autoriti monetari runei darussalam for... · 2017-10-20 · autoriti monetari brunei darussalam...

AUTORITI MONETARI BRUNEI DARUSSALAM

Request for Information

Retail Payments Infrastructure

for Brunei Darussalam

October 2017

v1.0

Autoriti Monetari Brunei Darussalam Request For Information

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Contents

1. INTRODUCTION ..................................................................................................................................... 3

2. OBJECTIVES ........................................................................................................................................... 3

3. PARAMETERS ........................................................................................................................................ 4

4. LEGAL AND REGULATORY FRAMEWORK .............................................................................................. 5

5. VISION FOR BRUNEI DARUSSALAM RPI ................................................................................................ 6

5.1 Key functionality ........................................................................................................................... 6

5.2 The envisaged business architecture ............................................................................................ 6

5.3 Technical approach ....................................................................................................................... 8

5.4 Project approach ........................................................................................................................... 8

6. INSTRUCTIONS TO VENDORS ................................................................................................................ 9

7. INFORMATION REQUEST .................................................................................................................... 10

7.1 Company information ................................................................................................................. 10

7.2 Solution proposals ...................................................................................................................... 11

8. POINT OF CONTACT ............................................................................................................................ 12

9. SUBMISSION OF RESPONSES............................................................................................................... 12


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1. INTRODUCTION

Autoriti Monetari Brunei Darussalam (AMBD) has been responsible for the development of the national

inter-bank payments infrastructure over the last 5 years. Our strategic plan for payments includes the

extension of this infrastructure to retail payments, including cards, mobile, internet and other Fintech-

based payment media. The overarching objective is to reduce the use of both cash and cheques in the

country over the next five years, reducing costs and encouraging innovation. The focus is to establish a

safe, efficient, interoperable consumer and e-commerce payment environment that will streamline both

face-to-face and on-line transactions for individuals and businesses.

This document sets out a high-level vision for retail payments infrastructure (RPI) in Brunei Darussalam

and its purpose is to obtain information about prospective vendors’ capabilities and potential costed

solutions to fulfil the vision and meet Brunei’s retail payment objectives as set out below. The information

received in response to this document will be used by AMBD, in consultation with other stakeholders, to

establish the way forward for Brunei’s retail payments infrastructure.

AMBD may request full quotations for services as a result of the RFI, but reserves the right not to select

any of the vendors or to request prospective vendors to work together to provide a comprehensive

solution.

2. OBJECTIVES

Primary objectives in pursuing the retail payments infrastructure initiative are as follows:

i. The main objective is to promote the use of electronic payment in Brunei Darussalam:

a. To increase the level of acceptance and usage of electronic payment by introducing

innovative payment methods;

b. To make electronic payment more attractive to users through improving: ease of

usage; level of acceptance; and benefits of use over cheques and cash; and thus

c. To reduce the level of cash circulation and usage of cheques.

ii. Create an interoperable card, mobile and internet payment eco-system:

a. Make the most of the opportunity to introduce mobile payment and other FinTech

payment methods to enable safe and efficient instant payment cost-effectively;

b. Provide interoperable customer service, so that all domestic terminals support all

Brunei-issued cards; all mobile payment users can transact with each other;

c. Reduce costs to banks of multiple ATM and Point of Sale installations;

d. Enable connection with ASEAN retail payment initiatives for pan-ASEAN

interoperability in due course.

iii. Improve security levels:

a. Ensure that fraud risk is controlled in the introduction of new payment methods;


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b. Minimise the risk of card fraud penetrating Brunei Darussalam’s market as

neighbouring countries implement tighter security measures;

c. Assure soundness and utility of legal and regulatory framework.

iv. Improve performance and cost-effectiveness

a. Enable cheap internet banking and e-commerce including in-out international

payment;

b. Overcome high unit costs inherent in a small market;

c. Enable Government services to be ordered and paid for electronically.

v. Assure access to finance for all Bruneians regardless of wealth, location or service providers

used.

3. PARAMETERS

With a total population of just under 420,000 (based on Department of Economic Planning and

Development (JPKE) statistics), there is considerable activity in electronic retail payment in Brunei

Darussalam. However, it is all based on the initiatives of 6-7 individual banks and there is no

interoperability other than through the international payment networks (Visa, MasterCard and China

UnionPay). The retail payment scene is described in the outline below.

The national demographic breakdown is as follows (2015 figures):

2015

Age Group Population Distribution

0 - 19 133,900 32.1%

20 - 39 149,200 35.8%

40 - 59 103,900 24.9%

60+ 30,200 7.2%

417,200 100%

Brunei Darussalam has a mobile phone penetration of 125.5% in 2016, according to the Authority

of Info-communications Technology Industry of Brunei Darussalam (AITI), with a large proportion

of the mobile phones used being smartphones capable of internet access.

AITI also reported that mobile broadband penetration (handset) per 100 inhabitants in Brunei

Darussalam reached 115.7% in 2016; interbank internet payment transactions are already

available via RTGS and ACH Direct Credits, but are not instantaneous.

According to www.internetlivestats.com, 72.3% of the population have access to the Internet

overall.

There is some use of NFC at Point of Sale - the introduction of Visa PayWave has been well

received.

http://www.internetlivestats.com/


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As yet, there are no interoperable mobile payments, but some use of mobile banking channels.

The Ministry of Finance (MoF) provides a front-end system for the on-line submission of bill

payments to certain Government utilities. This is called the e-Payment Gateway (ePG).

JPKE also reported the results of the Economic Census 2011 indicated that small (with 1-19

employees) and medium (20-99 employees) enterprises (SMEs) made up 97.5 per cent of the total

number of active enterprises in Brunei Darussalam in 2010. Almost two-thirds (3,623 enterprises)

of the total enterprises were small. Whereas, 1,804 medium enterprises accounted for 32.4 per

cent.

Gross Currency in Circulation at the end of 2015 was recorded at BND 1.32 billion, a 3.96%

increase from the previous year (AMBD, 2015).

Brunei Darussalam therefore has a very different profile in retail payments compared to many small

countries, with a high level of digital activity. This suggests a multi-channel strategy with common facilities

is the right way to proceed. Full interoperability is essential to make the most of market scale. If these

advantages are exploited effectively by stakeholders, Brunei Darussalam can create a world-leading,

innovative payments environment.

4. LEGAL AND REGULATORY FRAMEWORK

Brunei has a sound regulatory framework which oversees all payments related matters. The relevant laws,

which are available on AMBD’s and the Brunei Attorney General’s Chambers’ websites include:

AMBD Order, 2010,

Bills of Exchange Act, 2015

Finality and Netting Order, 2015

Oversight (Payment Systems) Order, 2015

Criminal Asset Recovery Order 2012

Islamic Banking Order, 2008

Electronic Transactions Act, 2008

Banking Order, 2006

AMBD also operates a “regulatory sandbox” arrangement to encourage FinTech implementations in the

country. This provides a means to deliver pilot solutions for market testing.


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5. VISION FOR BRUNEI DARUSSALAM RPI

5.1 Key functionality

To meet the objectives, AMBD has held discussions with potential vendors and service providers with a

view to implement retail payments infrastructure delivering:

Interoperability:

o Cost-effective switching of inter-bank transactions (using payment orders, cards or other

instruments) from acquirer to issuer, originated via ATMs, PoS, mobile, kiosks and

internet banking, with Integration of front-ends and channels to provide easy-to-use,

consistent payment services;

Ease of use:

o Ability to initiate account to account transfers, purchases and a broad range of bill

payments, from/to existing accounts and using electronic (stored value) wallets;

Efficient settlement:

o Interfacing with ACH for clearing of internet and mobile transactions, and RTGS for inter-

bank settlement as necessary, and connecting with SWIFT/ASEAN infrastructure for

international retail payments in due course;

Enhanced security:

o Introduction of universal EMV in Brunei Darussalam to protect against card fraud, 3D-

secure to protect against on-line fraud; and suitable measures for mobile, internet and

FinTech payment mechanisms such as multi-factor authentication, and intrusion and

malware detection;

o Deployment of solutions such as tokenization to protect account information held on

databases, passed across mobile networks or held on mobiles e.g. for NFC transactions;

o Compliance to industry standards such as PCI-DSS or any other best industry practices

relating to information and transaction security;

Special features:

o Encouragement of consistent NFC facilities and standardised features such as QR codes;

o No requirement for non-English interfaces.

5.2 The envisaged business architecture

We envisage that the card reciprocity and inter-bank transaction routing requirements for all transaction

types could be met by a conventional switch, a real-time ACH mechanism, or even RTGS. We are also open

to secure outsourced solutions. This inter-bank mechanism (“Payment Hub”) could be a physical

mechanism implemented in Brunei Darussalam, or a remote service.

For card reciprocity at ATMs and PoS, the Payment Hub acts as a clearing system, directing payment traffic

as necessary. For mobile-initiated transactions, we want to make the best use of the existing rules and

inter-bank payments infrastructure where possible, but the clearing mechanism needs to be real-time:


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• Each participating bank would deploy their own mobile App(s) with common messaging standards

that can enable a secure message to be sent to the core banking system to set off a transaction

through the Payment Hub, to be cleared in real-time via the AMBD clearing systems.

• Banks can provide their own value-added services on top of the standard message details, and

deploy innovative point of sale technologies such as NFC and QR codes;

• Mechanisms for credit checking on the sending account need to be provided, as well as a

mechanism for verifying the validity of receiving accounts, implying a national account database;

• Clearing and settlement would use a real-time process.

We anticipate integrating e-wallet payments into the scheme, provided by banks, mobile network

operators or FinTechs, so that the service can support both conventional bank account holders and

wallet holders, who may be unbanked and/or require the flexibility and control of a stored-value

mechanism:

Transactions can be account-to-account, wallet-to-wallet, account-to-wallet or wallet-to-account.

Multiple bank account platforms and wallet platforms must interoperate.

The Payment Hub clearing mechanism in these cases is acting much like a switch, but does not require

many of the functions of a conventional switch, such as stand-in processing. We envisage the Payment

Hub using the same ISO20022 message standards as the current RTGS and ACH.

All must be provided at transaction prices acceptable to the customer, merchants and billers; and

limited investment cost by the banks or AMBD. Keeping the costs down is the big challenge in a small

market, but the architecture must be sufficiently future-proof to accommodate new instruments and

participants readily.


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5.3 Technical approach

We want to build on our lead in ISO20022 messaging to establish a fully ISO20022 compliant Retail

Payments Infrastructure. We feel that this has advantages over the ISO8583 standard more commonly

used for cards, which is aging and becoming inconsistent in implementation.

Additionally, we are open to exploring deployment of new technologies, provided they would meet our

requirements for economy, security and efficiency of operation, and provided they can be implemented

in a realistic timescale. New tools such as NFC, QR codes, tokenization, “Blockchain” distributed ledgers

are of interest to us.

We anticipate that in future, the use of payment products and services from the global IT giants (such as

Apple, Google, Microsoft, Amazon and Alipay), specialist money transfer operators and social media

companies may become very important and we must future-proof our retail payment services to

accommodate consumer enthusiasm for such innovative products.

5.4 Project approach

The project will be led and facilitated by AMBD but will be a joint endeavour between AMBD,

stakeholders and vendors. AMBD will favour solutions that:

do not require major on-the-ground technology development and up-front costs, but re-use

existing components;

enable the Brunei banks to share services already operating elsewhere; and/or

involve a self-funded entity that will establish the RPI on a build and operate basis, perhaps via

a local or international joint venture.


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6. INSTRUCTIONS TO VENDORS

This is a Request for Information (RFI) only and does not constitute a commitment, implied or otherwise,

that AMBD will take procurement action in this matter. AMBD shall not be responsible for any cost

incurred in furnishing the requested information. Submission of a response constitutes acknowledgment

that the vendor accepts these terms. Responding vendors may be individual organisations, joint ventures

or consortia.

After all responses have been evaluated, AMBD will identify the most suitable solution approach. AMBD’s

management, the Brunei Association of Banks (BAB) and other stakeholders will then agree on the

preferred supply and technical approach. The information provided by potential vendors may be used by

AMBD either in part or in whole in preparing an Invitation to Tender (ITT), and if such a tender is issued,

it will be sent to vendors that demonstrate adequate capabilities in response to this RFI.

Vendors’ responses must both:

provide the Vendor Information requested below; and

describe their solution by answering the questions in the Solution Proposal section below, with a

high-level costing to illustrate business viability.

The Vision for Brunei Darussalam’s Retail Payments Infrastructure is set out in this document and RFI

responses should address all the issues raised therein.

Our target is to have an interoperable retail payment infrastructure in place before the end of 2019,

embracing the broad aims described in the introduction, the objectives listed above and the functions set

out in the “Vision” section above.


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7. INFORMATION REQUEST

7.1 Company information

We request the following information in not more than 4 pages, and structured as below:

1) Provide general company background information

a. Company profile

b. Year established

c. Headquarter and branches location in ASEAN region.

d. Primary area of business

e. Organization chart (Optional)

f. Brief summary of financial results for the past three (3) years i.e. revenue, profit, etc.

g. Outstanding legal matters in the region (If any)

2) Vendor’s experience

a. List of current and previous projects of similar types and countries involved

b. Number of years working in the projects mentioned

c. Project scale (rough estimation in BND)

d. Other relevant experiences in related services

3) Vendor’s capabilities

a. Number of staff with relevant experience

b. Any related centre of expertise

c. Potential for value-added services

d. Relevant products and services offered by your Company

4) Vendor’s resources who are likely to be deployed for the project

- Name, years of experience and the nationality of:

a. Project Manager

b. Technical Engineers

5) Primary contact details

6) Other relevant information.


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7.2 Solution proposals

Please describe your solution and demonstrate how it would fulfil Brunei Darussalam’s retail payment

Vision described above:

1) What is your approach to the solution?

(for example, on-shore installation, remote or virtual service, sharing an existing facility, others)

2) We recognise that there could be a number of alternative options for delivery of a solution. What

is your preference for the contractual arrangement?

a) Supply, implement, support

b) Add Brunei Darussalam’s institutions as customers of an existing service

c) Build and operate

d) Joint venture with local partner or local banks

e) Joint venture with international partner

f) Others

3) Under your preferred arrangement, how long would the implementation take and how would it

be phased?

4) Provide a Summary of your suggested Business and Technical Architecture with diagrams,

showing roles of stakeholders and interconnection.

5) Business viability

a) We request responders to the RFI to provide provisional cost information regarding:

- Cost of implementation of any physical components;

- Likely operating and support costs, given Brunei Darussalam’s low tax environment and highly

educated English-speaking workforce;

- Revenues that could be generated across the Brunei Darussalam market;

- Potential for external revenues – e.g. establishing a third-party processor in Brunei

Darussalam that could offer external services, or initiating cross-border payment schemes

with nearby cities.

b) Demonstrate that costs and revenues can support a sustainable business

- It would be helpful if this information were provided in the form of a simple cost model with

key parameters that could be adjusted for different scenarios.

6) Describe how your solution would meet our objectives and the Vision for Brunei Darussalam RPI.

7) What would be the challenges to achieve the above?

8) Explain how you will ensure that the solution delivers a high-level of performance and security.


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8. POINT OF CONTACT

All questions and inquiries regarding this RFI should be directed to:

Payment and Settlement System Unit

Autoriti Monetari Brunei Darussalam

Level 14, Ministry of Finance Building

Commonwealth Drive

Bandar Seri Begawan, BB3910

Brunei Darussalam

Email: [email protected]

9. SUBMISSION OF RESPONSES

Please email your completed response to [email protected]. Supplemental materials may be provided.

Please inform us by 10 November 2017 if you are planning to send a response.

Final responses should be submitted to Point of Contact above no later than 30 November 2017.

Any information of a confidential or proprietary nature contained in a vendor response should be clearly

marked ‘PROPRIETARY’ or ‘CONFIDENTIAL’ by item or at the top of each page. Reasonable precautions

will be taken to safeguard any part of the response identified by a vendor as being confidential or

proprietary.

All responses, once delivered, become the property of AMBD.

mailto:[email protected]

mailto:[email protected]

autoriti monetari runei darussalam for... · 2017-10-20 · autoriti monetari brunei darussalam...

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