Sterling Commerce Software Helps Reform Brazilian Payments System
Câmara Interbancária de Pagamentos (CIP), Brazil's interbank funds transfer system, deploys Sterling Managed File Transfer to automate payments processing and support industry standard.
At Sibos, Sterling Commerce, an IBM® company (NYSE:IBM), today announced that CIP, the funds transfer system geared at making Brazil the financial centre of Latin America, has implemented Sterling Managed File Transfer (MFT) as its secure, scalable and reliable platform to clear and settle payments and optimise liquidity.
Sterling MFT also enables CIP to offer its members DDA (Débito Direto Autorizado), a nationwide electronic solution developed to facilitate billing and invoicing transactions amongst Brazil’s banking customers.
Since the nineties, Brazil has invested heavily in IT and systems automation as a way to overcome more than a decade of hyperinflation. Founded in 2001, CIP initiated the country’s payments system reform and established the infrastructure, which served as a cornerstone in the evolution towards DDA. Since DDA was introduced in October 2009, more than 153 million electronic DDA invoices have been transferred through Sterling MFT.
DDA provides a standardised paper payment slip used to collect both business-to-business (B2B) and business-to-consumer (B2C) bills and invoices. To enable DDA, CIP relies on Sterling MFT as the cost effective and secure platform to route mission critical documents and perform high volumes of data transfers. The potential market for DDA is over 3 billion invoices per year, currently presented as paper invoices. Through standardisation, the previous eight-day payment settlement cycle is now reduced to two days.
CIP selected Sterling MFT for its compatibility with the data encryption formats prevailing in the private network connecting banks, CIP and the Central Bank in Brazil. Also of essence to CIP was Sterling MFT’s ability to guarantee secure delivery as well as integration into existing CIP applications, thereby reducing the risk of fraud, enabling quick and easy inter-bank file exchange, and allowing 24x7 unattended operations. The solution additionally provides a complete audit trail of data movement to ensure security and regulatory compliance.
“By automating payments processes throughout the banking community, CIP plays a central role in maintaining the competitiveness of Brazil’s economy,” said Jim Gahagan, global financial services industry executive at Sterling Commerce. “Faster, more secure transfers benefit companies by reducing the risk of fraud and improving the speed of the financial cycle. This helps to position Brazil as a leading economic centre in Latin America, and provides an example of best-practice in payment transfer systems worldwide.”
“We think DDA can be replicated in other countries and other jurisdictions, since there are benefits for corporations, small traders, consumers and banks,” said Joaquim K. Kavakama, CEO, CIP. “Sterling Commerce has helped us to establish DDA as a national standard. Next, we would look to the broader development of DDA globally as a key component to the future growth of CIP.”
CIP is a board member of the International Payments Framework Association, created to foster global standard adoption, making it easier to make cross border payments. CIP is a not-for-profit organisation composed of 42 shareholder banks and has helped reduce systemic risk throughout the Brazilian banking sector. In 2009 CIP performed 1.8 billion operations, amounting to R$ 6.2 trillion.
Sterling Commerce will be on Stand: C216 at Sibos 2010, Amsterdam.