Saturday, July 24, 2010

Setting up a new scheme: Learning from CUP

Traversing down the roadmap of bringing a payments scheme to life is interesting.  Once a scheme is launched, most of us think that all the features of the scheme come to life in relatively short order.  As an entire industry is affected by a new scheme coming to life, getting a good feel for timeline is critical to success of many products/ventures that are dependent on the scheme of the land.

Features of a typical scheme include:
  • Domestic
    • ATM
    • Retail (Debit, Credit)
    • Online
    • Other payment networks (Postal system, Rural, Cooperatives...)
  • Connectivity / bilateral agreements with other schemes (primarily 'international'), primarily around card acceptance
  • Connectivity / bilateral agreements with international banks (primarily 'international') primarily around card acceptance

While launch of new schemes are not commonplace, China UnionPay (CUP) is a recent addition  The journey to setup a scheme is hard work and takes years, this post will look at some of the milestones once a scheme has been 'launched' (source)
  • 1993: Creation of CUP started as part of the Golden Card Project
  • 2002: Launch of scheme
  • 2003: Issue of new cards
  • 2004: CUP cards accepted in Hong Kong
  • 2005: CUP cards accepted by ATM/POS offered by Citicorp network
  • 2006: CUP cards accepted in Australia
  • 2007: Multi-factor authentication for online payments
 While the world is getting smaller, and technology becoming more of a commodity, the above timeline might still be representative of a new payment scheme roadmap.

Do you see the trend for new payment schemes coming up?  Do you see a different timeline?  Appreciate your comments.

2 comments:

  1. Well, NPCI (National Payments Corporation of India) too has similar plans.

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  2. Prashant, That is very interesting. The question is the timeline for the rollout. Will it be reasonably big-bang, or a roll-out over 3-5 years. The readers of this blog would be very appreciative if you can point to such information. Thanks.

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