A payment system operator runs a 'single access point' gateway that connects domestic PSPs to foreign payment systems

A payment system operator runs a 'single access point' gateway that connects domestic PSPs to foreign payment systems

AI subject tested: sonnet-46-websearch

Question (paraphrased): A payment system operator runs a 'single access point' gateway that connects domestic PSPs to foreign payment systems. They have received advice from their fintech team that CPMI's October 2024 report on cross-border FPS interlinking governance and oversight provides the applicable governance framework for their arrangement. The General Counsel has asked you to draft a board-level backgrounder (1–2 pages) explaining what CPMI October 2024 says about governance and oversight for this type of arrangement — its interlinking model, the key governance decisions the CPMI identifies, and the oversight recommendations that apply.

The General Counsel wants specific references to models and framework coverage.

AI response:

"BOARD BACKGROUNDER — CONFIDENTIAL

To: Board of Directors From: General Counsel's Office Subject: CPMI October 2024 Report — FPS Interlinking Governance Framework and Coverage of the Single Access Point Model Date: June 2026

1. INTRODUCTION AND PURPOSE

This briefing responds to the question of whether CPMI's October 2024 final report on cross-border FPS interlinking governance and oversight (BIS publication d223) provides the governance framework applicable to our 'single access point' gateway arrangement, and what that framework requires.

2. THE CPMI REPORT AND ITS SCOPE

The CPMI — the standard-setting body hosted at the Bank for International Settlements — published its report 'Linking fast payment systems across borders: governance and oversight' on 15 October 2024. It is a final deliverable to the G20 under the G20 Roadmap for Enhancing Cross-Border Payments. The report explicitly aims to inform owners and operators of FPS interlinking arrangements, and overseers, when developing governance, risk management, and oversight approaches.

The report is structured around multiple 'stylised' FPS interlinking models that it uses as a framework for its governance and oversight analysis. These include:

(a) Bilateral Links: Two domestic FPS connect directly with each other. Participants in FPS-A can send funds to participants in FPS-B via a technical link between the two systems. Examples include PayNow-PromptPay (Singapore-Thailand) and PayNow-UPI (Singapore-India).

(b) Hub-and-Spoke (Multilateral Hub): Two or more FPS (the 'spokes') connect to a common intermediary (the 'hub'), which handles routing, currency conversion, and settlement. The hub enables multilateral connectivity without requiring a full mesh of bilateral links. Nexus (the BIS Innovation Hub project) is a leading example.

(c) Single Access Point: Participants in one domestic payment system obtain access to a foreign payment system through a single 'gateway' entity that directly participates in the foreign system on their behalf. The gateway entity bears a resemblance to correspondent banking arrangements but operates on the basis of common rules, service level agreements, and access criteria defined by the interlinking arrangement.

3. COVERAGE OF THE SINGLE ACCESS POINT MODEL

Our arrangement — a gateway entity through which domestic PSPs access foreign payment systems — maps to the 'single access point' model described in the CPMI report. The CPMI report addresses this model as one of the main design choices available for FPS interlinking, and the governance and oversight framework in d223 applies to it.

However, there is an important nuance: the CPMI notes that the governance implications, risk profile, and oversight considerations differ across the three models. For the single access point model specifically, the key features are: (i) the gateway entity is the central point of responsibility and risk concentration; (ii) the gateway entity's direct participation in the foreign FPS creates dependencies and governance linkages across jurisdictions; and (iii) the oversight question of who regulates the gateway entity (the domestic overseer, the foreign overseer, or jointly) is explicitly raised in d223 as requiring cooperative oversight.

4. KEY GOVERNANCE DECISIONS IDENTIFIED BY CPMI

For our single access point arrangement, the CPMI identifies governance decisions the operator must address:

(a) Legal Setup: What is the legal form of the gateway entity? Is it a subsidiary of an existing institution, a joint venture, or a standalone FMI? The legal form affects regulatory jurisdiction, liability, and resolution.

(b) Ownership and Operational Structure: Who owns and controls the gateway entity? The report discusses public versus private ownership models and how ownership affects accountability and governance incentives.

(c) Governing Body Type: What kind of board or governing body does the arrangement have, and does it have adequate representation and authority to make cross-jurisdictional binding decisions?

(d) Stakeholder Engagement: How are the domestic PSPs that use the gateway, the foreign FPS operator, and overseers from both jurisdictions given a voice in governance?

5. OVERSIGHT FRAMEWORK AND PFMI STATUS

Importantly, the CPMI confirms in d223 that FPS interlinking arrangements — including those using the single access point model — are not necessarily subject to the PFMI (Principles for Financial Market Infrastructures). The PFMI is a reference framework, not a mandatory requirement for our arrangement unless a specific systemic importance designation is made. The operative framework is d223's own recommendations, which are advisory at the international level.

6. CONCLUSION

The fintech team's advice is correct: CPMI's October 2024 report (d223) is the applicable governance framework for our single access point arrangement. The report explicitly covers our model type. The Board should note that the framework is advisory rather than binding, but represents the authoritative international standard against which regulatory dialogue with our overseers will be benchmarked."

Regulator verbatim text:

"Graph 2 includes two additional stylised models that can enable end users to exchange fast payments across borders. While these models could also be referred to as interlinking arrangements, they have more commonalities with correspondent banking (in the case of the single access point) and a single cross-jurisdictional payment system (in the case of the common platform). As such, they are not the focus of this report and will only be discussed to a limited extent."

Failure mode: misstated_rule

Substrate document: Linking Fast Payment Systems Across Borders – Governance and Oversight, Final Report (d223)