazine. 26 November 2013.
  13. ↑ Press Association (19 August 2010). "Timeline of events in bank's short history". Irish Independent . Retrieved 19 August 2010.
  14. ↑ "Bank changes name and logo". The Irish Times. Retrieved 16 October 2020.
  15. 1 2 McManus, John (26 February 2004). "Bank targets bigger rivals". The Irish Times.
  16. ↑ Hardiman, Cyril (5 February 2004). "Money clearing chief sets out his stall on 'closed shop' jibes". Irish Independent .
  17. ↑ "Study of the Banking Profession". Competition and Consumer Protection Commission.
  18. ↑ "Competition and Regulation in Retail Banking" (PDF). OECD Competition Committee. 27 October 2008.
  19. ↑ Keenan, Dan (27 May 2005). "Competition Commission to investigate four banks in the North". The Irish Times.
  20. ↑ "Competition Commission publishes final report into Northern Ireland personal banking market". Thomson Reuters. 15 May 2007.
  21. ↑ "Irish Banking Federation amalgamates and expands reach to Brussels". The Irish Financial Review. 9 September 2014.
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