โถ๏ธ 1. ๐๐จ๐ซ๐ซ๐๐ฌ๐ฉ๐จ๐ง๐๐๐ง๐ญ ๐๐๐ง๐ค๐ข๐ง๐ ๐ฆ๐จ๐๐๐ฅ
The correspondent bank holds deposits owned by other banks from other countries. This allows banks to access financial services in different jurisdictions.
Under some international card schemes (VISA, Mastercard), participating banks typically rely on correspondent banking for settlement. [1]
โถ๏ธ 2. ๐๐ง๐ญ๐๐ซ๐ฅ๐ข๐ง๐ค๐ข๐ง๐ ๐ฆ๐จ๐๐๐ฅ
This enables PSPs (Payment Service Providers) participating in the payment infrastructure of one country to send and receive payments to/from PSPs participating in another countryโs infrastructure.
Interlinking can be costly and complex from a legal, operational and technical point of view, and therefore has generally only been set up between countries with considerable economic activity between them and/or migration flows. [1]
โถ๏ธ 3. ๐๐ข๐ง๐ ๐ฅ๐ ๐ฉ๐ฅ๐๐ญ๐๐จ๐ซ๐ฆ ๐ฆ๐จ๐๐๐ฅ
PSP of the payer is the same entity (or part of the same group) as the PSP of the payee. This can be the case for proprietary arrangements (e.g. traditional money transfer operators), some international card schemes (i.e. โ3-party modelโ) and e-money schemes, or multinational banks that are present in the payerโs and the payeeโs country. [1]
โถ๏ธ 4. ๐๐๐๐ซ-๐ญ๐จ-๐ฉ๐๐๐ซ ๐ฆ๐จ๐๐๐ฅ
The peer-to-peer model cuts out the financial intermediary PSP and enables the payer to send the payment directly to the payee. For example, sending crypto assets over blockchains falls into this category.
โถ๏ธ ๐๐ก๐๐ฅ๐ฅ๐๐ง๐ ๐๐ฌ ๐จ๐ ๐๐ซ๐จ๐ฌ๐ฌ-๐๐จ๐๐ซ๐๐๐ซ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ
Cross-boarder payments are ๐๐๐ซ๐จ๐ฌ๐ฌ ๐ฃ๐ฎ๐ซ๐ข๐ฌ๐๐ข๐๐ญ๐ข๐จ๐ง๐ฌ. Different countries have different payment regulations, and different payment processing and clearing systems.
We need a way to ๐ข๐ง๐ญ๐๐ซ๐จ๐ฉ among the information flow and fund flow. So thatโs why we have different models to address this issue.
Reference:
[1] Enhancing Cross-border Payments by by FSB
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