Currents of Liquidity Flows Created by the Different Type of Payments: the Case of SPEI

Abstract

SUMMARYIn the present study we examine through network model and transactional analysis the structure of participants' funds assigned to cover their own payments and payments initiated by their clients (third party) in the Mexican Real Time Payment system SPEI 2 . First we build two networks by splitting the number of transactions in two sets of operations, namely payments initiated by third parties and by participants. Our main finding in this regards is that both networks have a core-periphery structure and third party payments help to increase connectivity at the core. From the transactional analysis, we found that third party payments use 47% of the total amount of funds -an indication that participants have strong interest to settle third party payment on real time. Further, in the case of third parties' payments the ratio of external funds vs. funds formed with incoming payments, is 15%-85%, whereas for transactions initiated by participants this ratio is 19%-81%. This finding is an evidence that with third party payments banks are able to increase the overall level of recycling in the system. Copyright © 2015 John Wiley & Sons, Ltd. INTRODUCTIONThe digital age we are living in, which makes many aspects of our lives easier, has de facto increased the complexity of some of our day to day activities. Innovation of products in the markets is making our previously simple choices ever more difficult. From the size of a cup of coffee, to the more technologically advanced tablets, products in the market come in different shapes, versions, and offer overlapping solutions that are not complete substitutes. Innovation in payments is not the exception. Costumers and merchants have access to different methods to perform payment transactions, all meant to make processes easier, but they end up generating more tasks and even more duties for users. Nevertheless, payment services are at the heart of all economic activities. Simplicity in the use of payments has economic value for the society as a whole. Furthermore, the efficient and safe use of currency properly incorporated in the business processes is a crucial factor for overall economic growth and for time saving in a wider scale. In other words, public authorities (specifically central banks), payment services industry practitioners together with academicians have a common interest to achieve broader efficiency though the usage of electronic payment instruments. Nevertheless, nowadays, significant country-specific differences in retail banking regulation and patterns in adopting non-cash payment methods have created a complex multiple player landscape.In order to increase the effectiveness of the payment services industry, a variety of aspects must be studied carefully-from costs and prices of mobile and electronic payment instruments to adequate straight through processing of clearing and settlement of transactions. Payments architectures across the globe are being renewed to become faster, more efficient and more effective. Speed is only one of the factors sought,...