SEPA Instant CSMs interoperability
SICT Cross-border Example
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Welcome back to another exciting episode of Payment Bites. In today's session, we're building upon our previous article. In our previous article about SEPA Instant cross-border, we introduced the concepts of instant transactions between borders.
In today's discussion, we will delve into some insights concerning the diagram we introduced, using it as a practical exercise. Before we dive in, I encourage you to revisit the diagram, reviewing the article where we initially introduced the concepts and taking some time to formulate your own conclusions. Once you've done that, we can delve into a deeper analysis together.
🎯 Insights and conclusions
Domestic CSM1, domestic CSM2 and RT1 are acting as TIPS instructing parties.
Transactions between PSP1, PSP2 and PSP3 are cleared and settled within the domestic CSM1 technical accounts except for those transactions initiated by PSP3 directed to to either PSP1 or PSP2 that will settle in TIPS accounts.
Transactions between any participant connected to CSM1 and the rest of the community (PSP4, PSP5, PSP6, PSP7) will get routed to TIPS and will settle in TIPS accounts.
Transactions between PSP4 and PSP5 will clear and settle locally in CMS2.
Any payment initiation from PSP4 or PSP5 will get routed by CSM2 to either RT1 or TIPS depending on the reachability of the beneficiary BIC.
Transactions involving PSP6, PSP4, and PSP5 will default to settlement through RT1. However, if any of these parties explicitly express a preference for TIPS settlement, that choice will be honored.
Any payment involving PSP7 as instructing or instructed agent will settle in TIPS.
The treasury teams of PSP4 and PSP5 need to manage three separate settlement accounts.
Your turn – any additional insights or conclusions to share?