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Paying in 2025. Scenarios for the future of payment systems in Germany.

Technical Report · February 2016

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Paying in
2025
Scenarios for the future of the
payment systems in Germany
Paying in 2025

Scenarios for the future of the

payment systems in Germany
A study conducted by SRC Security Research & Consulting GmbH
with professional support of Z_punkt The Foresight Company
and Fraunhofer INT
Contents
Foreword 04 Executive Summary 06

01 / The network industry payment systems 12

The payments 13 Innovations 16
value chain in payment systems

02 / The dynamics of the environment 20

Fintechs 25 Global internet giants 28
Customer acceptance 31 Authentication procedures 33
Willingness to cooperate 35
03 / Scenarios 38
Diversity at the 40 Added values in the world 50
customer interface of digital banks

Convenience in 60 Traditional banks 70

digital ecosystems on speed

04 / Possible game changers 82

Quantum computers 83 Blockchain 85

Methodology 88 Involved experts 92

Imprint 94
 Foreword
We decided to commission the strategic project
“Paying in 2025“ to improve our understanding
of what the future of payments might look like
and also – naturally – to derive from the results
what we should focus our activities on in order
to contribute efficiently to the progress in the
payments sector.

Currently, an ever growing number of mar-

ket players drives technical innovations and
service innovations in the payment industry. At
04 the same time, regulation of the payment sec-
tor is increasing significantly. Both phenomena
contribute to a fiercer competition. Particularly
for the providers of payments infrastructures,
who need to plan in long-term investment cy-
cles, these developments create uncertainties
regarding the future of payments.

To shed some light on this issue, we have con-

ducted a comprehensive analysis of the trends
and developments which are likely to manifest
over the next ten years and which can already be
identified today. It is not our intention to predict similar studies from other countries has shown
the “one true“ future of payments. Rather, we aim that the results of the study do, in many cases,
to identify those factors that are likely to have the reflect international or global trends; of course,
strongest influence on the future of payments in the detailed analysis there may be aspects
over the next decade. On this basis, we have de- which are very specific for the German market.
veloped various internally consistent scenarios
of the future which give us an idea of what pay- I hope that you will find our assessment of
ments may look like in ten years’ time. Our aim the future helpful for your own analysis on how
was to support decision-makers in the payments to adjust to a changing payment systems world.
sector in the analysis of the opportunities and
challenges of the future payments landscape.
Gerd Cimiotti 05
Naturally, the analysis at hand is based on in- M A N AG I N G D I R E C TO R
formation from the years 2015/2016. Depending S R C S E C U R I T Y R E S E A R C H & C O N S U LT I N G G M B H
on how the identified drivers are going to de-
velop, the scenarios will also change. Although
the scenarios take up a large proportion of this
study, what matters most for the future is to ob-
serve the development of the identified drivers.

In line with our own business focus, it is the

German and European markets that are at the
centre of this study. However, a comparison with
 Executive
The world of electronic payments is changing
at a high speed. New payment systems are es-

Summary
tablished; new market actors enter the playing
field; the expectations of the users increase. The
change of purchasing channels and the digi-
talisation of business processes have a strong
impact on the requirements for payments.
Competition in the payments sector becomes
generally fiercer and more intense, also due to
regulatory interventions which open the market
for new players and innovative technologies.
06
What’s going to happen next? It is not yet
possible to predict a clear direction of develop-
ment. However, fundamental changes are to be
expected: on the level of payment instruments,
of the level of the underlying technical infra-
structure and with regard to the functioning of
the entire ecosystem “payments“. The current
study investigates these changes.
Drivers of future
developments
There are three essential framework conditions
for future developments which we can already
name with great certainty. Instant Payments will
become a reality already in 2017/2018. The digi-
talisation of the purchasing process and the use
of “smart“ end devices which are equipped with
various sensors for the authentication of their
users will proceed. Finally, a strict regulation
will lead to a further decline of return potentials
from interchange fees for payment institutes
and the access to accounts for so-called initia-
tion service providers (PISPs) and account infor-
mation service providers (AISPs) will be opened
further.
These largely secured developments are
contrasted by various uncertainties which may
become important drivers of future develop-
ments. From a larger number of trends and driv-
ers, the study extracts the following key ques-
tions (cf. section 2):
01 / What relevance will fintechs have for pay-
ments in the year 2025?
02 / How far will global internet giants get in- 07
volved in payment transactions by 2025?
03 / How will customer behaviour develop by
the year 2025?
04 / To what extent will easily usable and at the
same time highly secure authentication proce-
dures be available by 2025?
 05 / How will the willingness to cooperate within
the banking industry develop by the year 2025
to establish innovations of payment transactions
successfully in the market?
The future of payments depends to a large
extent on the answers to those questions.
08
Four scenarios for the
year 2025
As the questions raised above do not allow a
clear prognosis, the study uses various scenarios
to approach the future of payment systems – i.e.
consistent, coherent and clearly definable vi-
sions of the future. From the possible answers to
the five key questions arise four scenarios of the
future for the year 2025 (cf. figure 01 and a more
detailed description in chapter 03):
01 / Diversity at the customer interface:
This scenario – the baseline scenario – largely
pursues the developments that can already be
observed in the market today. The number of
services offered to access an account and to
process payments continues to grow, but no in-
novation succeeds in changing the market fun-
damentally over the next ten years.
02 / Added values in the world of digital banks:
The second scenario is mainly shaped by fin-
techs and pure digital banks which redefine
the customer interface and offer added values
to their customers on the basis of information
gathered about payment transactions.
03 / Convenience in digital ecosystems: In this
scenario, the global internet giants succeed in
taking over the interface to the customer and
to integrate the payment processing completely
into the business processes that they support.
04 / Traditional banks on speed: In the fourth
scenario, the banking industry uses its payment
transaction infrastructure to integrate upstream
and downstream business processes into the
processing of payments and to introduce ser-
vice innovations.
These sketchy descriptions make one thing
very clear: the question of which scenario is go-
ing to materialise is closely linked to the question
of who (i.e. which market players) will dominate
the development of innovations in the payments
sector in the future.
It furthermore becomes clear that none of
the identified scenarios has a markedly disrup-
tive character – in terms of a sudden change. All
scenarios could develop in a more or less rapid
evolution.
An analysis of the technologies that are rele-
vant for payment processing has shown that the
vast majority of the identified technology trends
promote all four scenarios almost equally. At the
same time it was found that the ISO 20222-infra-
structure, which the banking industry built in the
context of the SEPA migration, is a very powerful
technical foundation for the integration of com-
plete business processes into the clearing and
settlement process. Apart from the necessary
clearing data, the ISO 20022 infrastructure the-
oretically allows the transmission of any informa- 09
tion in a structured form, end-to-end between
payer and recipient. With the introduction of the
SEPA Cards Clearing (SCC), the German bank-
ing industry already demonstrated this capacity
with the integration of card payment data into
the payment transactions. With this infrastruc-
ture and with the online banking as customer
interface, the banking industry has a set of in-
struments at its disposal which provide the op-
portunity- on the basis of a collective develop-
ment - to digitalise business processes of third
 parties (e.g. invoicing) and integrate them into and could lead to entirely new business mod-
the clearing and settlement process. els in the payments sector. It is not yet possible
to predict the usability of both developments;
however, in theory both technologies have the
potential to change the infrastructure of pay-
ment transactions fundamentally (cf. chapter 4).
Possible game
changers

10 Apart from a large number of technology trends

that support the evolutionary character of the
various scenarios, two technologies were iden-
tified which might act as game changers: the
availability of quantum computers and the use
of blockchain protocols for the implementation
of digital transactions. If quantum computers
reach market maturity this will have far-reaching
consequences for the encryption of informa-
tion in payment transactions (and beyond). The
blockchain basically constitutes a paradigm for
the processing and protection of transactions
The scenarios at a glance

SCENARIO 01 (baseline scenario) SCENARIO 02

Diversity at the customer interface Added values in the world of digital banks
11

SCENARIO 03 SCENARIO 04
Convenience in digital ecosystems Traditional banks on speed

  Figure 01
12
01
The network industry
payment systems
The increasing digitalisation of business processes comes along with
changes in the field of payment transactions. This chapter describes the
key characteristics of the transactions value chain and illustrates the par-
ticular character of innovations within this value chain.

The payments dependent sector of the economy: they form

value chain
Without electronic payment transactions, the
economy would be rendered inoperable. Pay-
ment systems enable economic activities by
guaranteeing reliable and secure transactions.
The necessary infrastructure includes networks,
binding agreements and technical standards.
Payment systems furthermore represent an in-
the basis for the business of a large number of
13
service providers which enable and support the
processing of payment transactions. Which ba-
sic characteristics distinguish the payments in-
dustry?
AC TORS
The payments value chain is primarily focused
on the processing of payments between a payer
 01 / The network industry payment systems
and a recipient, enabled by a payment system
service provider.
On the level of payer and recipient, it is pos-
sible to distinguish between their economic role
in the business process, the respective end de-
vice used for the processing of the transaction
and – usually closely connected to devices used
by the parties – the technical channel used to
process a transaction:
14 • Economic role in the business process: Private
customer, corporate customer or credit insti-
tute?
• End device: Payment card, mobile device
(smart phone) or stationary PC?
• Technical channel: ATM, POS terminal, inter-
net or shop?
Payment system service providers are ei-
ther account-holding credit institutes (merchant
bank or customer bank) or processing service
providers.
The amendment of the Payment Services Di-
rective introduced a new type of processing ser-
vice provider into the value chain: these service
providers can take over essential parts of the
customer interface – via payment initiation ser-
vices and account information service – and can
use the technical infrastructure established by
the account-holding payment services providers
for this purpose.
SUB - PROCESSES
The payments value chain can be subdivided
into seven sub-processes (cf. figure 02): the
initiation (step 01) and authorisation (step 02)
are followed by the clearing (step 03) between
the payer’s and the recipient’s account-holding
service providers, which in turn is followed by
the actual settlement (step 04). Finally, both
 01 / The network industry payment systems

the payer and the recipient are provided with 01 / Payment initiation
information about the completed transaction
(step 05), and the payment equivalent is pro-
vided to the recipient (step 06). In a last step, 02 / Authorisation
complaints are processed if necessary (step 07).

By establishing according agreements 03 / Clearing

and technical standards, the payments sys-
tems make sure that these steps are carried
out securely and reliably between all partici- 04 / Settlement
pants in a payment system. These process-
es together with the abovementioned roles
05 / Information on the 15
represent the payment systems ecosystem.
completed transaction

UPS TRE AM AND DOWNS TRE AM

06 / Provision of
BUSINESS PROCESSES
payment equivalent

Since paying is not an end in itself, the pay-

ment systems ecosystem is embedded in an 07 / Management of complaints
extensive value chain which comprises the busi-
ness processes before and after a payment
transaction. The complete purchasing process   Figure 02
 01 / The network industry payment systems
starts with the customer approach or the cus-
tomer’s search for a product, the comparison of
various offers and the selection of the product
the customer wants to buy; it continues with the
ordering of the product, the delivery and the is-
suing of an invoice; the process furthermore en-
tails the customer service after the purchase and
the management of possible complaints. Impor-
tant services in this context are the appropriate
information of the customer about current of-
fers, the provision of loyalty-information and the
16 assessment of customer information to improve
the customer approach.
Innovations in
payment systems
Innovation is often perceived to be a direct re-
sult of intense competition. However, in the area
of payment systems, this perception is only par-
tially correct.
DRIVEN BY COMPETITION:
INNOVATIONS AT THE CUS TOMER
INTERFACE
Innovations that can be implemented in com-
petition are, as a rule, innovations at the cus-
tomer interface which leave the underlying in-
frastructure unaffected. Accordingly, the most
perceived changes in payments are currently
defined mainly by innovations at the customer
interface – i.e. a more customer-friendly display
of account information or an easier integration
of payments into comprehensive electronic
business processes. These innovations are in-
novative overlay-services on the basis of estab-
lished infrastructures, processes and systems.

ONLY POSSIBLE THROUGH
COOPER ATION: INNOVATIONS OF
THE INFRASTRUCTURE
Innovative overlay services are contrasted with
real infrastructure innovations – for instance
when it comes to the integration of new services
into the payment systems or when defining new
procedures for payment processing. Innovations
of this kind always require a joint effort by all sys-
tem participants. It thus follows that cooperation
is the basis for any genuine function extension or
improvement of the basic infrastructure.
ISO 20 022 CLE ARING
INFR A S TRUC TURE A S BA SIS
FOR NE W SERVICES
The introduction of the ISO 20022 clearing infra-
structure in the context of the SEPA-migration is
an excellent example of this – with the clearing
infrastructure, an important infrastructure foun-
01 / The network industry payment systems
dation was laid to introduce new services in ad-
dition to the processing of credit transfers and
direct debits. These new services use the ability
of this infrastructure to transport data between
payer and recipient. It is a mandatory prerequi-
site for such services that they are supported by
the payment service providers of all payers and
recipients of a payment system. These function
extensions can thus only be implemented in a
cooperative innovation process.
17
INCRE A SING INNOVATION PRESSURE
In the area of payment systems, we should
expect to see an increasing innovation pressure
in the future, for at least two reasons. As pay-
ment transactions are always an integral part of
a comprehensive business process, the increas-
ing digitalisation of business processes means
that – firstly – the payment systems also need to
develop further; for this is the only way to sup-
port the new methods of processing business
 01 / The network industry payment systems

transactions efficiently in an increasingly inter-

linked world. Secondly, regulatory measures in-
tensify the competition and thus stimulate the
innovation pressure. This particularly applies to
the customer interface where banks have to ex-
pect increasing competition in the future, due
to the introduction of account information ser-
vices and payment initiation services. But also
in the field of infrastructure, the introduction of
the so-called instant payments results in new
framework conditions, which will also influence
18 the design of payment systems.
19
20
02
The dynamics of the
environment
The world of payments is transforming – on the level of payment instru-
ments, on the level of the underlying technical infrastructure and with
regard to the way the entire ecosystem “payments” is functioning. This
chapter examines the critical uncertainties of the environment which will
have significant impact on the future of payment systems.

There are three essential framework condi-
tions for future developments which we can al-
ready name with great certainty today. Firstly,
Instant Payments will become a reality already
in 2017/2018. The only question that remains
unanswered today is whether the introduction
of Instant Payments will also be connected to
Real Time Settlement by the year 2025. Sec-
ondly, a number of complementary technology
trends will contribute to the further progress of
the digitalisation of purchasing. This applies to
21
the digitalisation of the purchasing process as
much as to the use of smart end devices that
are equipped with a variety of sensors for the
authentication of their users. Thirdly, strict regu-
lations will further cut the return potential for
payment institutes from interchange fees; the
regulations will furthermore open access to ac-
counts for-so called payment initiation services
and account information services.
 02 / The dynamics of the environment
These largely secured developments are con-
trasted by various critical uncertainties:
01 / What relevance will fintechs have for pay-
ments in the year 2025? Fintechs develop so-
called overlay services (cf. page 20) on basis of
the banking industry infrastructure to imple-
ment innovations at the customer interface.
02 / How far will global internet giants get in-
volved in payment transactions by 2025, to ben-
22 efit from the data resulting from payment trans-
actions?
03 / How will customer behaviour develop by
the year 2025? With regard to the acceptance
of innovations in payments, the sensitivity for
the protection of their own data, but also their
readiness to change account relations to benefit
from innovations.
04 / To what extent will easily usable and at the
same time highly secure authentication proce-
dures by available by 2025?
05 / How will the willingness to cooperate within
the banking industry develop by the year 2025
to establish innovations of payment transactions
successfully in the market?
Depending on the answers to these ques-
tions, the future of payments will take very dif-
ferent shapes (cf. figure 03 and 04 and the de-
tailed description in chapter 03). In this chapter,
we are first going to take a closer look at the five
topics mentioned above.
 02 / The dynamics of the environment

Basic logic of the examined scenarios

SCENARIOS SCENARIO 01 SCENARIO 02 SCENARIO 03 SCENARIO 04

Diversity at the Added values in Convenience Traditional banks on
customer interface the world of digital in digital ecosystems speed
banks

23

CRITICAL Fintechs as Involvement of Customer Highly secure Cooperation

innovation drivers internet giants acceptance of and convenient within the bank-
UNCERTAIN-
innovations authentication ing industry
TIES

SECURE Instant Payments will Access to accounts will Digitalisation of purchasing

FACTORS become a reality be opened procedures will continue

  Figure 03
 02 / The dynamics of the environment

Critical uncertainties and their development

in the scenarios
SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4
Diversity at the Added value Convenience in Traditional
customer interface in the world of digital banks on speed
digital banks ecosystems

01 What relevance will fintechs have by 2025? rather high very high medium medium

24 02
To what extent will global internet giants get
involved in payments by 2025? medium medium very strongly medium

How well will customers accept payment

03a innovations by the year 2025? medium well well well

How sensitive are customers with regard to the

03b protection of their data? medium less sensitive less sensitive sensitive

To what extent are customers willing to change

03c their account relations? medium high degree medium medium

To what extent are easy and highly secure

04 authentication procedures available? medium available available available

How does the willingness to cooperate within high

05 the banking industry develop? medium medium medium willingness

  Figure 04

Fintechs – the new
competitors at the
customer interface
The digitalisation of the society facilitates the en-
try of new competitors into the financial services
market significantly - comparable to the devel-
opments that could previously be observed in
the music and media economy.
02 / The dynamics of the environment
DATA - BA SED BUSINESS MODEL S
The so-called fintechs use new types of business
models which are often based on the utilisation
of data which becomes available during busi-
ness processes and which enable the fintechs
to tap new sources of revenue. The fintechs are
thus able to offer their services at competitive
prices compared to established providers. It is
also regulatory interventions that open the mar-
ket for fintechs. Decisive factors in this context
are the regulatory requirements to open the ac- 25
cess to the payment infrastructure and the es-
tablishment of lower regulatory requirements
for so-called E-money institutes in comparison
to banking licenses. Both factors facilitate the
market entry for new providers.
In many financial metropolises worldwide
so-called accelerator or incubator programmes
have been established. This development also
supports the emergence of internet services
which are supposed to make paying faster, easier
 02 / The dynamics of the environment
and more cost-efficient. Between 2013 and 2014
alone, the worldwide investments into fintech
companies have tripled to a total amount of 12.2
billion US dollars.
AGILE PRODUC T DE VELOPMENT
The strategy of fintechs is usually based on a so-
called “fail quickly” strategy: The development
speed is high; products are often launched very
26 early and partly unfinished. The products are con-
tinuously improved in agile processes on basis of
market feedback. This strategy contrasts with a
classical approach where only mature and com-
prehensively tested products are introduced to
the market. The implementation of “fail quickly”
projects in separate companies reduces the risks
for the providers and enables them to decide
flexibly on the further development of a project
on the basis of its market success.
NE W COMPETITORS
In May 2015, Raconteur, a British publishing
house, identified a number of fintechs (or for-
mer fintechs) as “hottest payment companies”.
These companies mostly facilitate the accept-
ance of online payments for merchants (e.g.
Adyen, Stripe, Razorpay) or they open additional
opportunities for the processing of online pay-
ments (e.g. Gocardless – electronic direct debits,
Venmo – P2P-transfers from the account, Klarna
– paying by invoice, Transferwise – international
credit transfer); or they are companies that see
themselves as payment aggregators (e.g. PayPal
or Apple Pay for In-App-Payments). With Square
and Poynt, the list contains two companies that
are active in face-to-face payments, although
they are primarily focused on the sale of sim-
plified or smart terminals. In November 2014, a
total number of 36 new competitors in the area
of “payments” was identified for the German
market alone.
SERIOUS COMPETITION

Even if only very few fintech projects succeed

in establishing themselves successfully and sus-
tainably in the market, the new competitors can
still have a significant impact on the established
business models of credit institutes. However,
established credit institutes can also seize the
opportunity to develop their own strategies
based on the strengths they have. Banks can, for
example, reinforce the bond of trust between
them and their customers by applying strict se- 27
curity and data protection standards. Further-
more, they can offer customer-friendly bank-
specific applications to their customers and can
provide them with analysis and information tools
which focus on advantages for the customer.
Moreover, developing their own digitalisation
strategies that do not only focus on the custom-
er interface but rather on data quality and the
ability of the backend systems to provide the
necessary data, represents a major lever in the
counter strategy of the banks.
 02 / The dynamics of the environment
28
Global internet giants
as payment services
providers?
Digital mobility with internet-capable end user
devices are the next logical step in the devel-
opment of the World Wide Web. Smart phones
and tablets have conquered the market and are
increasingly used not only for purchases but
also for payments. Alliances with global card
payment systems enable telecommunication
providers and global internet giants to enter
the payment market themselves. With ApplePay
and AndroidPay, the first two system solutions
were introduced into the market at global level.
The changing consumer behaviour with a clear
trend towards e-commerce promotes the mar-
ket acceptance of smart phone-based solutions.
S TR ATEGIES OF THE INTERNET GIANTS
The sales channel via mobile end devices is sig-
nificantly determined by telecommunications
providers, end device manufacturers (e.g. Apple
and Samsung) and operating system manufac-
turers (e.g. Google). The global internet giants
are specialised in adjusting their service offers
to the needs of internet users and continuously
extend their service portfolio. Their financial re-
sources allow them to invest into different ser-

vice innovations and to test them in the market.
This leads to extremely agile innovation politics
and relegates traditional market participants to
comparatively passive roles.
The control over end devices - and thus over
an essential end of the value chain – together
with a financial strength that allows investments
into service innovations turns internet giants
into serious competitors for traditional banks –at
least when it comes to paying with smart phones
from within applications.
BUSINESS FIELD PAYMENT
TR ANSAC TIONS
Despite decreasing income, payment transac-
tions are still an interesting field of business, par-
ticularly for internet giants. Their business models
are essentially based on covering as many areas
of their customers’ lives as possible. Integrating
payments into their service portfolio thus only
02 / The dynamics of the environment
follows logically: they can support their custom-
ers in the selection of products and services and
integrate the entire purchasing process.
So-called person-to-person payments rep-
resent a particularly attractive gateway into the
world of payments for the internet giants. The
transfer of a - usually small – amount of money
between two private individuals is at the centre
of this service. This business transfer in itself does
not promise direct return; however, it has the po-
tential of generating significant customer contact 29
and of promoting the establishment of new pay-
ment interfaces.
Internet giants always strive to integrate pay-
ments as closely as possible into their own eco-
system. Their strategies are often designed to use
the data which becomes available in the context
of payments for a targeted approach to their cus-
tomer groups; this shall increase customer loyalty.
Providers of products and services - among oth-
ers also financial services – are granted access to
 02 / The dynamics of the environment

the ecosystem of the internet giant, and thus to

the giant’s customers, against payment of a fee.

Compared to the new competitors, banks

have the advantage of greater experience in se-
curing payment transactions and in the protec-
tion of personal data. Additionally, people gen-
erally place greater trust in banks than in their
competitors. However, it is often the convenience
of a transaction that is decisive from a customer’s
perspective. Combining convenient processing
30 of transactions with a high level of security is thus
a crucial factor for the success of the newly devel-
oping payment markets which will be based on
the use of mobile end devices.

Customer acceptance of
payment innovations
In all market sectors, the question of how fast an
innovation can prevail in the market depends on
the customers’ willingness to accept changes.
In the area of payment systems, the customer’s
02 / The dynamics of the environment
willingness to change must be considered to be
comparatively low according to current studies.
NO ABRUPT CHANGE OF PAYMENT
BEHAVIOUR EXPECTED
A study conducted by Deutschen Bundesbank
in March 2015 comes to the following conclu-
sions:
• Cash is still the most commonly used means of 31
payment for purchases.
• Innovative payment procedures become more
widely known; however, they are still rarely used.
• Many people stick with to their chosen pay-
ment behaviour.
• Abrupt changes of payment behaviour are not
to be expected, since payment habits currently
change very slowly.
 02 / The dynamics of the environment
A study on the payment behaviour with re-
gard to “girocard” conducted by GfK on be-
half of EURO Kartensysteme confirms these
results. The GfK-study, which was conducted
in 2014/2015, stipulates that half of the German
population does not have any preferences with
regard to cash payments or card-based pay-
ments. 88% of people living in Germany, i.e. the
vast majority, has no intention of changing the
use of their cards. Studies from other countries
also confirm that people change change their
32 habits only very slowly when it comes to the
means of payment.
CHANGING PAYMENT BEHAVIOUR OF
YOUNGER TARGET GROUPS
At the same time, many studies also make it
clear that the payment behaviour of younger tar-
get groups is different from that of older target
groups. The study of Bundesbank cited above
came to the result that the growing internet
turnover and the growing up of a generation
which is enthusiastic about technology are two
factors that contribute to a general change of
payment behaviour.
In a nutshell: The usage behaviour with regard
to payments is unlikely to change in the short term.
Even product improvements - for instance con-
tactless payments or the possibility to use smart
phones for payments – will only lead to a change
in customer behaviour if considerable efforts are
invested into customer communications. However,
the generation change will certainly lead to a high-
er acceptance of innovative payment methods in
the long-term.

Market requirements
for authentication
procedures
The market requirements for authentication
procedures are substantially determined by two
trends: security and convenience.
02 / The dynamics of the environment
SECURIT Y
Payment services are only economical if they pro-
vide a high level of technical security. High securi-
ty standards are also desirable from a customer’s
perspective. A broadly communicated and pub-
licly accepted high security standard can even
become a market-effective differentiating factor
which promotes acceptance of an authentication
procedure in the market.
Regulators and customers alike therefore de- 33
mand the use of procedures that provide a high
level of security. In a circular issued on 5 May
2015, the Federal Financial Supervisory Authority
informed about the Minimum Requirements for
the Security of Internet Payments (German ab-
breviation: MaSI). Since 5 November 2015, these
minimum requirements have to be implemented
by all credit institutes. Apart from a number of
formal requirements regarding risk management,
the circular also defines that all customer must
be provided with a so-called “strong authen-
 02 / The dynamics of the environment
tication” method for the online access to their
account. Even though it is possible to waive the
obligation for strong authentication for certain
transaction based on a risk analysis, all customers
have to be provided with the means for strong
authentication.
CONVENIENCE
Authentication procedures can only be estab-
34 lished successfully in the market if the custom-
ers accept and use them. From a customer’s
perspective, convenience is a decisive factor for
acceptance.
However, the “convenience” of a specific
procedure is not an objectively measurable vari-
able. Whether an authentication mechanism is
considered to be convenient strongly depends
on how familiar a user is with the authentication
mechanism. A standardisation of the authenti-
cation procedures of various applications can
therefore increase customer acceptance signifi-
cantly.
With procedures that require a frequent au-
thentication of the customer (card-based pay-
ments, online-banking-systems) and the high
degree of trust that customers place in credit
institutes, they are generally well-positioned to
establish new authentication procedures suc-
cessfully in the market.
With the launch of Apple Pay, a new aspect
for the further development of authentication
procedures arose: the apparently high degree
of market acceptance of biometrical proce-
dures. At least if they are convenient, i.e. if the
authentication is integrated as smoothly as pos-
sible into the transaction processing.
 02 / The dynamics of the environment

the technical infrastructures of the payments

sector and the so-called overlay services which
are built on top of this infrastructure.

The latter make the infrastructure usable for

all participants of the payment industry. They are
usually developed in competition of the various
service providers and are a differentiating factor.
Innovations in the field of overlay services can
be employed individually by the users of an in-
frastructure, but are naturally limited by the pos-
sibilities offered by the underlying infrastructure. 35
In contrast to that, the technical infrastructure
Willingness to itself is always based on cooperatively devel-
oped standards, due to the network character of
cooperate within the the payment systems industry. This makes one

banking industry thing very clear: innovations in the infrastructure

To understand the network industry “payment
systems”, it is essential to differentiate between
are only possible through cooperation within
the industry. The willingness of the banking in-
dustry to cooperate with regard to the further
development of the payments infrastructure is
hence a decisive factor for the long-term market
 02 / The dynamics of the environment
position of the banking industry as the operator
of the payments infrastructure.
By maintaining an effective platform man-
agement for the targeted further development
of the payments infrastructure, the banking in-
dustry itself can therefore strongly influence the
emergence of payment innovations. The Swed-
ish banking industry, for instance, successfully
established a Near Real Time Settlement sys-
tem for retail payments. On this basis, new ser-
36 vices like Swish for person-to-person payments
were introduced. On the whole, the experiences
made in Europe so far indicate that initiative of
this kind can only be implemented successfully
if they are supported by the entire banking in-
dustry of a country. In contrast to that, individu-
al initiatives with similar contents which are not
interoperable within one country are generally
less accepted in the market place.
A consortium of Australian banks is conduct-
ing what is considered one of the currently most
ambitious projects for the further development
of the payments infrastructure. On 2 December
2014, the banks officially announced that they
commissioned SWIFT to develop a new pay-
ments platform for Australia. This new payments
platform (short: NPP) shall be put into operation
in 2017 and it is supposed to offer a genuine real
time-processing for retail payments.
THE ISO 20 022 INFR A S TRUC TURE
Among the most important infrastructure plat-
forms within the German banking industry is,
on the one hand, the ISO 20022 infrastructure
which was built in the context of the SEPA mi-
gration. In theory, this infrastructure allows the
transmission of any data between a payer and a
recipient in a structured form. The SEPA Cards
Clearing, which was introduced in 2015/2016, is
a first example of such an infrastructure which
enables the clearing of card payments on the
basis of the ISO 20022 infrastructure.
 Another important infrastructure platform of
the banking industry are the chipcards issued by
the banking industry. The chipcards are a pow-
erful instrument for the identification of custom-
ers and for the protection of transaction data.
With the current contactless interface extension
of the chipcard, the “secure elements” issued
by credit institutes are equipped with additional
communication options which make them more
independent of conventional card readers.

37
38
03
Four scenarios for the future of
payment systems in Germany
How is the fintech market going to develop? Which strategies do global
internet giants follow in the area of payments? Are the customers ready to
accept fundamental innovations in payment transactions? To what extent
are easy and secure authentication procedures available? What about the
willingness to cooperate within the banking industry to create innovations
together?

From the perspective of 2016, it is not possible
to give a clear answer to these questions about
the future. This chapter therefore tries to ap-
proach the above questions by giving various
possible answers in the form of four alternative
coherent and strictly delimited future scenarios
(cf. figure 05 at the end of this chapter).
Scenario 01 largely carries forward the devel-
opments which can already be observed today
towards more diversity at the customer inter-
face. For this reason this scenario can be con-
sidered the baseline scenario (without any sur- 39
prises). In the next three scenarios, one crucial
group of actors at a time succeeds in achieving a
dominant role in the payments business: the fin-
techs, which develop further into digital banks
(scenario 02), the digital ecosystems of the
global internet giants (scenario 03) or the classic
credit institutes, who assert themselves against
the new competition with innovation campaigns
(scenario 04).
Scenario 01

Diversity at the
customer
interface
 03 / Four scenarios for the future of payment systems in Germany

The payments landscape is characterised by constant change and creative

destruction. Competition is fierce and no single solution is able to domi-
nate the market permanently. The customers choose from a large number
42
of payment options according to their current preference.

In 2025, the dominance of individual payment
schemes will be a thing of the past. Banks, fin-
techs and the ecosystems orchestrated by the
global internet giants share a highly competitive
market. Many fintechs have an extremely short
lifespan due to the predatory competition and
the innovative competition. Banks run the risk
of being reduced to account-holding and the
clearing and settlement of transactions, while
the competition increasingly takes over the cus-
tomer interface and the account information
services.
 03 / Four scenarios for the future of payment systems in Germany

Diversity at the customer interface: profile

Venture capital investment boom – predominantly of non-banks –

into fintechs offering payment services; regulator removes competi-
Central drivers tion obstacles and opens the account interface.

The fintech boom continues with high venture capital investments;

Role of the fintechs most fintech actors are short-lived.

Increasingly reduced to account management and transaction 43

Role of traditional banks processing.

Fierce competition for the customer interface due to growing

number of relevant providers and new solutions being developed
Competitive situation all the time.

Central
customer requirements Manifold needs, search for customised individual solutions.

Predominant Diversity of all kinds of payment methods, short lifespan of many

payment procedures payment innovations.
 03 / Four scenarios for the future of payment systems in Germany
2015 -2025: WHAT BROUGHT ABOUT
THIS DE VELOPMENT?
Decisive factors for the development in the
years 2015 to 2025 were the continuous invest-
ment boom in the area of fintechs and the open-
ing of the customer interface, initiated by the
European Union:
• Global, but particularly European fintechs,
were provided with risk capital on a large scale.
44 New products are entering the market continu-
ously. The course for the fintech boom has thus
been determined. However, most offers still lack
a solid business case in 2025.
• In conformity with the requirements defined by
Brussels, the banks have opened the access for
overlay services via the API interface. New pay-
ment initiation services and account information
services emerged, they are well accepted by the
customers.
The interaction of both factors has produced
a large variety of payment options which were
established successfully in the market. The banks
react to the growing competition by expanding
their own payment offers. However, these offers
do not offer any particular additional benefit
and are integrated into the apps of third par-
ties who thus take over the customer interface.
Hence, the banks are less and less successful in
maintaining customer loyalty via the payment
interface.
2025: WHERE DO THE AC TORS S TAN D?
Competition for the customer interface is ex-
tremely fierce in 2025. A countless number of
national and global fintechs act as innovation
engine, particularly in the area of overlay servic-
es. The market is strongly fragmented. So far, no
dominant volume provider was able to prevail
in the market. The half-life period of the numer-
ous payment initiation services and account in-

formation services is short. Banks were forced
to largely abandon the payment business at the
customer interface. The margins in this area are
small anyway. The credit institutes focus their ef-
forts on account management and on clearing
and settlement services. But the Fintechs’ bal-
ance sheets also present mixed pictures. Many
providers who created sensations with their in-
novative concepts in 2020 have already disap-
peared completely from the market by 2025.
Only very few offers and business models are
profitable in the long-term. As soon as a pay-
ment system reaches a larger volume in the
market, it must meet comprehensive obligations
and regulations. This leads to higher costs per
unit.
Consumers in 2025 are demanding, indi-
vidualistic and have a digital lifestyle. Digital as-
sistance systems take over everyday tasks and
make life easier. End customers want payment
procedures that are tailored to their needs. De-
pending on the individual preference regarding
03 / Four scenarios for the future of payment systems in Germany
convenience, security, data protection, costs
etc. payment procedures are selected in the
specific situation. Customer loyalty is low.
In the area of payment systems, retailers are
driven by demands. Despite the short lifespan
of many payment systems, retailers mostly sup-
port a wide range of payment procedures– at
the point-of-sale, online and for mobile devices.
Everything is subordinated to one goal: pre-
vent at any cost that purchases are cancelled
because a payment systems is not supported. 45
Many retailers try to win the loyalty of regular
customers by providing their own apps which
integrate payment options via in-app payments.
 03 / Four scenarios for the future of payment systems in Germany

Use case: wallet in the

sports armband

Jens, in his mid-twenties and sports student is,

once again, at the sports shop to try the latest
shoes. The shop assistant shows him the lat-
est models and Jens tries on shoes in different
sizes. Jens is convinced: he needs these stylish
46 shoes of the “Wired Running Gear“ collection,
even though they are quite expensive.... After
the purchase, he receives a push message on his
sports armband with access to after sales ser-
vices – as well as the promised app that comes
with his new shoes.

PAYMENT PROCEDURE
Jens pays directly at the shop assistant’s mobile
terminal.
His wallet with payment function is integrated
into his sports armband which he wears day and
night.
The self-check-out at the central cash desk area
would have been an alternative option. The cash
register systems accept cash, many payment
cards and a large number of wallet systems with
different standards.
Jens receives the payment receipt by email.
03 / Four scenarios for the future of payment systems in Germany
TECHNOLOGY A SPEC TS
The wallet is connected to the mobile or station-
ary terminal via NFC.
Jens is authenticated for the payment process
by means of a fingerprint scan on his own arm-
band.
Alternatively, he can use his mobile phone for
payment and use not only fingerprints but also 47
face or voice recognition as means of authenti-
cation.
He chooses the payment service provider in the
respective app.
The payment process is convenient and secured
through modern cryptology.
 03 / Four scenarios for the future of payment systems in Germany

Use case: paying via a

smart TV

Carlos is retired and walking has become harder

for him these days - it never really was his thing
anyway. He has got used to his smart TV which
he has owned for a few years now. It is really
easy to use, entering data is convenient and it
48 works almost without mistakes.

Carlos‘ smart TV is his window to the world;

he uses it regularly to order food or other every-
day products. Today he needs some basic foods
and the tasty fish soup for which the timer is au-
tomatically set once you put it into the micro-
wave.

PAYMENT PROCEDURE
Carlos orders and pays directly via his smart TV.
He has a subscription, including direct debit
mandate, with the food delivery service. That
is a preferred standard payment procedure if
there is a relationship of thrust. Billing and other
methods are also possible.
He authorises the order with his fingerprint on
his remote control.
The account management app on his smart TV
automatically updates his housekeeping book
and warns him in case of account overdrafts or
irregularities.
03 / Four scenarios for the future of payment systems in Germany
TECHNOLOGY A SPEC TS
Authentication for the payment procedure is
conducted via a fingerprint scanner on the re-
mote control of the smart TV.
The smart TV is furthermore equipped with a
camera system to enable video phone calls with
his grandson.
If the coordination and skills of his hands should 49
decrease further, Carlos has an alternative op-
tion to authorise payments: he can look directly
into the camera and say “initiate payment pro-
cedure“. Face and voice are authenticated by
the smart TV.
Scenario 02

Added values in
the world of
digital banks
 03 / Four scenarios for the future of payment systems in Germany

From a fintech-start up to a digital bank: a handful of young companies

share the major part of the market with several successful direct banks.
With their flexible digital account information services, the new digital
banks offer solutions developed thoroughly from a customer’s perspective.

52
Thanks to their convincing added value offers,
certain fintechs that cooperate with white label
banks grow significantly in the period from 2015
to 2025. The same applies to digital banks that
place their bets on innovative fintech solutions.
Customers move their salary accounts to digi-
tal banks and direct banks on a massive scale.
These banks offer solutions that are conceptual-
ised thoroughly from a customer’s perspective.
Particularly in the area of account information
services, these solutions are very convincing;
the same applies to offers that are based on an
insight into the customers’ behaviour. Financial
services and other services are digitalised quick-
ly and extensively. Multi-channel banks tend to
have a competitive disadvantage compared to
pure digital banks due to their cost structures.
Payment initiation services are hardy affected at
all by this development.
 03 / Four scenarios for the future of payment systems in Germany

Added values in the world of digital banks: profile

Customers are willing to change. Changing accounts has been simpli-

Central drivers fied. Easy and secure online identification procedures are available.

Top fintech companies bundle their offers and cooperate with white
Role of the fintechs label banks and direct banks.

Role of traditional banks Push excellence in services requiring intensive consulting.

53

Competitive situation Increasing competition due to new competitors of relevant size.

Central customer Transparent real time information on all account movements and
requirements suitable financing offers without effort.

Transfer-based mobile payment apps partially replace cards. Pay-

Predominant payment ment initiation can be dominated by payment initiation services and
procedures card payment schemes.
 03 / Four scenarios for the future of payment systems in Germany
2015 -2025: WHAT BROUGHT ABOUT
THIS DE VELOPMENT?
Various factors contributed to the rise of the
digital banks by 2025. The customers’ willing-
ness to change their account relations proved
to be high; at the same time, obstacles for ac-
count changes were removed. Online identifica-
tion methods strongly simplified the registration
with new providers; account switching services
enable a smooth change of the salary accounts.
54 The advantage of a branch network has been
strongly relativised. Customers benefit from e-
services and use branches less and less.
Digital banks are able to score at the custom-
er interface without having any branches. They
use advanced algorithms to predict consumer
behaviour. On this basis, they offer real-time and
low-threshold added value services tailored to
the customers’ needs. The customers can con-
figure the payment services and added value of-
fers individually and conveniently.
Who are these new, market-dominating digi-
tal banks of the year 2025? On the one hand,
they are institutes that emerged from the coop-
eration of top-fintechs and white-label-banks.
On the other hand they are direct banks (includ-
ing investment banks and automobile banks)
that have extended their service offers and po-
sitioned themselves as digital banks.
2025: WHERE DO THE AC TORS S TAN D?
In 2025, digital banks are already holding 50
million salary accounts. In essence, their busi-
ness models are based largely on value added
services. Account information services and mo-
bile services deepen their understanding of the
customers’ needs. They detect customer needs
with algorithmic intelligence and communicate
context-related offers in real time. They are thus
able to offer pro-active solutions in the account
information services, solutions that are con-
venient, cheap and always available. However,
 03 / Four scenarios for the future of payment systems in Germany

fundamentally new payment initiation services tensive personal consulting services move their
could not be established successfully in the mar- accounts to digital banks. The traditional banks
ket. are trying to catch up by building digital spin-
off banks; however, the necessary restructuring
The prototypical customer of the year 2025 of their branch system restricts their room for
wants a bank that thinks and acts to make the manoeuver.
customer’s life easier. The customers want to
decide on their individual preferences for pay-
ments and account services. Digital banks sup-
port the customers in a large number of recur-
ring daily tasks, e.g. matching of money flows
and invoices, documents for the tax authorities, 55
warnings in case of irregular account move-
ments. The administration of financial matters -
inconvenient from a customer’s point of view – is
highly simplified.

The core business of traditional banks are

services that are complex and require intense
consulting. Traditional banks see themselves
as personal finance managers with a high cus-
tomer-orientation across all customer contact
channels. Many customers who do not need ex-
 03 / Four scenarios for the future of payment systems in Germany

Use case: intelligent

housekeeping book

Ms Gutierres loves to go shopping in stores. She

prefers shops with smart trolleys that recognise
her via her smart phone. If she puts anything
into her trolley, the products are identified and
her banking app creates a provisional invoice
56 which is continuously updated. The digital bank-
ing app additionally provides further data in real
time: when was the last time she bought a prod-
uct of this category and at which price? Further-
more, the remaining housekeeping budget and
the spending of a comparison group are avail-
able at any time.

PAYMENT PROCEDURE
After she has selected all products she wants to
buy, Ms Gutierres goes through the self-check-
out zone. There is no more need for queuing.
The cash register system reads the product data
from the banking app and states the total price
of the purchase price. All Ms Gutierres has to do
know is to confirm the payment.
The more often Ms Gutierres goes shopping at
a specific store, the higher the discount she gets
at the cash desk.
The receipts are provided electronically and are
transferred into the virtual housekeeping book
by her bank. The receipts are sorted according
to category.
03 / Four scenarios for the future of payment systems in Germany
TECHNOLOGY A SPEC TS
The product recognition in the trolley is imple-
mented via RFID-Technology.
The data is transferred via Bluetooth or NFC to
the customer‘s mobile end device.
For payment, either the card data is read from
the customer’s e-wallet stored on her mobile
phone (via NFC), or biometrical face recognition 57
of is used in combination with a direct debit or
alternative payment procedure. After all, there
are a lot of payment procedures which can be
used.
The banks analyse the consumer behaviour of
their customers by means of their added value
services; on this basis, they agree on discount
arrangements with the retailers.
 03 / Four scenarios for the future of payment systems in Germany

Use case: shopping app

of a digital bank

Kerstin comes home late from work and still

needs to buy food. Before starting her car, she
enters her shopping list into the shopping app
of her digital bank. She thinks that the augmen-
ted reality windscreen is so useful for this. Pro-
58 ducts that she buys regularly are stored so that
the list is completed in the blink of an eye.

PAYMENT PROCEDURE
The payment function is integrated into the su-
permarket app and offers various payment op-
tions.
In accordance with her preferences, the digital
bank recommends that Kirsten should use “Di-
gibank Pay“ as payment method, a kind of se-
cure and comfortable credit transfer from the
online account. Identification via fingerprint only
takes one second.
Complaints are also very easy to handle in the
digital bank shopping app. Despite electronic
verification, something can still go wrong some-
times with the express service for outgoing
goods or during deliveries. The shopping insur-
ance of the digital banks handles damages and
takes care of a quick subsequent delivery.
03 / Four scenarios for the future of payment systems in Germany
TECHNOLOGY A SPEC TS
Authentication procedures are based on finger-
prints or face recognition (frontal camera) via the
smart phone.
The smart phone itself serves as a token.
The account data and the access to the online
banking services are stored on the smart phone;
paying by means of the customer‘s own digital 59
end device works very quickly.
The communication is encrypted with state-of-
the-art procedures (elliptic curve cryptography).
Scenario 03

Convenience
in digital
ecosystems
 03 / Four scenarios for the future of payment systems in Germany

The global internet giants have a tight hold on the world of payment
systems. Their ecosystem reflects comprehensively the business pro-
cesses for B2B and B2C – including the payment services. The consumers
benefit from comfortable purchasing and paying services. The integrated
payment systems of the digital ecosystems are also popular in stationary
62 shops.

In the years up to 2025, the payment and wal-
let systems of the digital ecosystems achieve a
breakthrough. The internet giants exploit their
market power in the online business and their
direct access to digital end devices, primar-
ily smart phones and tablet. The customers fi-
nally enjoy comfortable shopping and payment
services. The banks lose the direct access to
customers little by little. They have to make an
effort to get their payment systems into the wal-
lets of the global tech-giants to prevent being
left completely behind when it comes to pay-
ments.
 03 / Four scenarios for the future of payment systems in Germany

Convenience in digital ecosystems: profile

The digital ecosystems have a very powerful market position in online

retailing. Providers of devices and/or operating systems integrate pay-
Central drivers ment functions. Mobile payments dominate at POS terminals.

Role of the fintechs Digital ecosystems dominate fintechs.

63
Role of traditional banks Focus on account management and interbank infrastructure.

High market power of digital ecosystems; other actors are being

Competitive situation pushed out of the payments market.

Central customer Convenience: easy, quick and cheap shopping and paying; benefit-
requirements ing from loyalty programmes and individual recommendations.

Paying with proprietary ecosystem wallets via smart phones across

Predominant payment all channels. Global card payments systems cooperate with the tech
procedures giants and dominate the payment processing.
 03 / Four scenarios for the future of payment systems in Germany
2015 -2025: WHAT BROUGHT ABOUT
THIS DE VELOPMENT?
By 2025, the global internet giants have seized
the opportunity to integrate payments into their
digital ecosystem. Two factors played a crucial
role: on the one hand, the large tech-companies
were able to extend their already existing plat-
forms with millions of users in the online and mo-
bile segment to include payments. On the other
hand, they succeeded in using the direct access
64 to the customers’ end devices and to establish
smart phones and tablets as payment interfaces
par excellence.
Smart devices proved to be success drivers
in the radical change of the payment world. The
internet giants used existing payment solutions
and developed them further in new and innova-
tive ways. They were also able to win the up-
per hand because their payment applications
are often pre-installed on the customers‘ smart
devices. And the fintechs, which still looked like
emerging success stories in 2015, also offer little
resistance.
2025: WHERE DO THE AC TORS S TAN D?
The customers appreciate that the large eco-
systems are able to satisfy (almost) all every-
day needs (“One Stop Shopping”) by 2025.
The smart end devices have thus become the
“remote control” for the daily life. Against this
backdrop it is understandable that the custom-
ers also wish to rely on digital platform provid-
ers when it comes to payments. The services
introduced by the internet giants transfer the
comfort that customers are used to from on-
line shopping to the payment process. The
customers loyalty to “their” digital ecosystem
is high, also thanks to the targeted and indi-
vidual product recommendations. Since pay-
ing is closely linked to other daily tasks, the
change hurdle is high.
 03 / Four scenarios for the future of payment systems in Germany

The over-the-counter trade proved to be an are forced to focus on account management

important gateway which it helped the digital and interbank-infrastructures. The credit insti-
ecosystems to access the world of payments. tutes have lost direct access to the custom-
Payments based on near field communication ers and thus also relevant knowledge about
technologies have conquered the market at customer needs. To remain at least involved in
high speed. In 2017, market penetration was transactions they have to fight to be listed in
at 50 percent, in 2020 already at ninety per- the e-wallets of the tech-giants.
cent. E-wallets integrated into smart end de-
vices are becoming the standard at a similar
pace. In 2025, thirty percent of payments at
points-of-sale (POS) are already conducted via
e-wallets. Even more than that: smart phones 65
and tablets are rapidly becoming the universal
payment instruments: at the POS, online and
mobile.

The fintech boom has almost come to a

standstill, since the large tech-giants have al-
most entirely absorbed the dynamics originat-
ing from the fintechs.

Traditional banks have been reduced to the

role of reliable infrastructure managers. They
 03 / Four scenarios for the future of payment systems in Germany

Use case: digital pay

2025

Ms Fritz is a business woman and a frequent

traveller. Her business smart phone is equipped
with the digital payment function offered by the
manufacturer‘s ecosystem. She furthermore in-
stalled a large number of apps for services she
66 requires regularly, e.g. the app of a hotel chain,
a taxi booking app etc. What matters to her is
to receive all payment receipts directly and im-
mediately in electronic form. This allows her to
complete her travel expense report with just a
few clicks.
 03 / Four scenarios for the future of payment systems in Germany

PAYMENT PROCEDURE TECHNOLOGY A SPEC TS

Ms Fritz registers her rented car at the car park
via the NFC of her smart phone. The system links
the payment data to the car‘s registration plate.
When she leaves the car park with the car, the
invoice is automatically issued and delivered.
Initiation of payment procedure via NFC.
Authentication by means of fingerprint on the
smart phone.

She books taxis via the iTaxiApp and pays “in-

app“, using the stored data, via her payment
card, direct debit or Paypal. She agreed to the 67
use of her data beforehand.

As soon as Ms Fritz switches off her shared car

with the “return“-button, the trip data is sent to
the car sharing provider; the car sharing provi-
der automatically debits her ApplePay-account.

She pays her coffee via NFC without PIN or with

fingerprint for small amounts.
 03 / Four scenarios for the future of payment systems in Germany

Use case: Amazon

Money 2025

As self-employed masseur, Simon Marcow-

icz likes to keep track of things. Establishing
his own practice requires a lot of time, money
and patience. He prefers to shop online and he
appreciates having an easy overview of all his
68 accounts, something that Amazon Money has
been offering for a while now. So he knows ex-
actly how much money he‘s currently able to
spend even before he buys something online.
For big purchases, he uses the consumer credit
“at the touch of a button“. Amazon determines
the individual conditions in real time.
 03 / Four scenarios for the future of payment systems in Germany

PAYMENT PROCEDURE T ECH N O LO GY A S PEC T S

Simon wants to buy a new 80’’-Smart-TV from Real time credit assessment based on the ac-
Amazon. count history.

Since he is an Amazon-Money costumer, he is Automatic generation of individual financial

able to see his account balances and the algo- products.
rithmically calculated forecast of all his accounts
during the purchasing process on request.

For the purchase of the new TV, he decides on 69

the “smart financing“ option: the platform sug-
gests an individual instalment credit based on
his financial profile; the credit is offered by vari-
ous financial partners of Amazon.

With the 1-Click buy option, the financing con-

tract is closed automatically.
Scenario 04

Traditional
banks
on speed
 03 / Four scenarios for the future of payment systems in Germany

Traditional banks understand payments as crucial customer contact point

and advance this point. They use the open goal of instant payments as an
“innovation catalyst“ and develop modern payment and account holding
services; compared to new providers, the banks benefit from the existing
bond of trust between them and their customers. The banks thus succeed
in strengthening their dominance in the payments market.
72

The customers‘ increasing willingness to change Using customer-focused and security-oriented

service providers, growing security require-
ments for financial services and the introduc-
tion of instant payments: in 2015/2016 the banks
feel a growing pressure for innovation. But the
banking industry fires up the innovation engine.
innovations as a lever, the banks revolutionise
their business and invent new payments and ac-
count holding services. By 2025 the banks suc-
ceed in consolidating their market position.
 03 / Four scenarios for the future of payment systems in Germany

Traditional banks on speed: profile

Increasing security requirements defined by the regulator; custom-

er-focused innovations developed by banks; acceleration of compe-
tition driven by the regulator; customers discover banking as field of
Central drivers optimisation and are very willing to switch their service providers.

Role of the fintechs Banks take over important fintech innovations.

Are able to hold their ground thanks to cooperative and custo-

73
Role of traditional banks mer-focused innovations.

Obstacles for account changes are removed, competition becomes

fiercer; banks secure their market share and impede the market
Competitive situation entry of new competitors.

Central customer Security, as long as this security does not interfere with convenience
requirements and easy use.

Card-based payment systems dominate at POS terminals. For online

Predominant payment and mobile retail payments, transfer-based payment methods offered
procedures by banks have been established successfully.
 03 / Four scenarios for the future of payment systems in Germany
2015 -2025: WHAT BROUGHT ABOUT
THIS DE VELOPMENT?
A comparison of the payments landscapes in the
years 2015/16 and 2025 makes it clear: the credit
institutes have managed to turn things around
by taking decisive action. Around 2015/2016 the
situation was difficult from the banks‘ perspec-
tive: the danger of a substantial loss of custom-
ers could no longer be denied. Bank customers
complained about a lack of appreciation and
74 discovered banking as a field of optimisation.
The regulator tightened security requirements,
abolished interchange fees and paved the way
for customer migration.
The traditional banks used the imminent cri-
sis as an opportunity. The prospect of being re-
duced to an infrastructure manager in the new
world of payments released energies. Support-
ed by all credit institutes, a comprehensive inno-
vation campaign was started under the slogan:
“Re-thinking the Banking Business“.
The banks developed customer-friendly
payment innovations on the basis of Instant
Payments and their ISO 20022 clearing infra-
structure. Using the clearing infrastructure as
“massaging channel“ for valuable transactions
dispensed with the need for intermediaries and
made bank accounts more attractive for cus-
tomers.
2025: WHERE DO THE AC TORS S TAN D?
Around 2025 it becomes evident: the banks
have defended their positon in the payments
business. With their customer-focused innova-
tion campaign they succeeded in staying visible
at the customer interface. Their highly perfor-
mant, modern and customer-friendly account
holding and payment services are supported
by cross-application authentication procedures.
The product “Electronic Bill Presentment and
Payment” (EBPP) opens new market segments
for the payment systems of the banking indus-
 03 / Four scenarios for the future of payment systems in Germany

try. The instant processing of payments makes

intermediaries unnecessary.

The customers attach great importance to

security and data protection. They benefit from
the state-of-the-art and secure account holding
and payment services offered by the banks.

Merchants benefit from standardised inter-

faces. The security of investment in the area
of payment systems is high. At the same time,
implementation costs are manageable. At the 75
point-of-sale, cards (or their emulations) domi-
nate at least as authentication mechanisms. In
e-commerce, instant payments or payment pro-
cedures based on Electronic Bill Presentments
are primarily used.

The fintech sector is still active. Traditional

banks monitor the start-up scene closely and ex-
pand their portfolio by acquisitions. In 2025, the
fintechs supply ideas to the banks that regularly
absorb the best ideas.
 03 / Four scenarios for the future of payment systems in Germany

Use case: instant person

to person payment

Maxi, 17 years old, high school graduate, wants

to buy a dress for the prom night, which takes
place that very evening. She goes to a Peek and
Cloppenburg store. Unfortunately, she does not
have enough money. Her basic student’s bank
76 account does not allow overdrafts. The solu-
tion is: mum and dad! Her parents are of course
happy to take over the costs for the dress. Maxi
sends them s short video message which shows
her in her new dress in front of the changing
room.

PAYMENT PROCEDURE
Maxi’s father uses the app of his bank to send
her 150 euros. He holds his girocard against his
mobile phone – a result of the security setting
which he put to “high security“. His app informs
him that the money has been transferred to
Maxi’s bank account.
Maxi‘s mother immediately knows that Maxi’s fa-
ther sent her the money – although her account
is at a different bank. Her banking app informs
her about any movements on her husband‘s ac-
count. This way, both are always kept up-to-date
about their liquid resources.
Maxi receives a push message which informs her
about the cash receipt. She pays at the counter
using NFC.
03 / Four scenarios for the future of payment systems in Germany
T ECH N O LO GY A S PEC T S
Secure mobile banking with an instrument is-
sued by the bank used as a token. This token can
also be used for access to other online services.
The credit transfer is processed as Instant Pay-
ment.
Account information services are configurable in
accordance with individual preferences. 77
Traditional payments with cards or mobile
phones at the point-of-sale.
 03 / Four scenarios for the future of payment systems in Germany

Use case: electronic

billing with address
service

Renate, aged 46, mental coach, orders flowers,

a bowl with fresh fruits and a reboot drink for her
studio online. In one hour she will welcome her
78 most important client, so everything has to be
perfect. And she must be in top form. She uses
the new online shop that her friend recommend-
ed. She uses voice input to dictate her wishes to
her smart phone and double-checks her order
on the fully opened screen before sending it.
 03 / Four scenarios for the future of payment systems in Germany

PAYMENT PROCEDURE T ECH N O LO GY A S PEC T S

Immediately after Renate has place her order, Linking of any alias to the IBAN, in this case the
the merchant banks knows where the order mobile phone number.
came from, thanks to the addressing service of-
fered by the banking industry; this service uses Authorisation via fingerprint.
the mobile phone number to identify the order-
er. The merchant bank then communicates the Electronic Bill Presentment and Payment ena-
payment and invoicing data to Renate‘s account bles the transfer of billing information in the
holding banks. context of payment messages. The online bank-
ing shows all incoming invoices clearly arranged 79
Renate‘s banking app now shows her the invoice and allows convenient payment.
issued by the merchant and the filled in credit
transfer form, listed next to each other. All Re-
nate has to do now is to authorise the payment
with her fingerprint. Only ten seconds have
passed since she placed the order.
 03 / Four scenarios for the future of payment systems in Germany
Key differences between the scenarios
SCENARIO 01
Diversity at the customer interface
Dominant actors in the New fintechs appear all the time and
payments market try to take over the customer interface;
banks try to keep up; they are more and
more reduced to background services.
80
Main consumer Customers are demanding. They have
demands many different requirements for payment
procedures and are looking for custom-
made and individual solutions.
Predominant payment Diversity of payment methods; most pay-
procedures ment innovations have short lifespans.
  Figure 05
SCENARIO 02
Added values in the world of digital banks
Digital and direct banks design their
service thoroughly from a customer’s
perspective and support their customers
in all standard financial matters.
The customers want to be transparently
informed about their bank accounts
movements in real time. They want to
receive the best financing offers from the
account holding bank - without effort.
Transfer-based mobile payment apps
partially replace payment cards. In e-
commerce, payment initiation is domi-
nated by payment initiation services; at
the POS it is dominated by card payment
schemes.

SCENARIO 03
Convenience in digital ecosystems
Few global digital ecosystems substan-
tially expand their payment services and
oust other service providers. They ex-
pand into stationary retail and dominate
at the point-of-sale.
Customers want to shop and pay easily,
quickly and at favourable prices. They
wish to profit from loyalty programmes
and individual recommendations.
Payment via proprietary wallets of the
ecosystems across all channels; wallets
are stored on the customers‘ smart
phones. Global card payment systems
cooperate with tech-giants and dominate
the payment processing.
03 / Four scenarios for the future of payment systems in Germany
SCENARIO 04
Traditional banks on speed
Banks defend their role in the payments
market by an innovation boost, based on
Instant Payments and the use of the ISO
20022 infrastructure.
81
Customers are rather conservative and
attach importance to security, as long
as the payment procedure is easy and
convenient.
Customers use the P2P payment options
offered by their banks for the payment
of small amounts. Customers authorise
larger amounts via their online-banking
after bill presentment.
82
04
Possible game changers
The scenarios developed in the previous chapter have an evolutionary
character rather than a disruptive one: they can materialise at a slower
or quicker pace and without an explicit rupture. Furthermore, none
of the scenarios is based on a technological breakthrough. A technol-
ogy analysis conducted in the course of the “project 2025“ has shown,
however, that there are two technologies that have the potential to
shake the foundations of the world of payments: quantum computers
and the blockchain.

83

Quantum computers
Quantum computers use phenomena from quan-
tum physics for information processing. Com-
pared to traditional physics, the systems in quan-
tum physics do not have a sharply defined state,
but rather exist in form of superpositions of vari-
ous different states at the same time. The tradi-
tional bits of information processing can thus be
generalised to quantum bits (qubits) which allow a
superposition of the states “0“ and “1“. Quantum
computers offer the possibility of processing these
various states of a superposition at the same time.
Since the number of possible states in a quantum
mechanical superposition increase exponentially
 04 / Possible game changers
with the number of qubits, the performance of in-
formation processing improves significantly com-
pared to traditional parallel computers.
WHY ARE QUANTUM COMPUTERS DIS -
RUP TIVE FOR PAYMENT
TR ANSAC TIONS?
The security of the widespread asymmetrical
encryption procedures is based on the fact
84 that the prime factorisation of a large figure is
not feasible with the computing power of cur-
rent computers. As early as 1994, P. Shor pub-
lished an algorithm which solves this factorisa-
tion problem quickly with the help of a quantum
computer. Quantum computers could therefore
be used to break the encryption procedures
which are usually used today.
SHOULD WE E XPEC T THE DISRUP TION
BY 2025?
Currently, quantum computer are still at a com-
paratively early stage of research. The most ad-
vanced experimental prototypes presently only
have up to approximately ten qubits. Nonethe-
less, the Canadian company D-Wave already
offers a commercial system. This system, how-
ever, is designed for the solution of optimisation
problems and is thus not suited for the imple-
mentation of the above-mentioned Shor-Algo-
rithm. Nevertheless, during the last few years,
a few important advancements were made (e.g.
in the area of error detection); these advance-
ments lead to the initiation of additional invest-
ment programmes for quantum computers. This
could increase the development dynamics even
further in the coming years.

Blockchain
A blockchain is a publicly distributed and ac-
cessible database which maintains and builds
a cryptographically chained and continuously
growing list of transaction data files to prevent
manipulation and changes. All transactions be-
tween computers are added to this blockchain
and are made public to all participants. To ma-
nipulate a blockcain, an attacker would have to
completely re-calculate the entire blockchain
which would require considerable processing
power compared to the verification of the cor-
rectness, while at the same time the blockchain
continues growing. To maintain the integrity of
the system, each network node validates parts
of the blockchain (individual blocks) and the
entire blockchain. All transactions are publicly
transparent, the users, on the other hand, are
pseudonymised. Even operators of blockchains
or of so-called data storage hubs of the block-
chain cannot change the blockchain. This way a
04 / Possible game changers
database evolves which is absolutely neutral and
trustworthy for all parties involved.
WHY IS THE BLOCKCHAIN DISRUP TIVE
FOR PAYMENT TR ANSAC TIONS?
The blockchain is generally suitable for the
forgery-proof processing and documentation
of transactions - whether it be informational or
monetary transactions - directly between send-
er/payer and recipient and for the transparent 85
storage of the transaction information for all par-
ties involved. On such a neutral platform, which
is transparent for all actors and hardy manipula-
ble, it would be possible to implement so-called
“Smart Contracts” as new business models.
Further possible digital business models are, for
instance, escrow accounts and the secure issu-
ing and transfer of share certificates. The block-
chain is thus relevant to all security-focused and
innovation-focused scenarios. This technology
would first and foremost have to be considered
 04 / Possible game changers

disruptive for the payments transaction sector if,

for instance, the central banks were to decide to
use this technology themselves.

SHOULD WE E XPEC T THE DISRUP TION

BY 2025?

Currently, there is most of all a lack of business

model innovations. Several of the world’s largest
banks are presently working on the topic of block-
86 chains and on utilising blockchain in the market.
The importance of the blockchain and the possi-
bilities it offers are currently discovered by more
and more actors, the development dynamics are
high. However, most projects are still at an early
implementation stage. The stock exchanges are
also considering the potentials of blockchains.
87
 Methodology
What is the payment landscape going to look
like in ten years‘ time? A question like that can-
not be answered with a prognosis, because the
future is always shaped by uncertain factors.
Nonetheless, it is possible to identify certain
developments that can be considered to be
relatively sure.

To tackle the remaining critical uncertain-

ties, it is helpful to develop various plausible
and possible scenarios. This allows to mark the
88 area of possible future developments, the un-
certainties become explicit and open for discus-
sions. The scenarios should not be understood
as prognosis. Rather, they are plausible and co-
herent visions of the future, internally consistent,
alternative versions of the future.

Scenarios enable a systematic and structured

approach to the future and form the basis for
the deduction of possible courses of action. For
this reason they have been used for many years
by companies, public administrations and other
organisations to achieve a fruitful discussion
about strategic questions about the future.
The study “Paying in 2025“ is also based on
a classic scenarios process (cf. figure 06). A sys-
tematic environment analysis of the factors that
influence the development of payments forms
the basis for the selection of key factors of fu-
ture developments. Among the key questions
discussed were the following ones:
• How could the requirements of consumers and
merchants - and thus the requirements for pay-
ment systems – change by 2025?
• How could the market and competition in the
payments sector develop by 2025?
• How is the regulation going to develop by
2025? What will be the resulting influence in the
area of payment systems?
• Which technological innovations and break-
throughs might influence payments by 2025?
A broad online study was carried out to in-
terview national and international payments ex-
perts on the drivers of change, their future de-
velopments and the importance for the future
of payments. The results were discussed with
representatives of the German banking industry
and concentrated to scenarios from which impli-
cations were deduced.
89
The most influential factors build the pillars
for the development of plausible and consistent
scenarios of the future. The experts determined
plausible future developments for these factors.
The scenarios were built and deepened by link-
ing the various factors. Furthermore, an impact
analysis was conducted to evaluate the impacts
of various scenarios of the different participants
in payments.
 The scenario process was designed by
Z_punkt The Foresight Company, and is based
on many years of methodological knowledge. In
a parallel process, the Fraunhofer INT analysed
future technologies and attributed them to the
scenarios.

90
Methodology

PHASE 1 PHASE 2 PHASE 3 PHASE 4 PARALLEL

Environment Key factor Scenario Deduction of Technology

analysis analysis construction recommendations trend analysis

Survey Workshop Workshop Workshop

91
What are the most Which of these in- Which of these Which opportu- Which fields of
important factors fluence factors are alternative projec- nities, risks and technology will
that will influence central drivers of tions are consistent possible courses influence future
payments in Ger- development? with each other? of action for the payment systems?
many in the future? German banking
Which alternative What are plausible sector result from How far will
future develop- and probable sce- these scenarios? technology mature
ments (projections) narios for paying by 2025?
of these factors are in 2025?
possible?

  Figure 06
 Involved
In the course of the project we enjoyed the sup-
port of a large number of experts, and we would

experts
like to seize this opportunity to thank them all on
behalf of SRC, Z_punkt and Fraunhofer INT.

The online survey was conducted in June/

July 2015. It aimed to evaluate various factors
which are going to shape the payment land-
scape in the future and furthermore allowed to
interview the involved experts on their expecta-
tions for the future.
92
National and international experts from dif-
ferent areas of the network industry payment
systems participated in the survey (acquirers,
automated clearing houses, banks, consultants,
chipcard manufacturers, merchants, mobile
network operators, processors, payment ser-
vice provider, regulators, terminal manufactur-
ers, and associations). 109 German-speaking
experts and 29 English-speaking experts were
approached; the response rate was at 64% and
31% respectively.
 Some of the approximately 80 participating va of VÖB-ZVD-Processing; Mr Arnoldt of Bun-
experts agreed to be named here. We would desverband der Deutschen Volksbanken und
like to thank all experts for their participation: Raiffeisenbanken BVR; Mr  Fontaine of Bundes-
Andreas Räschmeier, Horst Rüter, Franz-J. Köll- verband deutscher Banken; Mr Blasche of Bun-
ner, Peter Blasche, Michael Gerken, Dr. Peter desverband Öffentlicher Banken Deutschlands;
Söhne, Hermann Beckers, Dr. Toni Merschen, Mr Lahmann and Mr Schollmeyer of Deutscher
Karl F. G. Matl, Matthias Hönisch, Jörg Stahl, Sparkassen- und Giroverband; Mr  Cimiotti,
Peter Ciranka, Ralf-Christoph Arnoldt, Christian Mrs Quentmeier, Dr. Nebelung and Mr Kraus of
Bucheli, Jens Gerd Schmidt, Joachim Fontaine, SRC Security Research & Consulting. Again, we
Francesco Di Salvo, Kurt Gjesten, Jean Allix and would like to thank everyone involved for their
Dr. Martin Hausmann. time and their valuable input.
93
Between August 2015 and January 2016
three workshops took place in the course of
this project; the workshops aimed to identify
key factors and future manifestations, develop
scenarios and strategic implications. The fol-
lowing experts participated in the workshops:
Mr Köllner and Dr. Söhne of DG-Verlag; Dr. Mock-
Hecker and Mr Gerken of Deutschen Sparkas-
senverlag; Mr Niehoff, Mr Thöt and Mr Merl of
Bank-Verlag; Mr Beckers, Mr Dicke and Mr da Sil-
Imprint

Paying in 2025 AUTHORS

Scenarios for the Future of the Payment Gerd Cimiotti, SRC
Systems in Germany Regine Quentmeier, SRC
Detlef Kraus, SRC
A study conducted by SRC in cooperation Andreas Neef, Z_punkt
with Z_punkt The Foresight Company and Andreas Schaich, Z_punkt
the Fraunhofer-Institut für Naturwissenschaft- Eckhard Störmer, Z_punkt
lich-Technische Trendanalysen INT Dr. Martin Brüchert, Fraunhofer INT

TR ANSL ATION
PUBLISHER Christina Dahl, SRC
SRC Security Research & Consulting GmbH
Emil-Nolde-Str. 7 EDITING AND GR APHIC DESIGN
53113 Bonn KARO, www.karo.berlin
Germany
www.src-gmbh.de
© 2016 SRC GmbH
All rights reserved.
type=”ActiveOrHistoricCurrencyAndAmo
unt”/>
<xs:element
maxOccurs=”unbounded” minOc-
curs=”0” name=”DscntApldAmt”
type=”DiscountAmountAndType1”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”CdtNoteAmt” type=”Active
OrHistoricCurrencyAndAmount”/>
<xs:element
maxOccurs=”unbounded” mi-
nOccurs=”0” name=”TaxAmt”
type=”TaxAmountAndType1”/>
<xs:element
maxOccurs=”unbounded” minOc-
curs=”0” name=”AdjstmntAmtAndRsn”
type=”DocumentAdjustment1”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”RmtdAmt” type=”ActiveOr
HistoricCurrencyAndAmount”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”RemittanceAmount3”>
<xs:sequence>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”DuePyblAmt” type=”Active
OrHistoricCurrencyAndAmount”/>
<xs:element
maxOccurs=”unbounded” minOc-
curs=”0” name=”DscntApldAmt”
type=”DiscountAmountAndType1”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”CdtNoteAmt” type=”Active
96
OrHistoricCurrencyAndAmount”/>
<xs:element
maxOccurs=”unbounded” mi-
nOccurs=”0” name=”TaxAmt”
type=”TaxAmountAndType1”/>
<xs:element
maxOccurs=”unbounded” minOc-
curs=”0” name=”AdjstmntAmtAndRsn”
type=”DocumentAdjustment1”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”RmtdAmt” type=”ActiveOr
HistoricCurrencyAndAmount”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”RemittanceInformation11”>
<xs:sequence>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”Ustrd” type=”Max140Text”/>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”Strd” type=”StructuredRemittanceIn
formation13”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”RemittanceLocation4”>
<xs:sequence>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”RmtId”
type=”Max35Text”/>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”RmtLctnDtls”View
type=”RemittanceLoc
publication stats
ationDetails1”/>
</xs:sequence>
</xs:complexType>
<xs:complexType name=”RemittanceLoca
tionDetails1”>
<xs:sequence>
<xs:element name=”Mtd” type=”Rem
ittanceLocationMethod2Code”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”ElctrncAdr”
type=”Max2048Text”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”PstlAdr”
type=”NameAndAddress10”/>
</xs:sequence>
</xs:complexType>
<xs:simpleType name=”RemittanceLocatio
nMethod2Code”>
<xs:restriction base=”xs:string”>
<xs:enumeration value=”FAXI”/>
<xs:enumeration value=”EDIC”/>
<xs:enumeration value=”URID”/>
<xs:enumeration value=”EMAL”/>
<xs:enumeration value=”POST”/>
<xs:enumeration value=”SMSM”/>
</xs:restriction>
</xs:simpleType>
<xs:complexType
name=”ServiceLevel8Choice”>
<xs:choice>
<xs:element name=”Cd” type=”Exter
nalServiceLevel1Code”/>
<xs:element name=”Prtry”
type=”Max35Text”/>
</xs:choice>
</xs:complexType>
<xs:complexType name=”SettlementDateT
imeIndication1”>
<xs:sequence>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”DbtDtTm”
type=”ISODateTime”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”CdtDtTm”
type=”ISODateTime”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”SettlementInstruction4”>
<xs:sequence>
<xs:element name=”SttlmMtd”
type=”SettlementMethod1Code”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”SttlmAcct”
type=”CashAccount24”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”ClrSys” type=”ClearingSyst
emIdentification3Choice”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”InstgRmbrsmntAgt” typ
e=”BranchAndFinancialInstitutionIdentific
ation5”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”InstgRmbrsmntAgtAcct”
type=”CashAccount24”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”InstdRmbrsmntAgt” typ
e=”BranchAndFinancialInstitutionIdentific
ation5”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”InstdRmbrsmntAgtAcct”
type=”CashAccount24”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”ThrdRmbrsmntAgt” typ
e=”BranchAndFinancialInstitutionIdentific
ation5”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”ThrdRmbrsmntAgtAcct”
type=”CashAccount24”/>
</xs:sequence>
</xs:complexType>
<xs:simpleType
name=”SettlementMethod1Code”>
<xs:restriction base=”xs:string”>
<xs:enumeration value=”INDA”/>
<xs:enumeration value=”INGA”/>
<xs:enumeration value=”COVE”/>
<xs:enumeration value=”CLRG”/>
</xs:restriction>
</xs:simpleType>
<xs:complexType
name=”SettlementTimeRequest2”>
<xs:sequence>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”CLSTm” type=”ISOTime”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TillTm” type=”ISOTime”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”FrTm” type=”ISOTime”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”RjctTm” type=”ISOTime”/>
</xs:sequence>
</xs:complexType>
<xs:complexType name=”StructuredRegul
atoryReporting3”>
<xs:sequence>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Tp” type=”Max35Text”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Dt” type=”ISODate”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”Ctry”
type=”CountryCode”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Cd” type=”Max10Text”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Amt” type=”ActiveOrHistor
icCurrencyAndAmount”/>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”Inf” type=”Max35Text”/>
</xs:sequence>
</xs:complexType>
<xs:complexType name=”StructuredRemitt
anceInformation13”>
<xs:sequence>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”RfrdDocInf” type=”ReferredDocume
ntInformation7”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”RfrdDocAmt”
type=”RemittanceAmount2”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”CdtrRefInf” type=”Creditor
ReferenceInformation2”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”Invcr”
type=”PartyIdentification43”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”Invcee”
type=”PartyIdentification43”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”TaxRmt”
type=”TaxInformation4”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”GrnshmtRmt”
type=”Garnishment1”/>
<xs:element maxOccurs=”3”
minOccurs=”0” name=”AddtlRmtInf”
type=”Max140Text”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”SupplementaryData1”>
<xs:sequence>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”PlcAndNm”
type=”Max350Text”/>
<xs:element name=”Envlp” type=”Su
pplementaryDataEnvelope1”/>
</xs:sequence>
</xs:complexType>
<xs:complexType name=”SupplementaryD
ataEnvelope1”>
<xs:sequence>
<xs:any namespace=”##any”
processContents=”lax”/>
</xs:sequence>
</xs:complexType>
<xs:complexType name=”TaxAmount1”>
<xs:sequence>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”Rate”
type=”PercentageRate”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TaxblBaseAmt” type=”Acti
veOrHistoricCurrencyAndAmount”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TtlAmt” type=”ActiveOrHis
toricCurrencyAndAmount”/>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”Dtls” type=”TaxRecordDetails1”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”TaxAmountAndType1”>
<xs:sequence>
<xs:element maxOc-
curs=”1” minOccurs=”0” name=”Tp”
type=”TaxAmountType1Choice”/>
<xs:element name=”Amt” type=”Acti
veOrHistoricCurrencyAndAmount”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”TaxAmountType1Choice”>
<xs:choice>
<xs:element name=”Cd” type=”Exter
nalTaxAmountType1Code”/>
<xs:element name=”Prtry”
type=”Max35Text”/>
</xs:choice>
</xs:complexType>
<xs:complexType
name=”TaxAuthorisation1”>
<xs:sequence>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Titl” type=”Max35Text”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Nm” type=”Max140Text”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”TaxInformation3”>
<xs:sequence>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Cdtr” type=”TaxParty1”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Dbtr” type=”TaxParty2”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”AdmstnZn”
type=”Max35Text”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”RefNb”
type=”Max140Text”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Mtd” type=”Max35Text”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TtlTaxblBaseAmt” type=”A
ctiveOrHistoricCurrencyAndAmount”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TtlTaxAmt” type=”ActiveOr
HistoricCurrencyAndAmount”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Dt” type=”ISODate”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”SeqNb” type=”Number”/>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”Rcrd” type=”TaxRecord1”/>
</xs:sequence>
</xs:complexType>
<xs:complexType
name=”TaxInformation4”>
<xs:sequence>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Cdtr” type=”TaxParty1”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Dbtr” type=”TaxParty2”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”UltmtDbtr”
type=”TaxParty2”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”AdmstnZone”
type=”Max35Text”/>
<xs:element maxOccurs=”1”
minOccurs=”0” name=”RefNb”
type=”Max140Text”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Mtd” type=”Max35Text”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TtlTaxblBaseAmt” type=”A
ctiveOrHistoricCurrencyAndAmount”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TtlTaxAmt” type=”ActiveOr
HistoricCurrencyAndAmount”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”Dt” type=”ISODate”/>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”SeqNb” type=”Number”/>
<xs:element
maxOccurs=”unbounded” minOccurs=”0”
name=”Rcrd” type=”TaxRecord1”/>
</xs:sequence>
</xs:complexType>
<xs:complexType name=”TaxParty1”>
<xs:sequence>
<xs:element maxOccurs=”1” minOc-
curs=”0” name=”TaxId” </xs:schema>