BANKING LAW NATIONAL PAYMENT SYSTEMS

Question 1

NAME THE LAYERS THAT COMPRIMSES THE NATIONAL PAYMENT SYSTEMS

Answer 1

CUSTOMER NETWORK
PAYMENT NETWORK
CLEARING NETWORK
SETTLEMENT NETWORK

Question 2

CUSTOMERS NETWORK

Answer 2

In this network we have a bank customer and a payee such as a retailer, service provider.
payer intends to pay the payee at this point, without the use of cash.
The customer initiates the transaction by making a payment,
The payment instruction will then move to the next network, the payment network so that the payee can get the funds.

Question 3

PAYEMTENT NETWORK

Answer 3

• This is the second stage of the processing of a payment instruction.
• The payment instruction is prepared for the next stage
• The payment instruction which the customer gave is transmitted by a System Operator.
• If the customer and party being paid hold accounts at the same bank, the payment instruction is immediately executed.
• funds are debited to the customer’s account and credited to the payee.
• If the customer and the payee use different banks, the payment instruction moves to the clearance stage**

Question 4

CLEAREANCE NETWORK

Answer 4

It is also known as the Payment Clearing House (PCH) stage.
Participants in this stage include banks and non-banks such as BankerServe, Visa, Master Card
Participants in this stage are known as PCH System Operators (PCH SO).
Clearing and netting takes place at this stage (see definitions).
A PCH SO determines how much one bank owes another arising from all the transactions that took place within a particular time frame.
The resulting amount is sent to the next stage, the settlement stage

Question 5

SETTLEMENT NETWORK

Answer 5

This is the final stage of the processing of a payment instruction.
The result of the netting and clearing stage (a settlement instruction) is processed by the SARB settlement system called SAMOS.
SAMOS debits one bank (i.e. deducts funds from one bank – which is the bank of the customer) and credits the account of another bank.
The payees bank will then upon receipt of the funds from SAMOS, credit the account of the payee.
These processes explain why funds are not immediately available when a payer and payee use different banks.

Question 6

PAYMENT SYSTEM

Answer 6

system that enables payments to be effected

Question 7

SETTLEMENT OBLIGATION

Answer 7

an indebtedness that is owed by one settlement system participant to another as a result of one or more settlement instructions;

Question 8

SETTLEMENT SYSTEM PARTICPANT

Answer 8

(a) a Reserve Bank settlement system participant; or (b) a designated settlement system participant;

Question 9

PAYMENT CLEAEING HOUSE SYSTEN OPERATIONS

Answer 9

clears on behalf of any two or more Reserve Bank settlement system participants

Question 10

THE ROLE OF SAMOS

Answer 10

is to act as a final settlement system/platform for financial transactions