I note that Diner’s didn’t get group input from every bank before introducing their service to merchants and consumers. I can’ find any notes about Amex consulting the banks either.
Banks comply with Visa’s and Mastercard’s rules and conditions, rather than the reverse.

The object of the exercise is to provide easier, safer, lower risk transactions. The methodology has been determined, no discussion or input is required and no changes will be made to the system unless determined by the transaction processor to be of benefit to the client and the transaction processor. ie lower risk or lower costs.

Any assumption that any banks’ co-operation or input is required would be erroneous. The service is for consumers and is independent of any customer’s bank. Consumers and merchants are the customers, not banks. The customer may simply put a direct debit or credit authorisation in place to the favour of the transaction processor, or transfer funds to a stored value account with the transaction processor.
Merchants merely enroll with the transaction processor and receive funds from the transaction processor to settle customer transactions.
Banks have an opportunity to participate in promoting the service to their customers (merchants and consumers) and profit through paying lower fees, reducing loss and building customer loyalty.

1)Setting up rules and regulations including financial risk management, security requirements, responsibilities of stakeholders, enforcement mechanisms etc

It’s not a question of a new instrument, just a new method of communicating the wishes of the banking customer. The customer chooses to use the method and agrees to the terms and conditions prior to use.
No committee required.

2)Putting in place clearing and settlement infrastructures

The method includes providing participating banks with the transaction information in real time, along with the details of the counter-party institution. Whether the banks settle in real time, and how they settle, will be up to the banks and whatever agreements they choose to make between each other. The facilities to settle directly may be provided for banks, however there will be no obligation to use them.

There is no requirement for the banks to choose to participate. The customer may simply choose to put in place a direct debit or credit authority on behalf of the transaction service, authorising the service to recover funds customers have requested to be paid to the merchant’s account. The merchant may receive the funds to their account immediately unless they choose to participate through their bank rather than through the transaction processor and agree to different terms with their bank. The transaction processor will be offering instant settlement on debit and even with credit transactions when they are implemented through our system (rather than third party credit accounts). Banks would be able to bid for consumer lending in the same manner as consumers, first in first served.

3)Designing interoperability tech standards that are needed to connect several players and have the resulting system run smoothly

Any other ‘players’ will have to adopt the standard set by the transaction service processor in order to participate. Messages to the banks (if any) will be in the format provided by the transaction processor. There is no room for discussion. Direct debit and credit authorities will be in the format presently in use.

4)Laying down scheme’s audit and control procedures, including certifications processes, test platforms etc
The system’s audit control procedures are already laid down, and there are stronger audit rails presently built into the system than any existing transaction system. Certification is available only from, and upon 100% compliance with the rules set by, the transaction processor .
Testing is solely conducted by the transaction processor and the system has been designed to easily integrate into existing bank structures and processes, however there is no requirement for a bank to participate directly.

Banks may not even be required to provide credit or consumer loans.
Customers may be given the option of opening a credit account. Their credit worthiness will be determined and a risk profile ascribed. Any time a customer wishes to ‘borrow or pay by credit’ their request will be determined on a case by case basis in real time.

All customers will have the option of joining the community lending program (similar to a Prospero) and they may allocate excess funds towards investment in other customer’s credit requests. Customers would have a profile and could choose an investment profile to suit their risk choices and make those excess funds available for consumer loans to other customers who fit their chosen lending criteria. Loans will be split and spread across multiple loans within the same profile to reduce risk in the event of any individual default. The funds can be automatically allocated on behalf of investors through participation in a real-time pool which would provide loans as requested and approved in real time.
Portfolio’s may be split across various profiles and loan types, and even location. Our one world lending program will permit customers to allocate funds across borders and races to borrowers in particular countries, states, cities and villages, and/or by intended usage i.e. no interest development, business, student loans, consumer loans, etc.

The system has been designed to allow the transaction processor the option of bearing the risks, because the risks are measurable and manageable, unlike current systems. There are laws which must be observed and regulations to be satisfied, but I don’t see any requirement to consult any banks.

To design a transaction system with the intention of going to market with reliance on mass agreement from, or permission from banks would be short-sighted. Products and services succeed in the marketplace based on their merits and more importantly through their uptake by customers. Customers (including merchants) want lower costs, easier use and lower risk.

Our intention is to fulfill the customers and merchants wants in every way we can, and make profits doing so. Customers - consumers and merchants are not happy, we know we can make them happier - and make them our customers. If banks wish to share in the work (promoting the service to their customers) and the rewards (retain their customers) it may be prudent for them to participate. Our business plan is not contingent upon receiving bank co-operation (or bank funding) and neither is our success.

I’m still thinking 2-3 years.

If anyone could use it with any phone on any network, it was safer than anything else, the merchant required nothing new, and could eventually ditch the eftpos - do you think it would take 5 years?
If it improved consumer privacy, lowered merchant loss and risk of data breaches, would it be popular enough to be adopted quickly?
If it cost less than existing transaction methods?
If it was really easy?
What do you think?
I’m thinking 2-3 years.