Name: White Modern Geometric Business Marketing Strategy Presentation
Uploaded: 2022-12-05
Duration: 15 min 19 s
Description: Clearing and Settlement Systems This chapter contains descriptions of a number of clearing and settlement systems that are used for both electronic and check payments..

[Audio] Clearing and Settlement Systems This chapter contains descriptions of a number of clearing and settlement systems that are used for both electronic and check payments.. 

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[Audio] Clearing is all of the steps involved in transferring funds ownership from one party to another except for the final step, which is settlement. Settlement involves the finalization of a payment, so that a new party takes possession of transferred funds. The treasurer should be aware of these processes in order to understand the timing of payment transfers.. 

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all of the steps involved in transferring funds ownership from one party to another except for the final step, which is settlement.

involves the finalization of a payment, so that a new party takes possession of transferred funds.

[Audio] CHARACTERISTICS OF CLEARING AND SETTLEMENT SYSTEMS In clearing and settlement systems, the banks of the payer and beneficiary exchange information regarding monetary transfers; the result of this exchange is payments between the banks.. 

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CHARACTERISTICS OF CLEARING AND SETTLEMENT SYSTEMS

In clearing and settlement systems, the banks of the payer and beneficiary exchange information regarding monetary transfers; the result of this exchange is payments between the banks.

[Audio] OVERVIEW OF THE CLEARING AND SETTLEMENT PROCESS The general concept of clearing and settlement is for the banks of the paying party (the payer) and the receiving party (the beneficiary) to exchange information regarding monetary transfers, resulting in the transfer of funds between the two banks. The banks, in turn, debit the account of the payer and credit the account of the beneficiary. Given the massive volume of such transactions, formal clearing and settlement systems have been installed to streamline the process. Clearing and settlement systems are generally organized around individual countries or economic regions. Banks located within these areas can have an account with the local clearing and settlement institution; settlement takes place between the accounts of the banks held at the clearing institution. Banks located outside of these areas do not have such an account, and so must use a local bank as a correspondent bank that handles payment instructions on their behalf.. 

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OVERVIEW OF THE CLEARING AND SETTLEMENT PROCESS

The general concept of clearing and settlement is for the banks of the paying party (the payer) and the receiving party (the beneficiary) to exchange information regarding monetary transfers, resulting in the transfer of funds between the two banks. The banks, in turn, debit the account of the payer and credit the account of the beneficiary. Given the massive volume of such transactions, formal clearing and settlement systems have been installed to streamline the process.

[Audio] Settlement Types Payments can be on a gross basis, where each bank pays the total amount owed. Payments handled through a gross settlement system are more likely to have a requirement for immediate execution, where payment instructions are processed separately for each individual transaction. The cost of gross settlement transactions is high, so individual transactions running through these systems tend to involve larger amounts of funds or be very time sensitive. Payments can also be on a net basis, where a large number of transactions are accumulated and offset against each other, with only the net differential being transferred between banks. Payments handled through a net settlement system usually wait until the end of the day, when all transactions between the banks are summarized and offset against each other by a clearing institution; the clearing institution then sends the net transfer information to the settlement institution, which executes the transfer of funds between banks. Banks prefer to use net settlement systems because payments processed through them require greatly reduced funds transfers (and therefore considerably less liquidity) than gross settlement systems.. 

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where each bank pays the total amount owed

where a large number of transactions are accumulated and offset against each other, with only the net differential being transferred between banks

[Audio] Transaction Types Each clearing and settlement system is primarily designed to handle a certain type of transaction. FEDWIRE The Fedwire system is a gross settlement system that is operated by the U.S. Federal Reserve and processes large - value items with same - day, real - time settlement. Nearly all U.S. banks and the agencies of foreign banks participate in the Fedwire system. The fee for a Fedwire payment is relatively inexpensive.. 

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The Fedwire system is a gross settlement system that is operated by the U.S. Federal Reserve and processes large - value items with same - day, real - time settlement. The process flow for a Fedwire payment is for a paying company to transmit payment instructions to its bank, which debits the paying company's account and forwards the payment instructions on to the Federal Reserve (Fed). The Fed then debits the paying bank's account at the Fed and credits the account of the beneficiary bank at the Fed. Finally, the beneficiary's bank credits the account of the beneficiary.

[Audio] The process flow for a Fedwire payment is for a paying company to transmit payment instructions to its bank, which debits the paying company's account and forwards the payment instructions on to the Federal Reserve ( Fed). The Fed then debits the paying bank's account at the Fed and credits the account of the beneficiary bank at the Fed. Finally, the beneficiary's bank credits the account of the beneficiary.. 

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xhibit 11.1
Fedwire Process Flow
Payer Company
Payer's Bank
The payer company instructs its
bank to send funds to the beneficiary
company
The payer's bank debits the payer
company's account and sends funds
to the beneficiarys bank through the
Federal Reserve System

Federal Reserve
System
Beneficiary's Bank
Beneficiary
Company
The Federal Reserve debits the
accc.nmt of the payer's bank and
credits the account Of the
bank
The beneficiary's bank credits the
account of the beneficiary company
The beneficiary's bank notifies the
beneficiary company of the transfer

[Audio] AUTOMATED CLEARING HOUSE ( ACH ) SYSTEM The ACH system is the net settlement system used for electronic payments in the United States, and is used by most banks in the country. The transfer of funds from the payer to the beneficiary can take several days, depending on the payer's payment instructions. This system is significantly more complex than the Fedwire system, since it comprises a network of bank associations and privately owned processing entities. The cost of an ACH payment is quite low, usually just a few cents per transaction.. 

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The ACH system is the net settlement system used for electronic payments in the United States, and is used by most banks in the country. Settlement timing is based on the payment date specifi ed by the payer in the ACH file submitted to its bank. A company can deliver ACH debit instructions that are no earlier than one banking day prior to the settlement date, while ACH credits can be delivered no earlier than two banking days prior to the settlement date. If the ACH fi le is delivered too late to settle on the specifi ed date, then the ACH operator will use the next business day as the settlement date.

[Audio] The ACH process flow is for a company to submit an electronic file to its bank (also known as the originating depository financial institution), containing payment information; the bank lets these submissions accumulate until the end of the day. At that time, it directly pays any of the authorized items with a book transfer if the recipient has an account with the bank. If not, the bank batches and forwards the remaining payment authorizations to its designated ACH operator (usually a regional branch of the Federal Reserve, or the Electronic Payments Network). The ACH operator collects the ACH submissions from all of the banks in its region and calculates the net settlement amounts that they must pay to each other. The ACH operator then aggregates the remaining transactions involving banks outside of its region, subdivides them by ACH region, and transmits them to the ACH operators responsible for conducting similar processing for their regions. Payments are made to the beneficiary's banks (also known as receiving depository financial institutions), which in turn pay the beneficiaries. Payments between banks associated with different ACH operators are settled on a gross basis.. 

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Exhibit 11.2
ACH Flow
Pay in-house
by bcx)k transfer
Send transactions outside region
to ACH operator
Originator (Paying
Company)
Originating
DepositffY
Financial
Institution
ACH
The paying cornpany initiates entries
into the ACH network
The financial institution aggregates ACH
instructions and forwards them to the
ACH operator
The ACH calculates
settlement Claims between the originating
and financial institutions in its
area

Receiving
Depository
Financial
Institution
(Beneficiary)
The financial institution receives ACH
transactions on behalf of the paying
cÜnpany
The payment

[Audio] CLEARING HOUSE INTERBANK PAYMENTS SYSTEM ( CHIPS ) CHIPS is a net settlement system that is operated by the Clearing House in New York, which in turn is owned by a group of banks. It settles primarily foreign exchange and euro dollar trades. CHIPS accumulates payment instructions throughout the day, and then calculates the net payment to be paid by each bank in the system. The net payment is then made through the Fedwire system. The CHIPS system is designed for high - value payments, and can also transmit remittance information along with payment instructions.. 

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CLEARING HOUSE INTERBANK PAYMENTS SYSTEM ( CHIPS )

CHIPS is a net settlement system that is operated by the Clearing House in New York, which in turn is owned by a group of banks. It settles primarily foreign exchange and euro dollar trades. CHIPS accumulates payment instructions throughout the day, and then calculates the net payment to be paid by each bank in the system. The net payment is then made through the Fedwire system. The CHIPS system is designed for high - value payments, and can also transmit remittance information along with payment instructions.

[Audio] CHECK CLEARING A check issued from a payer to a beneficiary can be cleared and settled through one of several routings. They are: • Same bank settlement. The bank on which a check is drawn may be the same bank used by the beneficiary. If so, the bank simply makes a book entry to shift the in - house funds from the account of the payer to the account of the beneficiary. • Correspondent bank settlement. A company may receive a check from an entity located outside of its country. If so, the company's bank sends the check to a correspondent bank in the originating country; clearing and settlement occurs in that country, and then the correspondent bank uses an electronic transfer to shift the funds back to the beneficiary's bank. • Check - clearing institution. Checks are physically processed through the Federal Reserve System. The process flow is for the beneficiary (check recipient) to send the check to its bank, which in turn sends the check to the check - clearing institution ( CCI), which is frequently the Fed. The CCI aggregates the information on all checks received and sends a payment instruction to the Fed. The Fed then debits the account of the payer's bank at the Fed and credits the account of the beneficiary's bank at the Fed. Meanwhile, the CCI has notified the banks of both the payer and beneficiary, who debit the payer's bank account and credit the beneficiary's account, respectively. • Electronic check presentment. Either the recipient of a check or its bank can scan a check to create an electronic image, and then send the image to the CCI. Since no transport of actual checks occurs, the clearing process can be several days quicker than traditional paper check clearing.. 

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A CHECK ISSUED FROM A PAYER TO A BENEFI CIARY CAN BE CLEARED AND SETTLED THROUGH ONE OF SEVERAL ROUTINGS. THEY ARE:

Same bank settlement . The bank on which a check is drawn may be the same bank used by the benefi ciary. Correspondent bank settlement.  A company may receive a check from an entity located outside of its country.  Check - clearing institution . Checks are physically processed through the Federal Reserve System Electronic check presentment . Either the recipient of a check or its bank can scan a check to create an electronic image, and then send the image to the CCI.

[Audio] THE CONTINUOUS LINK SETTLEMENT ( CLS ) SYSTEM An industry initiative to eliminate the settlement risk in foreign exchange transactions. This is achieved by using a ' payment versus payment' method, which provides a simultaneous exchange of currency values through CLS bank international. The CLS concept is being adopted globally with a view to reduce the risks involved in settlement of foreign exchange transactions. Before CLS, each side of a trade was paid separately. Taking time-zone differences into account, this heightened the risk of one party defaulting. CLS is a real-time system that enables simultaneous settlement globally, irrespective of time zones.. 

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CONTINUOUS LINK SETTLEMENT ( CLS ) SYSTEM

An industry initiative to eliminate the settlement risk in foreign exchange transactions. This is achieved by using a payment versus payment' method, which provides a simultaneous exchange of currency values through CLS bank international. The CLS concept is being adopted globally with a view to reduce the risks involved in settlement of foreign exchange transactions. Before CLS, each side of a trade was paid separately. Taking time-zone differences into account, this heightened the risk of one party defaulting. CLS is a real-time system that enables simultaneous settlement globally, irrespective of time zones.

[Audio] Treasury Systems The treasurer requires information that is not normally available through a company's standard accounting systems, or even from its enterprise resources planning ( ERP) systems. Even though an ERP system is designed to aggregate all of the information used in a modern corporation, the treasurer also requires information from a variety of external sources regarding investments, foreign exchange positions, interest rates, and so forth. Consequently, treasury systems are needed that integrate information from a variety of sources, yielding real - time information that the treasury staff can use to efficiently perform their tasks. TREASURER'S TECHNOLOGY NEEDS The treasurer is in the difficult position of requiring information from many sources, most of which are not required by any other company manager. Since treasury is a relatively small department that may not command the resources of larger departments, it can be difficult to collect all of the required information. Consequently, the treasurer must frequently prioritize information needs. While priorities may vary by company, the following list establishes a reasonable set of priorities, in declining order:. 

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The treasurer is in the difficult position of requiring information from many sources, most of which are not required by any other company manager. Since treasury is a relatively small department that may not command the resources of larger departments, it can be difficult to collect all of the required information. Consequently, the treasurer must frequently prioritize information needs. While priorities may vary by company, the following list establishes a reasonable set of priorities, in declining order:

[Audio] Cash position. The treasurer's overriding obligation is to ensure that the company has adequate cash to fund its operations. Thus, the following technology needs are critical: • Cash book balance tracking • Multibank reporting of balance information • Cash pooling management • Cash forecasting and reconciliation of actual to projected cash flows • Funds transfer capability • Investment management, including money market dealing • Interest income calculation • Debt management • Interest expense calculation • Payment processing • Intercompany transaction settlement with notional accounts. 

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The treasurer’s overriding obligation is to ensure that the company has adequate cash to fund its operations. Thus, the following technology needs are critical:

Cash book balance tracking  Multibank reporting of balance information Cash pooling management  Cash forecasting and reconciliation of actual to projected cash fl ows  Funds transfer capability  Investment management, including money market dealing  Interest income calculation  Debt management  Interest expense calculation  Payment processing  Intercompany transaction settlement with notional accounts

[Audio] 2. Foreign exchange transactions. Some companies have so little foreign business that foreign exchange transactions are negligible, but larger firms with established treasury operations will likely need the ongoing purchase and sale of multiple currencies. Thus, the following technology needs arise: • Rate feeds from Bloomberg or Reuters • Intercompany netting capability • Foreign exchange forecasting and position analysis • Foreign exchange bid summarization • Foreign exchange deal - making capability • Foreign exchange confirmation processing. 

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Some companies have so little foreign business that foreign exchange transactions are negligible, but larger firms with established treasury operations will likely need the ongoing purchase and sale of multiple currencies. Thus, the following technology needs arise:

Rate feeds from Bloomberg or Reuters  Intercompany netting capability  Foreign exchange forecasting and position analysis  Foreign exchange bid summarization  Foreign exchange deal - making capability  Foreign exchange confi rmation processing

[Audio] 3. Hedging. For those companies that elect to hedge their interest rates or foreign exchange positions, consider the following technology requirements: • Rate feeds from Bloomberg or Reuters • Exposure modeling capability • Hedge deal – making capability • Hedge confirmation processing • Hedge documentation capability for Statement of Financial Accounting Standards ( SFAS) 133 requirements. 

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For those companies that elect to hedge their interest rates or foreign exchange positions, consider the following technology requirements:

Rate feeds from Bloomberg or Reuters  Exposure modeling capability  Hedge deal – making capability  Hedge confi rmation processing  Hedge documentation capability for Statement of Financial Accounting Standards (SFAS) 133 requirements

[Audio] The treasurer's technology needs also extend to the efficiency of and control over treasury activities. Thus, the following requirements should be considered: Efficiency Issues • Minimize data entry. The system should never require the manual entry of a transaction into the system more than once, and preferably should involve automated data collection and posting, so that no manual entry is required at all. • Work flow processing. If supervisory approval is required, the system should electronically route the pertinent transaction to the correct supervisor for approval.. 

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[Audio] Control Issues • Audit trail. All treasury transactions should result in a clearly defined audit trail that identifies who made a transaction and the date, amount, and accounts impacted by the transaction. • Segregation of duties. The system should limit access to certain modules and require approval of key transactions. • Warning indicators. The system should automatically notify users if transaction confirmations have not been received, if hedging policies are being violated, if there are negative cash balances, and so on.. 

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[Audio] SWIFT CONNECTIVITY The Society for Worldwide Interbank Financial Telecommunication ( SWIFT) operates a worldwide network that banks use to exchange standardized electronic messages that are known as SWIFT MT codes. The SWIFT network is highly secure and is designed strictly to transport messages between participants — it does not provide a clearing or settlement service.. 

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The Society for Worldwide Interbank Financial Telecommunication (SWIFT) operates a worldwide network that banks use to exchange standardized electronic messages that are known as SWIFT MT codes. The SWIFT network is highly secure and is designed strictly to transport messages between participants — it does not provide a clearing or settlement service.

[Audio] Access to the SWIFT network is important for larger companies, because they can link their treasury management systems directly into the SWIFT network. By doing so, they avoid having to establish individual interfaces with the reporting systems of all the banks with which they do business, and instead can rely on a single standard messaging format to initiate transactions with and acquire information from bank accounts all over the world.. 

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Access to the SWIFT network is important for larger companies, because they can link their treasury management systems directly into the SWIFT network. By doing so, they avoid having to establish individual interfaces with the reporting systems of all the banks with which they do business, and instead can rely on a single standard messaging format to initiate transactions with and acquire information from bank accounts all over the world.

White Modern Geometric Business Marketing Strategy Presentation

Scene 0

This chapter contains descriptions of a number of clearing and settlement systems that are used for both electronic and check payments.

avatar

Clearing is all of the steps involved in transferring funds ownership from one party to another except for the final step, which is settlement

Settlement involves the finalization of a payment, so that a new party takes possession of transferred funds

The treasurer should be aware of these processes in order to understand the timing of payment transfers.

In clearing and settlement systems, the banks of the payer and beneficiary exchange information regarding monetary transfers

the result of this exchange is payments between the banks.

The general concept of clearing and settlement is for the banks of the paying party (the payer) and the receiving party (the beneficiary) to exchange information regarding monetary transfers, resulting in the transfer of funds  between the two banks

The banks, in turn, debit the account of the payer and credit the account of the beneficiary

Given the massive volume of such transactions, formal clearing and settlement systems have been installed to streamline the process.

Clearing and settlement systems are generally organized around individual countries or economic regions

Banks located within these areas can have an account with the local clearing and settlement institution

settlement takes place between the accounts of the banks held at the clearing institution

Banks located outside of these areas do not have such an account, and so must use a local bank as a correspondent bank that handles payment instructions on their behalf.

Payments can be on a gross basis, where each bank pays the total amount owed

Payments handled through a gross settlement system are more likely to have a requirement for immediate execution, where payment instructions are processed separately for each individual transaction

The cost of gross settlement transactions is high, so individual transactions running through these systems tend to involve larger amounts of funds or be very time sensitive

Payments can also be on a net basis, where a large number of transactions are accumulated and offset against each other, with only the net differential being transferred between banks

Payments handled through a net settlement system usually wait until the end of the day, when all transactions between the banks are summarized and offset against each other by a clearing institution

the clearing institution then sends the net transfer information to the settlement institution, which executes the transfer of funds between banks

Banks prefer to use net settlement systems because payments processed through them require greatly reduced funds transfers (and therefore considerably less liquidity) than gross settlement systems.

Each clearing and settlement system is primarily designed to handle a certain type of transaction

The Fedwire system is a gross settlement system that is operated by the U.S

Federal Reserve and processes large - value items with same - day, real - time settlement

banks and the agencies of foreign banks participate in the Fedwire system

The fee for a Fedwire payment is relatively inexpensive.

The process flow for a Fedwire payment is for a paying company to transmit payment instructions to its bank, which debits the paying company's account and forwards the payment instructions on to the Federal Reserve (Fed)

The Fed then debits the paying bank's account at the Fed and credits the account of the beneficiary bank at the Fed

Finally, the beneficiary's bank credits the account of the beneficiary.

The ACH system is the net settlement system used for electronic payments in the United States, and is used by most banks in the country

The transfer of funds from the payer to the beneficiary can take several days, depending on the payer's payment instructions

This system is significantly more complex than the Fedwire system, since it comprises a network of bank associations and privately owned processing entities

The cost of an ACH payment is quite low, usually just a few cents per transaction.

The ACH process flow is for a company to submit an electronic file to its bank (also known as the originating depository financial institution), containing payment information

the bank lets these submissions accumulate until the end of the day

At that time, it directly pays any of the authorized items with a book transfer if the recipient has an account with the bank

If not, the bank batches and forwards the remaining payment authorizations to its designated ACH operator (usually a regional branch of the Federal Reserve, or the Electronic Payments Network)

The ACH operator collects the ACH submissions from all of the banks in its region and calculates the net settlement amounts that they must pay to each other

The ACH operator then aggregates the remaining transactions involving banks outside of its region, subdivides them by ACH region, and transmits them to the ACH operators responsible for conducting similar processing for their regions

Payments are made to the beneficiary's banks (also known as receiving depository financial institutions), which in turn pay the beneficiaries

Payments between banks associated with different ACH operators are settled on a gross basis.

CHIPS is a net settlement system that is operated by the Clearing House in New York, which in turn is owned by a group of banks

It settles primarily foreign exchange and euro dollar trades

CHIPS accumulates payment instructions throughout the day, and then calculates the net payment to be paid by each bank in the system

The net payment is then made through the Fedwire system

The CHIPS system is designed for high - value payments, and can also transmit remittance information along with payment instructions.

A check issued from a payer to a beneficiary can be cleared and settled through one of several routings

The bank on which a check is drawn may be the same bank used by the beneficiary

If so, the bank simply makes a book entry to shift the in - house funds from the account of the payer to the account of the beneficiary

A company may receive a check from an entity located outside of its country

If so, the company's bank sends the check to a correspondent bank in the originating country

clearing and settlement occurs in that country, and then the correspondent bank uses an electronic transfer to shift the funds back to the beneficiary's bank

Checks are physically processed through the Federal Reserve System

The process flow is for the beneficiary (check recipient) to send the check to its bank, which in turn sends the check to the check - clearing institution (CCI), which is frequently the Fed

The CCI aggregates the information on all checks received and sends a payment instruction to the Fed

The Fed then debits the account of the payer's bank at the Fed and credits the account of the beneficiary's bank at the Fed

Meanwhile, the CCI has notified the banks of both the payer and beneficiary, who debit the payer's bank account and credit the beneficiary's account, respectively

Either the recipient of a check or its bank can scan a check to create an electronic image, and then send the image to the CCI

Since no transport of actual checks occurs, the clearing process can be several days quicker than traditional paper check clearing.

THE CONTINUOUS LINK SETTLEMENT ( CLS ) SYSTEM

An industry initiative to eliminate the settlement risk in foreign exchange transactions

This is achieved by using a 'payment versus payment' method, which provides a simultaneous exchange of currency values through CLS bank international

The CLS concept is being adopted globally with a view to reduce the risks involved in settlement of foreign exchange transactions

Before CLS, each side of a trade was paid separately

Taking time-zone differences into account, this heightened the risk of one party defaulting

CLS is a real-time system that enables simultaneous settlement globally, irrespective of time zones.

The treasurer requires information that is not normally available through a company's standard accounting systems, or even from its enterprise resources planning (ERP) systems

Even though an ERP system is designed to aggregate all of the information used in a modern corporation, the treasurer also requires information from a variety of external sources regarding investments, foreign exchange positions, interest rates, and so forth

Consequently, treasury systems are needed that integrate information from a variety of sources, yielding real - time information that the treasury staff can use to efficiently perform their tasks

The treasurer is in the difficult position of requiring information from many sources, most of which are not required by any other company manager

Since treasury is a relatively small department that may not command the resources of larger departments, it can be difficult to collect all of the required information

Consequently, the treasurer must frequently prioritize information needs

While priorities may vary by company, the following list establishes a reasonable set of priorities, in declining order:

The treasurer's overriding obligation is to ensure that the company has adequate cash to fund its operations

Thus, the following technology needs are critical:

• Multibank reporting of balance information

• Cash forecasting and reconciliation of actual to projected cash flows

• Investment management, including money market dealing

• Intercompany transaction settlement with notional accounts

Some companies have so little foreign business that foreign exchange transactions are negligible, but larger firms with established treasury operations will likely need the ongoing purchase and sale of multiple currencies

Thus, the following technology needs arise

• Foreign exchange forecasting and position analysis

• Foreign exchange deal - making capability

• Foreign exchange confirmation processing

• Hedge documentation capability for Statement of Financial Accounting Standards (SFAS) 133 requirements

The treasurer's technology needs also extend to the efficiency of and  control over treasury activities

Thus, the following requirements should be

The system should never require the manual entry of a transaction into the system more than once, and preferably should involve automated data collection and posting, so that no manual entry is required at all

If supervisory approval is required, the system should electronically route the pertinent transaction to the correct supervisor for approval.

All treasury transactions should result in a clearly defined audit trail that identifies who made a transaction and the date, amount, and accounts impacted by the transaction

The system should limit access to certain modules and require approval of key transactions

The system should automatically notify users if transaction confirmations have not been received, if hedging policies are being violated, if there are negative cash balances, and so on.

Society for Worldwide Interbank Financial Telecommunication

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) operates a worldwide network that banks use to exchange standardized

electronic messages that are known as SWIFT MT codes

The SWIFT network is highly secure and is designed strictly to transport messages between participants — it does not provide a clearing or settlement service.

Access to the SWIFT network is important for larger companies, because they can link their treasury management systems directly into the SWIFT network

By doing so, they avoid having to establish individual interfaces with the reporting systems of all the banks with which they do business, and instead can rely on a single standard messaging format to initiate transactions with and acquire information from bank accounts all over the world.