Annex: Sponsoring PSPs and Sponsored Entities

• Sponsoring PSP is a PSP who enables access to an Instant Payment System for other entities, such as indirect participants, sponsored banks and/or EMIs. A Sponsoring PSP is a direct participant in the IPS and participates in Nexus, and has onboarded one or multiple indirect participants (these could be wallet providers or other banks, see Sponsored Entity). For Nexus, the Sponsoring PSP is the PSP performing the role of Debtor Agent or Creditor Agent in Nexus. Any processing beyond this role (as Debtor or Creditor agent in Nexus), for example updating the individual wallet balances of account holders at a Sponsored Entity, is out of scope for Nexus.

• Sponsored Entity is the party who is party who has a commercial bank relationship with a Sponsoring PSP. The Sponsored Entity can be an indirect participant of an Instant Payment System, an Electronic Money Issuer (EMI) or equivalent who is not eligible to be a direct participant, or a provider of specific financial services, such as investments or savings accounts. The Sponsored Entity has a contractual relationship with the Sponsoring PSP and initiates and receives payments through the Sponsoring PSP. Whether the Sponsored Entity is seen as a provider of financial services and must be licensed, or otherwise, is determined by the local applicable legislation.

PSPs can provide access to the instant payment systems for sponsored entities, such as indirect participants or Electronic Money Issuers (EMIs) when allowed by the IPSO. Within Nexus, a PSP playing this role will be referred to as a Sponsoring PSP. With regards to the Nexus Payment flow, the interaction between the Sponsoring PSP and its clients is out of scope.

Clients of the Sponsoring PSP have several options to initiate a Nexus payment, depending on their internal processes, the processes of the Sponsoring PSP and their bilateral agreement. Sponsoring PSP can, for example, offer the sponsored entities access to their corporate channel. This can be their corporate internet banking channel, allowing for manual upload or entering of payments, or a machine-to-machine interface, potentially via sFTP or an API. This is to be bilaterally agreed between the sponsored entity and the Sponsoring PSP and is outside of the scope of Nexus.

The Sponsoring PSP should treat the payment instruction from the Sponsored Entity the same as any other incoming payment request and should perform all validations as it would do for any other payment, including an account validation and balance check, compliance checks and fraud detection. It should also offer the available Nexus services; the cross border proxy resolution and the cross-border account resolution.

Whether a PSP can perform the role of a Sponsoring Bank is up to the local regular or supervisor, the local scheme rulebook and the Rules, Regulations and Access Criteria of the IPS. In order to perform the role of a Sponsoring PSP, the PSP needs to adhere to the following requirements:

• A Sponsoring PSP must be a member of at least 1 domestic IPS so that they are able to send and receive payments. Therefore, an entity must be a PSP (as defined in Nexus) in order to become a Sponsoring PSP.

• The Sponsoring PSP must be a direct member of the IPS; indirect members are not allowed to act as Sponsoring PSPs.

• A Sponsoring PSP can provide services to multiple Sponsored Entities, and a Sponsored Entity can contract multiple Sponsoring PSPs (if and when allowed by the appropriate stakeholders)

• The Sponsoring PSP must provide one or more accounts in which the Sponsored Entity can holds funds, denominated in the IPS’s currency.

Note that for Nexus, the Sponsored Entity is not recognized as such and thus treated as an end-customer, similar to the Debtor or Creditor. Nexus does not prescribe how the ultimate customer is identified in the payment. However, opposed to legacy FIN MT messages, which do not carry dedicated fields to provide information on the ultimate parties of a payment, ISO 20022 offers a clear structure and designated data elements, allowing remitters to clearly identify ultimate parties, thereby improving the creditor’s reconciliation and interbank anti-financial crime processes.

Nexus therefore recommends the use of the Ultimate Debtor and Ultimate Creditor fields to identify the end-customers in these scenarios, in line with the Payments Market Practice Group recommendations.

Given that ultimate parties are defined as sensitive payment information, their correct identification and provision in the payment messages is particularly important for anti-financial crime controls. Any non-compliance (for instance, concealing of the ultimate beneficiary details) may be subject to regulatory consequences. This is also reflected in the revised Wolfsberg Group Payment Transparency Standards. It is the responsibility of the agent servicing the account of the Debtor and Creditor to determine if the ultimate party elements are correctly used.