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A payment system is the part of the financial market infrastructure that is dedicated to the transfer of funds by clearing and/or settlement on the basis of one or more means of payment. It consists of the following elements:
a formal multilateral agreement between an operator that may be a Central Bank or an interbank agency, and financial institutions called 'participants';
standardized procedures and rules of operation;
a technical protocol convened between the operator and the participants;
a risk management system for both the operator and the participants;
one or more payment instruments. A payment instrument is an instrument for transferring funds, regardless of the medium or process used. By way of illustration, cash, cheques, wire transfers, bills of exchange, promissory notes and debit are payment instruments.
The structure formed by the above-mentioned elements which constitute the payment system is intended for the execution of financial compensation and/or settlement instructions between participating financial institutions.
The BCEAO, in accordance with the provisions of Article 3 of Regulation No. 15/2002/CM/WAMU on payment systems, is responsible for the management of the WAEMU Automated Interbank Clearing System (SICA-UEMOA) and WAEMU Automated Transfer and Settlement System (STAR-UEMOA) payment systems.
SICA-UEMOA is an automated system for clearing retail payments. Payments processed through SICA-UEMOA are mainly ordered via transfers of less than 50 million FCFA, cheques, bills of exchange and promissory notes. SICA-UEMOA allows participating financial institutions to execute payment orders received from their customers through an interbank clearing process. At the end of the clearing process, the balances per participant calculated by SICA-UEMOA are settled in STAR-UEMOA.
In the scope of implementing its ISO 9001 quality policy, the Central Bank has made it a priority to increase participants' satisfaction with payment systems. In this regard, a quality improvement group was set up in order to regularly review activities falling under the BCEAO's responsibility for the management of payment systems, and pinpoint actions necessary to improve the quality of service to users of these systems.
Under this remit, the BCEAO is responsible for the following activities:
operational management of systems, namely supervision of transactions on the day’s trading, assisting participants, dealing with operational incidents, compiling and releasing regular reports, and invoicing;
technical management of systems including the resolution of technical incidents, data backup, security certificate management and tasks concerned with guaranteeing systems continuity;
keeping interbank agencies running by coordinating the activities of user-groups at national and regional levels with the aim of taking care of any operational, technical, financial or legal issues arising from the use of payment systems;
operational management of changes in user experience through the critical analysis of existing services, gathering the needs of the participants through the established feedback channels, as well as overseeing the development process for system updates;
operational risk management in relation to the functioning of payment systems by periodically staging incident simulation exercises, verifying participants' connection platforms, or holding user training sessions;
financial risk management ensured by the implementation of a Guarantee Fund aimed at safeguarding the settlement of clearing balances, and also by a system of Intra-Daily Advances (AIJ), allowing the BCEAO to grant STAR-UEMOA participants advances backed by collateral in order to maintain fluidity of payments within the STAR-UEMOA system.
STAR-UEMOA is the regional system for Real-Time Gross Settlement of urgent payments or systemically important transactions. In particular, it reduces the time and cost of transactions and strengthens regional integration. In terms of operations, STAR-UEMOA notably enables its participants, including the BCEAO, the banks, the National Public Treasuries, the Central Depository/the Regional Stock Exchange Settlement Bank (BRVM), GIM-UEMOA SA and WADB, to carry out transfer transactions and transactions for the settlement of offset balances.
Payment Systems Management