The payment and settlement system consists of the following components:
* Banks providing financial intermediation * A legal and statutory framework * Rules, regulations and agreements * Various payments instruments and payment streams. * Payment and settlement transactions. * Consumers of the different products provided by the customer payment service providers. * All payment related activities, processes, mechanisms, institutions and users (customers).
The Phases of the Payment Process
A payment system facilitates the easy transfer of money. This is carried out by a process, which is triggered by the customer, who following a deal agreement, wishes to make a payment and issues a payment instrument, such as a cheque.
Once the payment instruction has been received and accepted by a bank, the bank will assume responsibility for facilitating the final and irrevocable transfer of value.
The next phase is the process of clearing, that is the exchange of payment instructions between banks. Unless the paying and beneficiary banks are represented by the same institution, interbank settlement is required. This is accomplished by posting entries across the accounts of the banks held at the Bank of Sierra Leone, resulting in final and irrevocable interbank settlement of the amount concerned.
Once this has been confirmed by the Bank of Sierra Leone, the bank involved complete their accounting processes and provides payment finality to the customer.
The cycle is complete once the customer receives payment confirmation, either explicitly or implicitly.
