What is Credit Transfer?

Definition

Credit Transfer refers to the movement of funds or credit balances from one financial account to another. It involves transferring the ownership or rights to a specific amount of money or credit from the sender (transferor) to the recipient (transferee).

Key Points

• Transfer of Funds: It involves transferring money or credit between accounts held by individuals, businesses, or financial institutions.
• Electronic Transactions: Credit transfers are often conducted electronically through banking systems, wire transfers, or online payment platforms.
• Purpose: Credit transfers can be used for various purposes, including payments, settlements, remittances, and account management.

Types of Credit Transfers

1. Bank Transfers

Bank-to-Bank: Transfer of funds between different bank accounts, facilitated by banking institutions through electronic means.

2. Wire Transfers

Domestic and International: Immediate transfer of funds between banks or financial institutions across borders using secure networks.

3. Automated Clearing House (ACH) Transfers

Electronic Payments: Batch processing of transactions for payments such as payroll deposits, bill payments, and recurring transfers.

How Credit Transfer Works

Process and Example

1. Initiation: The sender (individual or business) initiates a credit transfer request, specifying the recipient’s account details and the amount to be transferred.
2. Authorization: The sender’s financial institution verifies the transaction and authorizes the transfer of funds or credit.
3. Execution: The funds are debited from the sender’s account and credited to the recipient’s account, typically within a specified timeframe depending on the transfer method used.

Example Scenario

Scenario: Jane needs to pay rent to her landlord, Tom. She initiates a credit transfer from her bank account to Tom’s bank account using online banking. Upon verification and authorization by the banks, the funds are transferred electronically, ensuring timely payment of rent.

Importance of Credit Transfer

Efficiency and Convenience

Credit transfers offer a quick and convenient method for individuals and businesses to conduct financial transactions without the need for physical cash or checks.

Global Transactions

Facilitates seamless international transactions, enabling businesses to engage in global trade, remittances, and cross-border payments efficiently.

Payment Automation

Supports automated payments for recurring expenses such as utilities, subscriptions, and loan repayments, reducing administrative overhead and ensuring timely payments.

Benefits of Credit Transfer

Speed and Security

Electronic credit transfers ensure prompt delivery of funds with enhanced security measures to protect against fraud and unauthorized transactions.

Cost-Effectiveness

Compared to traditional methods like cashier’s checks or money orders, credit transfers often incur lower fees, making them a cost-effective choice for large or frequent transactions.

Transparency and Tracking

Provides transparency with transaction records and electronic receipts, allowing senders and recipients to track payment status and reconcile accounts easily.

Challenges in Credit Transfer

Fees and Charges

Some credit transfers may involve fees depending on the transfer method, destination country, and currency exchange rates, impacting the overall cost of transactions.

Regulatory Compliance

Cross-border credit transfers may require compliance with international regulations, anti-money laundering (AML) policies, and Know Your Customer (KYC) procedures, adding complexity to the process.

Conclusion

In conclusion, credit transfer is a fundamental mechanism in modern finance, enabling individuals and businesses to transfer funds or credit balances electronically between accounts. Whether for personal payments, business transactions, or international trade, credit transfers offer speed, security, and convenience in managing financial obligations and facilitating economic activities. By understanding the mechanics of credit transfer, leveraging efficient payment methods, and staying informed about regulatory requirements, stakeholders can optimize financial operations and harness the benefits of seamless fund transfers in today’s interconnected global economy. As digital payment systems evolve and financial technologies advance, credit transfer continues to play a pivotal role in shaping the future of financial transactions and enhancing financial inclusion worldwide

As the name suggested, authorised push payments are:

1. Authorised: the payer fully intends to send their money to a recipient
2. ‘Push’ payments: the payer initiates the payment, as opposed to a ‘pull’ payment, where funds are taken from the payer’s account by the recipient

A legitimate authorised push payment could be made for several reasons. The payer may want to transfer money to invest, pay a tradesman, or even send money to family and friends.

APP fraud is so powerful as it effectively tricks the target into willingly parting with their money. This differs from unauthorised fraud, where the fraudster takes funds from your account without permission.

Safe Keeping Receipts (SKRs) play a crucial role in the world of finance and asset management. These documents are used to secure and verify the ownership of valuable assets, such as precious metals, art, or securities. In this article, we will explore what a Safe Keeping Receipt is, its primary uses, and where to obtain one.

What is a Safe Keeping Receipt (SKR)?

A Safe Keeping Receipt, often abbreviated as SKR, is a legal document issued by a financial institution or a storage facility that acknowledges the deposit and secure storage of valuable assets. It serves as proof of ownership and is typically used when individuals or entities want to safeguard their valuable assets in a secure, third-party location.

SKRs provide a transparent record of the assets, their condition, and their current location, making them a vital instrument in various financial and trading activities.

Primary Uses of Safe Keeping Receipts (SKRs)

SKRs serve multiple purposes, each of which plays a significant role in different sectors of the financial and trading world:

1. Asset Protection

The primary function of an SKR is to protect valuable assets from theft, damage, or loss. By depositing assets in a secure facility, owners gain peace of mind knowing that their possessions are safeguarded.

2. Collateral for Loans

SKRs are often used as collateral when individuals or businesses need to secure a loan or line of credit. Lenders may accept SKRs as collateral, as they provide evidence of the borrower’s ownership of valuable assets that can be used to cover the loan if it defaults.

3. Proof of Ownership

In transactions involving the sale or transfer of assets, an SKR serves as legal proof of ownership. It ensures that both parties have confidence in the asset’s authenticity and the seller’s ability to transfer ownership.

4. Asset Verification

In international trade, SKRs are used to verify the existence and authenticity of valuable assets, particularly when dealing with goods that are not immediately physically inspected by the parties involved.

Where to Obtain a Safe Keeping Receipt (SKR)

Obtaining a Safe Keeping Receipt typically involves the following steps:

1. Choose a Secure Custodian

The first step is to select a trustworthy financial institution or a reputable storage facility that offers safe keeping services. Ensure that the custodian has a strong track record in asset storage and management.

2. Deposit the Assets

Once you’ve chosen a custodian, you’ll need to deposit your valuable assets with them. This often involves an inspection and evaluation of the assets to determine their condition and value.

3. Receive the SKR

After the assets are deposited, the custodian will issue a Safe Keeping Receipt. The SKR will contain details about the assets, their value, the custodian’s information, and any relevant terms and conditions.

4. Use the SKR as Needed

Depending on the purpose of obtaining the SKR, you can use it for collateral, asset verification, or simply as proof of ownership. If you’ve used it as collateral for a loan, the lender may hold onto the SKR until the loan is repaid.

When seeking to obtain an SKR, it’s essential to conduct thorough due diligence on the custodian. Choose a custodian with a solid reputation, appropriate security measures, and clear terms for managing and releasing your assets. Always read and understand the terms and conditions outlined in the SKR, as they may vary depending on the custodian.

In conclusion, a Safe Keeping Receipt (SKR) is a valuable document that serves multiple purposes, from asset protection to collateral for loans and proof of ownership. When seeking an SKR, ensure that you select a reliable custodian who can safely store and manage your valuable assets. Understanding the uses and the process of obtaining an SKR is crucial for making informed decisions and ensuring the safety and security of your assets.

Procurement is the process of buying or otherwise obtaining goods or services, typically for business or government purposes and usually on a relatively large scale. Often confused with purchasing, procurement represents a more strategic and less purely transactional process.

How Procurement Works

In business, the procurement process can be a vital part of a company’s strategy because the ability to obtain sufficient quantities of materials or services at an acceptable price can determine if operations will be profitable. Similarly, government agencies must pay close attention to procurement in order to remain within budget. Procurement budgets typically allot a specific amount that managers can spend to procure the goods or services they need.

Broadly viewed, the procurement process entails every step from the preparation and processing of a request for certain items to the receipt of the good or service and approval of payment. On a more detailed level, this can involve establishing standards and specifications for goods and services, forecasting the organization’s needs, researching and selecting suppliers, arranging for financing, negotiating prices and contracts, finalizing the transaction, making payments, and managing inventory. As such, companies often require support from several different internal departments, and coordination among them, for successful procurement.

Depending on their expertise, those departments might divide up such tasks as:

• Choosing the goods and services required based on the organization’s strategic needs
• Soliciting quotes from suitable suppliers
• Working out a price and contract terms
• Receiving the shipment and submitting payment for it

Procurement is considered an integral part of supply chain management.

Competitive Bidding and Procurement

Different businesses and government agencies will have their own processes for choosing suppliers. This often involves multiple potential suppliers and some form of competitive bidding.

Competitive bidding for goods generally requires that suppliers submit proposals that detail the per-unit price of the item, along with shipping and delivery terms. In the case of services, proposals can involve the numbers of individuals who would work on a project, the type of technical support that is required, and other matters. To initiate this process, businesses and especially government agencies will often issue a formal request for proposals (RFP), spelling out their needs.

Ultimately, the organization that solicited the bids will choose one or more suppliers, based on cost and other factors. The lowest bidder won’t necessarily get the business.

Types of Procurement

Procurement can be divided into four basic types, with some overlap between them. These include:

• Direct procurement: This kind of procurement involves any goods or services that are directly involved in the production process. For a manufacturer, for example, that can include raw materials and component parts made by others.
• Indirect procurement: The obtaining of goods and services that are required to meet the operational needs of a business but that are not directly involved in the production process is referred to as indirect procurement. Examples can include office equipment and supplies, furnishings, and services such as marketing or advertising.
• Goods procurement: Any physical goods that businesses acquire through the procurement process fall into this category. They can involve either direct procurement (as in raw materials) or indirect procurement (as in office supplies).
• Services procurement: Like goods procurement, services procurement can be either direct or indirect. Direct services procurement may refer to labor directly involved in the production process, while indirect services procurement can include things like on-site security to guard the premises.

Note

Companies will generally have different budgets and processes for managing direct costs compared to indirect costs.

Procurement vs. Purchasing

Procurement and purchasing both result in the acquisition of goods and services, so it’s easy to confuse the two. But there are some key distinctions between them.

Purchasing is largely a transactional process involving the buying of certain goods and services, usually to satisfy an immediate need. Purchasing tends to be heavily focused on obtaining the best price rather than on other factors. It can be thought of as part of the procurement process, rather than being synonymous with it.2

Procurement is more of a strategic process, often involving a series of steps (as outlined above), only one of which might involve the actual purchase. Procurement tends to focus more on long-term value to the business than on price and also to foster more enduring supplier relationships than simply one-off transactions.

The table below highlights those key differences:

Accounting for Procurement

Procurement costs are generally integrated into the financial accounting of a company, since procurement involves acquiring goods and/or services for the revenue goals of the business.

Depending on their size and needs, some companies may also employ a dedicated procurement manager or procurement specialist to lead these efforts. Increasingly, larger companies are adding executive-level chief procurement officers (CPOs for short) to assume responsibility and give procurement a greater voice in their strategic planning.3 The CPO typically:

• Oversees procurement standards
• Works with accounts payable to ensure efficient payment
• Serves on procurement teams making procurement decisions when there are multiple competitive bids

What Is Meant by Procurement?

Procurement is the start-to-finish process involved in obtaining, or “sourcing,” something that the buyer, such as a business or government agency, needs to do its work. That can involve either goods or services.

How Is Procurement Done?

Procurement can be carried out in a variety of ways at its various steps. For example, organizations may encourage competitive bids from large numbers of potential suppliers or choose to work with a small group of exclusive suppliers or even a single source.

What Is Public Procurement?

Public procurement is another name for government procurement, in which states or agencies purchase goods and services from the private sector.

Is Procurement the Same as Purchasing?

While they are similar, purchasing may simply refer to the act of buying goods and services, while procurement can include setting specifications, researching and vetting suppliers, and additional steps both before and after the purchase transaction.

Treasury Bank credit transfers are exchanged as closed looped single or grouped transactions for privacy, convenience or efficiency reasons. The processing of credit transfers may differ from country to country and system to system; using ISO 20022 Pacs.008 credit transfers that will be sent when clients request Treasury Bank to send funds transfer to an account at the acquiring bank. As following:

• Clients may call or email to request a transfer over the counter or
• Clients may request payment through the web page or mobile banking API
• Clients are a corporation, may have your own ERP system and that is integrated with the Treasury Bank system and can request the payment through a pain.001 (payments initiation) message or
• Clients can request a payment through Treasury Bank proprietary integration with their acquiring bank that involve pacs.008

The above will result in outgoing pacs.008 from Treasury Bank

Structure​

Message flow where Treasury Bank and Receiving bank are correspondents​

Message flow where Treasury Bank and Receiving bank are not direct correspondents and settled through cover payment​

Message flow where the messages are routed through data processor (serial flow)​

Message flow through HSC or ACH clearing system​

Traditional Card Payment Transaction and Settlement Flow

1. Card transactions flow between client, Treasury Bank banks (issuer), processors, recieving banks (acquirer) and , within a card association network.
2. A cardholder initiates a card payment by presenting a payment card (or providing card details, such as the number and expiration date).
3. The merchant’s payment system sends the card information to the acquirer or payment processor, which sends the information to the appropriate card network, which forwards it to the issuing bank for approval.
4. The issuer approves or declines the transaction, sending the information back through the payment chain the way it came.

Treasury Bank’s Card Payment Transaction and Settlement Flow

Card transactions flow as Bank-to-Bank (B2B) as Credit Transfers

A cardholder is a merchant and client that initiates a card payment by presenting a payment card details, such as the number and expiration date.

The merchant’s sends its payment card requests to acquirer bank’s processor to pay other merchants with a Treasury Bank’s pre-approved identification and payment at acquirer bank processor.

How To Works

Unlike most banks, Treasury Bank Clients:

• are in-house investments contractors’ members with Treasury Bank
• have the same acquirer bank and processor
• Treasury contractors can only purchase from treasury bank members
• Transactions are internal book transfer at the acquirer bank’s processor

 Closed Looped Account Transaction:

• Treasury Bank as funds originator
• SFTP Client act as Treasury Banks bank connector
• Trading Partners hold accounts with Treasury Bank and acquiring bank.
• Acquiring Banks is account holders and cardholders receiving bank and processor with the card association.

Treasury Bank begins with contracting clients, fund underwriting, deposit account opening with acquiring banks, and  establishing control agreements with both banks. Treasures will also establish agreements with verify Treasury Bank to be fund originator as “Sender” and acquiring banks to be network processor as “Receiver.”   

Clients of Treasury Bank and the Acquirer Bank are automatically pre-identified and approved for funds by both banks Ledger for cash positioning and easy reconciliation.

After Treasury Bank originates 1:1 direct credit transfer to acquiring bank all clients’ payment transfers are closed looped RTP payment date with internal card information as book transfers within acquirer core network as its internal payment processor with or without card network

Each bank Issuing responsibility:

• Treasury Bank issues payment certificate
• Acquiring Bank issues payment card

Client initiates a card payment by presenting a payment card only with other pre identified and approved client for settlement by the Issuer and Acquirer.  

The card network only process payment within one acquiring bank internally.

Outside the Loop

• Any merchant payment outside the loop will be forwards to the appropriate card network with issuing bank pre-approval.
• Treasury Bank preapproval assures that payment will never decline within the network.

Tokenization

Tokenization is used to protect sensitive information. Tokenization involves a process of replacing credit card and account information with unique symbols, which creates a token. The token is not based on any known number in the original transaction such as a bank number, account number, or any other information tied to the customer.

Tokens allow retention of essential information about the transaction without compromising its security.

The following are examples of risks avoided that are associated with Treasury Bank payment cards:

• •Banks that use third parties to administer various aspects of customer card accounts are exposed to increased risks (e.g., operational, compliance, reputation) relating to the activities performed by the third party.
• All Prepaid verified cards are cash or cash equivalent account to void money laundering BSA/AML violations
• All cardholders are clients of both the issuer and the acquirer, so transferring of funds to or from an all account are unknown to avoid any KCY or CDD and EDD violations third party.
• Third parry integration has bank level security protocols to lower financial compliance risks that may exist due to multiple rules and regulations that apply. with card association rules and Regulation E.

Low Credit Risk

All credit transfers are one-way push credit transfers, which decreased credit risk by voiding potential fraud and charge-back activity. This is because all accountholders are directly between one closed connection with a issuing and an acquiring banks.

Benefit

Be apart of

Tangible Assets are physical assets that have an intrinsic worth due to their substance and properties. Real assets include precious metals, commodities, real estate, land, equipment, and natural resources. They are appropriate for inclusion in most diversified portfolios because of their relatively low correlation with financial assets, such as stocks and bonds.

Intangible Assets are valuable properties that are not physical in nature. Such assets include patents, copyrights, brand recognition, trademarks, and intellectual property.

For a business, perhaps the most important intangible asset is a positive brand identity.

Financial assets are liquid properties that derive value from a contractual right or ownership claim. Stocks, bonds, mutual funds, bank deposits, investment accounts, and good old cash are all examples of financial assets. They can have a physical form, like a dollar bill or a bond certificate, or be nonphysical—like a money market account or mutual fund.

In contrast, a real asset—also known as a non-security—has a tangible form, and its value derives from its physical qualities. It can be a natural substance, like gold or oil, or a man-made one, like machinery or buildings.

Standing Order

A standing order is a payment service by which a payment service provider, on the basis of a contract on the standing order with its payment services user, periodically on a certain or determinable day transfers a certain or determinable amount from the payment account of its payment services user to credit the payment account of the payee (e.g. payment of the annuity or installment of a loan, etc.). The contract on the standing order can be separately entered into or as a provision of another contract.

Methodology – credit transfer and standing order

Paper-based order:

Credit transfers initiated by a paper-based order cover payment orders by which a payment transaction of credit transfer is initiated, which are initiated:

• Over-the-counter at a credit institution or a person that, on the basis of a contract, is acting on behalf and for the account of a credit institution;
• By using a 2D barcode, QRC, or other forms of scanning on paper-based payment orders that are scanned exclusively over the counter at a credit institution or a person that, on the basis of a contract, is acting on behalf of and for the account of a credit institution;
• at all other places, e.g. automated payment machines or by using any other devices/means/channels on paper-based payment orders as invoice, check, money order or voucher. 

Credit transfers initiated by a paper-based order can be executed from a payment account – transaction account, payment account – another payment account, in cash and by “Other” sources of funds as securities. 

Electronically:

Credit transfers whose payment orders are submitted electronically cover payment orders that are initiated:

• over-the-counter at a credit institution (received by fax or in other ways if carried out without a manual intervention by credit institution’s employees);
• by using Internet (electronic) banking services;
• by using telebanking services;
• by using the service of payment via the mobile phone;
• through an ATM/banking kiosk,
• by using the E-bill service;
• via the SMS;
• through the Reporting entity’s internal system, and
• at all other places, e.g. automated payment machines or by using any other device/means/channel not mentioned above (e.g. through SWIFT).

Credit transfers initiated electronically can be executed from payment accounts – transaction account, a payment account – another payment account, other “accounts” (only if performed from “other” accounts of a credit institution) and other sources of funds.

DEFINITIONS AND DESCRIPTIONS

1. Consumer 

‘Consumer’ means a natural person who, in payment service contracts covered by the CFPB for purposes other than his/her trade, business or profession, as well as a natural person concluding a contract for the issue of electronic money pursuant to the Electronic Money Act outside the area of his/her business activity and freelance occupation.

2. Non-consumer 

“Non-consumer” means a legal or natural person other than the consumer.

The following are included:

• legal persons (e.g. corporate, institutions, cooperatives, associations, foundations etc.), craftsmen and other natural persons employed as freelancers or carrying out an economic activity when entering into a contract on payment services within the area of their economic activity or freelance occupation,
• entities that do not have legal personality, but that can be the holders of payment accounts (e.g. bodies of state administration, representative offices etc.)

3. Credit transfers 

“Credit transfer” means a payment transaction by which a credit institution transfers funds to a payee’s account on the basis of a payer’s order, and the payer and the payee can be the same person.

The following are also included:

• transfers of funds from one payment account to another;
• credit transfers initiated through a device that enables the execution of payment transactions (e.g. a deposit-withdrawal-transaction ATM);
• the transfer of the amount of a granted credit from the payment account and other “accounts” of the credit institution crediting the credit beneficiary’s payment account managed by another payment service provider;
• the transfer of the amount of a granted credit from the payment account and other “accounts” of the credit institution crediting the credit beneficiary’s payment account managed by the credit institution itself if the transfer is executed on the basis of a special payment order of the credit beneficiary, and not on the basis of a credit agreement;
• the transfer of the amount of a granted credit from the payment account and other “accounts” of the credit institution crediting the payment account of a payment service user other than the credit beneficiary, irrespective of whether the account is operated with the credit institution (when the transfer is carried out on the basis of a special payment order) or with another payment service provider;
• payer’s cash deposits (by a payment slip) to the payee’s payment account operated either by the credit institution or by another payment service provider;
• credit transfers used to settle credit instalments/annuities initiated through Internet (electronic) banking debiting the transaction account of a consumer or non-consumer crediting another “account” of the credit institution, etc.

4. National payment transaction 

“National payment transaction” means a payment transaction the execution of which involves a payer’s payment service provider and a payee’s payment service provider, or only one payment service provider, which operate in the Special District in accordance with Chapter 7 of the Administrative Ordiance

5. Modes of initiation of credit transfers

5. Paper-based 

The term “paper-based covers payment orders that the payer submits in paper form, or on paper-based forms.  

The following are also included:

• payment orders submitted by fax, fixed phone or other means in which the credit institution must intervene manually so that the order can be executed;
• payment transactions executed on the basis of the order by a consumer or non-consumer debiting their payment accounts in a sum total (batch payments, e.g. for employees’ salaries) and when specifications are received in paper form (every individual credit transfer is recorded), and 
• paper-based payment orders submitted at automatic payment machines.

The term “electronically” covers payment orders submitted electronically.

The following are also included:

• payment orders received by fax or in other ways if payment orders are carried out without manual intervention;
• payment transactions executed against the order by a consumer or non-consumer debiting their payment accounts in a sum total (batch payments, e.g. for employees’ salaries), and received over the counter at a financial institution on any of the media (e.g. USB, CD, disk, etc.). Every individual credit transfer is recorded for these payment transactions.

6. Payment method 

The payment method describes the device, means, place, channel etc. through which or at which credit transfer

payment transactions are initiated or executed.

The term “over-the-counter” covers data on payment orders by which a credit transfer payment transaction is initiated, which are submitted over-the-counter at a credit institution or another person that, on the basis of a contract, is acting on behalf and for the account of the credit institution.

The following are also included:

• payment transactions that are executed against the order of a consumer or non-consumer debiting his/her account in sum total, and the order is received over-the-counter at a credit institution or a person acting on behalf and for the account of the credit institution on any of the media (e.g. order for the payment of employee salaries submitted on a CD, USB, disk etc.). These payment transactions are recorded for every individual credit transfer.

The following is not included:

• payment transactions executed through a 2D barcode over-the-counter at a credit institution or another person that, on the basis of a contract, is acting on behalf and for the account of the credit institution;
• payment orders that are executed as the bill-paying service submitted for collection over-the-counter at a credit institution or a person that, on the basis of a contract, is acting on behalf and for the account of the credit institution;
• over-the-counter cash deposit to the payment account (including the use of a debit card);
• over-the-counter cash deposit through a payment instrument.

The term “2D barcode” covers j data on credit transfers initiated by using a 2D barcode or other forms of scanning on paper-based payment orders that are scanned exclusively over-the-counter at a credit institution (or through a person that, on the basis of a contract, is acting on behalf of and for the account of the credit institution).

The following are also included:

• credit transfers initiated by using a 2D barcode or other forms of scanning on paper-based payment orders scanned over-the-counters at the person that is acting on behalf and for the account of a credit institution that are executed as credit transfers, or the payment service provider (credit institution) does not have a contract with the payee.

The following is not included:

• any other form of 2D barcode usage except its scanning.

1. 3. Other 

The term “Other” covers payment transactions that are initiated/executed at all other places, e.g. automatic payment machines, or by using all other devices/means/channels other than those mentioned here.

1. 4. The Internet

The term the “Internet” covers data on credit transfers that a consumer or non-consumer has initiated by using the agreed Internet (electronic) banking debited to his/her payment account operated by a credit institution, and the payment service user has contracted the Internet (electronic) banking service with the credit institution.

The following are also included:

• credit transfers initiated at a banking kiosk through the Internet (electronic) banking service.

1. 5. Telebanking 

The term “Telebanking” covers data about payment orders initiated by using telebanking (using the user application pre-installed on the workstation or personal computer/device of the payment service user) debiting the payment account operated by a credit institution, and the payment service user has contracted the telebanking service with the credit institution.

1. 6. Mobile phone 

The term “Mobile phone” covers data on credit transfers that the payment service user has initiated by using the application installed on a mobile device to debit his/her payment account operated by a credit institution, and the service user has contracted the payment service with the credit institution via the application installed on the mobile device.

1. 7. ATM/banking kiosk 

The term “ATM/banking kiosk” covers data on credit transfer payment transactions initiated through an ATM/banking kiosk.

The following are also included:

• credit transfers initiated through an ATM/banking kiosk (e.g. deposit-withdrawal-transaction ATM) enabling the execution of payment transactions by a paper-based/electronic payment order (most often a 2D barcode) that can be paid directly from the payment account.

The following is not included:

• cash deposit at an ATM/banking kiosk through a payment instrument.
• credit transfers initiated at a banking kiosk through the Internet (electronic) banking service.

1. 8. E-bill

The term “E-bill” covers credit transfer payment orders initiated by using the E-bill service, which the payment service user has contracted with the credit institution. The E-bill includes payment orders in the electronic form that are completed in advance for the user, electronically submitted to the user for authorisation, and the user authorises them electronically.

1. 9. SMS

The term “SMS” covers data on payment transactions of a credit transfer initiated via the SMS on a mobile device. The payment account of the payment service user is debited, which is operated by a credit institution and the service user has contracted the SMS payment service with the credit institution.

1. 10. Internal system of reporting entities

The term “internal system of reporting entities” covers payment transactions that a credit institution executes through its internal system (internally developed application solution) debiting its accounts and debiting the account of the payment service user. 

The following are also included:

• the payment transactions of debiting the payment account of a credit institution through its internal system such as, for example, the payment of credit institution’s overhead costs or the payment of salaries to the employees of the credit institution. 

7. Source of funds for payment 

The sources of funds for the execution of a credit transfer payment transaction are described below. 

1. 1. Payment account – transaction account

A payment account – transaction account is a current account or a giro account regulated by the Payment System Act. For the execution of the payment transactions of credit transfer, it refers to the accounts of consumers, non-consumers and credit institutions.

1. 2. Payment account – another payment account 

A payment account – another payment account is any account operated by a credit institution on behalf of one or more users of payment services and it is used for the execution of the payment transactions of credit transfers, but it cannot be categorised under the “Payment account – transaction account” and Other “accounts”. For the execution of the payment transactions of credit transfer, it refers to the accounts of consumers, non-consumers and credit institutions.

1. 3. Other “accounts”

The term other “accounts” covers all other accounts that are not categorised under the “Payment account – transaction account” and “Payment account – another payment account”. It comprises all accounts other than payment accounts, such as time deposits, various accounts, sub-accounts etc. 

For the execution of the payment transactions of credit transfer, it refers to the accounts of credit institutions.

1. 4. Cash 

All payment transactions in which cash is the source of funds for the execution of a credit transfer are included.  For the execution of the payment transactions of credit transfer, it refers to the accounts of consumers and non-consumers.

1. 5. Other 

The term “Other” covers all payment transactions of credit transfers in which the source of funds cannot be categorised under any of the above, including payment transactions of credit transfers in which the source of funds is a payment instrument (credit, debit and similar payment card). For the execution of the payment transactions of credit transfer, it refers to the accounts of consumers and non-consumers.

DESCRIPTION OF THE BASIC FIELDS OF THE REPORT

1. “TOTAL – Number of transactions“ 

It presents the total number of executed national payment transactions of credit transfers, initiated paper-based or electronically, that credit institutions have executed in the Republic of Croatia in euro, debiting the payment accounts of their payment service users or debiting their payment accounts or other accounts.

The payment transactions of national credit transfers that credit institutions have executed in the Republic of Croatia debiting their accounts are accounted for as “non-consumers”.

2. “TOTAL – Value of transactions“ 

It presents the total value of executed national payment transactions of credit transfers, initiated paper-based or electronically, that credit institutions have executed in the Republic of Croatia in euro, debiting the payment accounts of their payment service users or debiting their payment accounts or other accounts. 

The payment transactions of national credit transfers that credit institutions have executed in the Republic of Croatia debiting their accounts are accounted for as “non-consumers”.

Table PT2 Cross-border/international credit transfers

Data presented in this report are collected on the basis of the Decision on the obligation to submit payment and electronic money statistics (Official Gazette 147/2013 and 16/2017) and the accompanying Instructions.

This report presents the cross-border/international credit transfers sent and received, debited from/credited to the account of the consumer, non-consumer and the credit institution itself as the reporting entity whose transactions are included within the non-consumer transactions.

It does not include the credit transfer payment transactions sent/received that the credit institution has executed on its own behalf and for its account, or payment transactions against a payment account of the credit institution operated by a foreign payment services provider that the credit institution does not execute for the purpose of rendering the payment service to a consumer, etc.

Data in this report refer to the total number/value of transactions during the reporting period, or month, including the first and the last day in the month. Payment transactions executed in all currencies are included, and the amounts in the table are presented converted in euro at the exchange rate of the CNB on the last day of the reporting period.

DEFINITIONS AND DESCRIPTIONS

1. Credit transfer

A credit transfer is a payment transaction by which a payment service provider transfers funds to a payee’s account against a payer’s order, and the payer and the payee can be the same person.

In the case of batch payments (file with payments, e.g. salaries, contributions, etc.) every transfer to the payee’s account is counted as a single transaction.

2. Consumer

“Consumer” means a natural person who, in payment service contracts covered by the Payment System Act (Official Gazette 66/2018 and 114/2022) is acting for purposes other than his/her trade, business or profession.

3. Non-consumer

“Non-consumer” means a legal or natural person other than the consumer.

The following are included:

• legal persons (e.g. corporates, institutions, cooperatives, associations, foundations etc.), craftsmen and other natural persons employed as freelancers or carrying out an economic activity when entering into a contract on payment services or a contract on the issuing of electronic money within the area of their economic activity or freelance occupation,
• entities that do not have legal personality, but that may be the holders of payment accounts (e.g. bodies of state administration, representative offices etc.).

4. Cross-border/international payment transactions received

Cross-border payment transactions received refer to the total number/value of payment transactions received by the reporting entity, where the payer’s payment service provider operates in the EU.

International payment transactions received refer to the total number/value of payment transactions received by the reporting entity, where the payer’s payment service provider operates in a third country.

Cross-border and international payment transactions received are defined by Article 3(1), sub-paragraphs 22 and 42 of the Payment System Act.

DESCRIPTION OF THE BASIC FIELDS OF THE REPORT

1. Cross-border/international credit transfers sent – number/value of transactions

Cross-border and international payment transactions sent are counted on the payer’s side and they refer to the total number/value of payment transactions of credit transfers which the credit institution has executed debiting the payment accounts of its payment service users or debiting its payment accounts or other “accounts”.

1. Cross-border/international credit transfers received – number/value of transactions

Cross-border and international payment transactions received are counted on the payee’s side and they refer to the total number/value of payment transactions of credit transfers which the credit institution has executed for the benefit of payment service users or for its own benefit.

Table PT3 Standing order transactions in the Republic of Croatia in euro

Data presented in this report are collected on the basis of the Decision on the obligation to submit payment and electronic money statistics (Official Gazette 147/2013 and 16/2017) and the accompanying Instructions.

This report presents national payment transactions of executed standing orders in euro by debiting the payment accounts of users (consumers and non-consumers) as well as the contractual charge to their payment cards on the basis of a standing order.

This report presents the given consents and standing order payment transactions also credited to the service user (another legal or natural person) as well as credited to the reporting entity itself (credit institution or electronic money institution).

DEFINITIONS AND DESCRIPTIONS

1. Standing order

A standing order is a payment service by which, on the basis of a contract on the standing order with its payment service user, the reporting entity (credit institution or electronic money institution), periodically on a specified or determinable day, transfers a specified or determinable amount from the payment account of its payment service user credited to the payee’s payment account (e.g. payment of the annuity or instalment of a credit, etc.). The contract on the standing order can be concluded separately or as a provision of another contract.

2. Contractual charge of a payment card with a standing order

The contractual charge of a payment card with a standing order means payment transactions for which the charge through a payment instrument (payment card) is pre-arranged and that have the elements of a standing order.

3. Consumer

“Consumer” means a natural person who, in payment service contracts covered by the Payment System Act (Official Gazette 66/2018 and 114/2022 ) is acting for purposes other than his/her trade, business or profession.

4. Non-consumer

“Non-consumer” means a legal or natural person other than the consumer.

The following are included:

• legal persons (e.g. corporates, institutions, cooperatives, associations, foundations etc.), craftsmen and other natural persons employed as freelancers or carrying out an economic activity when entering into a contract on payment services or a contract on the issuing of electronic money within the area of their economic activity or freelance occupation,
• entities that do not have legal personality, but that may be the holders of payment accounts (e.g. bodies of state administration, representative offices etc.).

5. National payment transaction

“National payment transaction” means a payment transaction the execution of which involves a payer’s payment service provider and a payee’s payment service provider, or only one payment service provider, which operate in the Republic of Croatia in accordance with Article 7 of the Payment System Act (Official Gazette 66/2018 and 114/2022)

DESCRIPTION OF THE BASIC FIELDS OF THE REPORT

1. Columns “TOTAL – Number of transactions” and “TOTAL – Value of transactions”

The columns show data about the number and value of transactions of executed standing orders, which refer to the total number/value of transactions during the reporting period, where the value of data includes the number/value of executed standing orders on the first and the last day of the reporting period.

2. Columns “Number of contracts”

The columns “Number of contracts” show data about the total number of active contracts on the standing order on the last day of the reporting period.

They also show the number of contracts on the standing order concluded between the payment service user and the reporting entity (credit institution or electronic money institution) irrespective of whether the contract is concluded directly with the reporting entity or through an intermediary (a third party that, on the basis of the contract with the reporting entity, concludes contracts on the standing order on behalf and for the account of the reporting entity).

Here’s a breakdown of what this might entail:

• What it is:A fund origination certificate is a document that verifies the origin of funds, ensuring they weren’t obtained through illegal or suspicious means. 
• Why it’s used:Financial institutions, regulatory bodies, and other entities often require this type of documentation to comply with anti-money laundering (AML) and Know Your Customer (KYC) regulations. 
• Examples:
  • Investment Funds: When investing in a fund, the fund manager might request a certificate to verify the source of the investor’s funds. 
  • Real Estate Transactions: In real estate deals, the buyer might need to provide a certificate to show where the purchase money came from. 
  • Large Cash Transactions:Banks and other financial institutions might require this for large cash deposits or withdrawals. 
• What it might include:The certificate could include information such as:
  • The source of the funds (e.g., salary, inheritance, loan). 
  • Details about the financial transaction or investment. 
  • The identity of the person or entity providing the funds. 
  • Supporting documentation, such as bank statements or employment contracts. 
• Other related terms:
  • Source of Funds: This refers to the origin of the funds being verified. 
  • Deal Origination: In finance, this refers to the process of identifying and securing investment opportunities. 
  • Certificate of Origin: This is a document used in international trade to verify the country of origin of goods

There are several different types of bank accounts that individuals and businesses can open, each serving a different purpose and offering various features and benefits.

In this explainer we will focus on three main types of accounts that can be created and dive into their differences, their advantages and how they can be used by enterprises venturing into embedded finance. We’ll also look at where account opening sits in the embedded finance process.

The Three Main Types of Account

‍1. Demand Deposit Account (DDA):

   – Definition: A deposit account is a type of bank account where you deposit money, and the bank holds the funds for safekeeping. It’s a financial arrangement where the customer entrusts their money to the bank, and where the bank pays interest on the deposit deposits.

   – Nature: Deposit accounts are on the “asset” side of the customer’s financial picture because they represent money they own. These accounts include savings accounts, checking accounts, money market accounts, and certificates of deposit (CDs).

   – Function: In a deposit account, you can store your money, make withdrawals, and perform transactions like paying bills or making purchases. Banks use the money in these accounts to provide loans to borrowers and generate income.

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2. Credit Account:

   – Definition: A credit account, also known as a credit line, is a financial arrangement where a lender (usually a bank or credit card company) extends credit to a borrower. The borrower can use this credit to make purchases or obtain cash advances, with the obligation to repay the lender with interest.

‍   – Nature: Credit accounts represent a liability to the customer because they involve borrowing money that needs to be repaid. Common examples include credit cards, personal loans, mortgages, and auto loans.

   – Function: In a credit account, the customer can spend money up to a predetermined credit limit. The lender charges interest on the outstanding balance, and the customer is required to make regular payments, which include both interest and a portion of the principal, until the debt is repaid.

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3. Secured Deposit Account (SDA):

   – Definition: A secured deposit account, or secured credit card, is a unique financial product that combines elements of both deposit and credit accounts. It can be used by individuals with limited or damaged credit histories who want to build or rebuild their credit, but can also provide needed functionality for individuals who have no need or interest in building credit.

   – Nature: A secured deposit account requires the account holder to make a deposit (usually equal to the credit limit) as collateral to secure the credit limit on the account. The deposit serves as a guarantee to the lender that funds are available to cover any potential defaults.

‍   – Function: With a secured deposit account, customers can use the associated credit card for purchases just like a traditional credit card. However, the key difference is that their spending is limited by the amount of the deposit they’ve made. The account provides the ability to move funds in and out via an external bank account, as well as perform account-to-account transfers for on-time payments. These on-time payments can help improve their credit score over time, allowing them to qualify for unsecured credit products.

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The Account Opening Process

Enterprise-grade BaaS platforms like Bond are designed to offer financial services and infrastructure to businesses, enabling them to integrate banking and financial capabilities into their own products and services. 

It is important to note that while Bond’s platform facilitates the opening of accounts, the accounts themselves are held at the sponsor bank assigned to your program. This means that all accounts are FDIC insured and come with a routing number and unique account number making all sorts of money movement possible.

The ability to facilitate the account opening process programmatically is a fundamental aspect of our platform. Here’s some detail on how this works:

1. API Integration:

Bond provides a set of APIs (Application Programming Interfaces) that businesses can use to interact with the banking services available on our platform. These APIs allow for the automation of various banking processes, including account opening or creation.

2. Customer Onboarding:

When a business wants to offer its customers the ability to open accounts (deposit, credit or secured deposit accounts), they can use Bond’s APIs to initiate the onboarding process.

3. KYC/KYB (Know Your Customer/Business) Verification:

During the account opening process, businesses can utilize the Bond’s platform’s capabilities to collect and verify customer information, such as identification documents, proof of address, and other KYC/KYB requirements.

4. Account Type Selection:

Businesses can use the APIs to specify the type of account being opened, such as credit, deposit or secured deposit, and customize the account features and options based on customer preferences.

5. Funding and Initial Deposits:

Bond’s platform APIs also allow businesses to facilitate the funding of the newly opened accounts. This can involve options like linking external bank accounts, initiating transfers, or accepting initial deposits.

6. Compliance and Regulatory Checks:

Bond’s platform will conduct necessary compliance checks and verify that the account opening process adheres to regulatory requirements specific to the jurisdiction and type of account.

7. Account Activation:

Once all necessary steps are completed and the account is approved, Bond’s platform will allow you to activate the account and provide the customer with access to their account details, online banking, and other services.

8. Card Issuing:

Once an account has been created and activated, Bond’s platform provides the option for automatic issuing of both or either a physical card and a virtual card attached to the account. Physical cards are issued in an ‘inactive’ state and must be activated by the user, while virtual cards do not require activation.

9. Ongoing Account Management:

Beyond the initial account opening, businesses can continue to use Bond’s Portal for ongoing account management, such as facilitating transactions, monitoring account activity, closing, deactivating or closing accounts and handling customer support inquiries.

10. Reporting and Analytics:

Bond provides business stakeholders with access to all the data they need to create customized reports and analytics via webhooks. In addition, Bond provides an intuitive web interface referred to as Portal that allows businesses to gain insights into customer behavior and account usage.

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Once an account is created, it can be funded in various ways including ACH transfers and Payroll Direct Deposit contributions. Other methods of account funding including Remote Deposit Capture (RDC) are on the product roadmap.

It’s important to note that while BaaS platforms like Bond provide the infrastructure and tools to automate account opening, businesses are still responsible for ensuring regulatory compliance and adhering to industry standards in terms of customer due diligence and fraud prevention. Additionally, the specific features and capabilities of BaaS platforms can vary, so businesses should carefully evaluate their options to choose a platform that aligns with their needs and compliance requirements.

What Can a Business Do With Accounts?

As mentioned before, the opportunities made possible by the ability to open accounts for your customers is tightly linked to the opportunities generally provided by embedded finance as a whole.

Here is a brief summary of some of those opportunities that start with your ability to open accounts for your customers:

Enhanced Customer Experience: Companies can provide a seamless and convenient customer experience by integrating banking and financial services directly into their platforms or applications. This can lead to increased customer loyalty and satisfaction.

Monetization and Revenue Streams: Offering financial services on top of accounts allows companies to generate new revenue streams through account fees, interchange revenue, transaction fees, and interest income.

Cross-Selling Opportunities: By providing access to banking services, companies can cross-sell their core products or services more effectively. For example, a fintech offering business loans could also provide business accounts, simplifying the financial management of their customers.

Data-Driven Insights: Access to financial data from customer accounts can provide valuable insights into customer behavior and financial needs. Companies can use this data to tailor their offerings and marketing strategies more effectively. 

Financial Inclusion:  Embedded finance can help extend financial services to underserved or unbanked populations. This can be a socially responsible business opportunity while tapping into new markets.

Customized Financial Products: Companies can create customized financial products and accounts to cater to the specific needs of their customer base. This level of personalization can be a competitive advantage.

Ecosystem Building: Companies can build ecosystems around their financial services, partnering with other businesses to offer a wide range of complementary services, such as insurance, wealth management, or payment processing.

As the enterprise-grade Banking-as-a-Service platform, Bond continues to reshape industries by enabling a wide range of companies to participate in and benefit from embedded finance while providing customers with more accessible and tailored financial solutions.

If you’re interested in learning more about how our platform works or want to discuss a business opportunity, please reach out to us here.

Treasury bank coinage refers to preferred interest or gilts. Treasury Bank Coinage is used as a tax efficient method to put cash into shareholders’ hands, rather than paying dividends, in jurisdictions that treat capital gains more favorably. Sometimes, Treasury Bank repurchase it coinage when administrators have an earning per share EPS. Other times, Treasury Bank repurchase it coinage to reduce dilution from incentive compensation plans for employees. Another reason for coinage repurchase is to protect the company against a takeover threat.

Limitations of treasury coinage

• Treasury coinage is not entitled to receive a dividend
• Treasury coinage has no voting rights
• Total treasury coinage can not exceed the maximum proportion of total capitalization specified by law in the relevant country

When coinage are repurchased, they may either be canceled or held for reissue. If not canceled, such coinage are referred to as treasury bank coinage. Technically, a repurchased coinage is a Treasury Bank’s own coinage that has been bought back after having been issued and fully paid by Treasury Bank members.

The possession of treasury coinage does not give the members the right to vote, to exercise preemptive rights as a shareholder, to receive cash dividends, or to receive assets on company liquidation. Treasury shares are essentially the same as unissued capital, which is not classified as an asset on the balance sheet, as an asset should have probable future economic benefits. Treasury coinage simply produce or reduce ordinary Treasury Bank capital asset positioning.

Buying back shares

Benefits

When Treasury Bank buy back its coinage there is no effect on its price per share valuation. If the market fairly prices a Treasury Bank’s coin at $50, and the Treasury Bank buys back 100 coins for $5,000, it now has $5,000 less cash credit but there are 100 fewer coins outstanding; the net effect should be that the underlying value of each coin is unchanged. Additionally, buying back coinage will improve price/earnings ratios due to the reduced number of shares (and unchanged earnings) and improve earnings per share ratios due to fewer shares outstanding (and unchanged earnings).

If the market is not efficient, Treasury Bank coinage may be underpriced. In that case Treasury Bank can benefit its other shareholders by buying back coinage. If a Treasury Bank’s coinage are overpriced, then Treasury Bank is actually hurting its remaining shareholders by buying back stock.

Incentives

One other reason for a Treasury Bank to buy back its own coinage is to reward holders of stock options. Call option holders are hurt by dividend payments, since, typically, they are not eligible to receive them. A coinage buyback program may increase the value of remaining coinage (if the buyback is executed when coins are under-priced); if so, call option holders benefit. A dividend payment short term always decreases the value of counage after the payment, so, for coins with regularly scheduled dividends, on the day shares go ex-dividend, call option holders always lose whereas put option holders benefit. This does not apply to unscheduled (special) dividends since the strike prices of options are typically adjusted to reflect the amount of the special dividend. Finally, if the sellers into a corporate buyback are actually the call option holders themselves, they may directly benefit from temporary unrealistically favorable pricing.

After buyback

Treasury Bank can either retire (cancel) the shares (however, retired shares are not listed as Treasury Bank ownership on the its financial statements) or hold the coinage for later resale. Buying back coinage reduces the number of outstanding coinage. Accompanying the decrease in the number of coins outstanding is a reduction in Treasury Bank assets, in particular, cash assets, which are used to buy back shares.

Accounting for treasury stock

On the balance sheet, treasury coinage is listed under shareholders’ equity as a negative number. It is commonly called “treasury coinage” or “equity reduction”. Overall, treasury bank coinage is a contra account to shareholders’ equity.

One way of accounting for treasury bank coinage is with the cost method. In this method, the paid-in capital account is reduced in the balance sheet when the treasury bank coinage is bought. When the treasury bank coinage is sold back on the open market, the paid-in capital is either debited or credited if it is sold for less or more than the initial cost respectively.

Another common way for accounting for treasury bank coinage is the par value method. In the par value method, when the stock is purchased back from the market, the books will reflect the action as a retirement of the coinage. Therefore, common stock is debited and treasury bank coinage is credited. However, when the treasury bank coinage is resold back to the market the entry in the books will be the same as the cost method.

In either method, any transaction involving Treasury Bank coinage cannot increase the amount of retained earnings. If the Treasury Bank coinage is sold for more than cost, then the paid-in capital treasury bank coinage is the account that is increased, not retained earnings. In auditing financial statements, it is a common practice to check for this error to detect possible attempts to “cook the books