Development Banking Interconnection


The global trend on the technology used in the financial area is to interconnect everyone with everyone. In practice, for a user of any bank and / or financial institution, it is much more comfortable if you can consult or pay your bills (electricity, gas, cable TV etc.) from any business, close to your home; or check your account balance or withdraw cash from the corner store; or add extra minutes to your child's cell phone by simply sending a message from their cell phone; or consult and pay a fee of your consumer credit at a service station; etc.

On the one hand, users avoid having to go personally to their bank, avoiding waiting lines. On the other hand, the merchant who participates in these transactions benefits from seeing his flow of customers and sales increase, as well as from the commissions for the transactions made in his trade. Finally, for banks and card issuers, there is an increase in transactions and allows them to reduce the cost of physical facilities.

For all this to happen, technology is required.

After participating in several projects, CHILE-OFFSHORE has specialized in this interconnection, and has gained the trust of both our clients and the counterparts of the constituents (Bank, Financial Institutions, etc.).

Who participates?

For the "everyone connects with everyone" scheme to work, they must participate in the system:

  1. Users - which are the users of the constituents, for example, current account customers, Bip card users, mobile users without a plan, etc.
  2. Agent - corresponding to commercial establishments that have in their possession a terminal (POS)
  3. Switch Company - company that provides services to carry out transactions between banks and / or financial institutions and agents.
  4. Principals - issuers who authorize transactions (banks, financial institutions, etc.).

CHILE-OFFSHORE has specialized in the exchange of transactions between "Switch" type companies and banks, such as Banco Santander, BCI and others.

A company of the switch-transactional type, Multicaja S.A. for example, provides transactional services that connect banks, commercial houses, telephone companies, etc., with businesses and customers to be able to offer various transactions. Most of these types of companies have many terminals (POS) spread throughout the country. Multicaja for example, has around 4000 POS distributed in the country (until June 2010 according to information provided by its website).

As is known by many, the global trend is the interconnection between all, so, to increase coverage and competition capacity, banks, financial institutes, gaming companies, etc., develop a business model that "acquires" transactions from switch providers.

POS - Switch - Bank

Most of the transactions made under this scheme are of the type of POS - SWITCH - BANK, and typically correspond to one of these transactions:

  • Cash deposit - a customer of a client (e.g., bank), arrives at the corner store, and can make a cash deposit into his current account, using for this a POS (of the switch company) installed in said warehouse.
  • Debit card wire - the same situation of "Cash deposit", but now the customer wires money from his account (this money is paid by the business owner and then he (merchant) collects this money from the principal and additionally receives a commission from the switch company).
  • Consumer Credit Payment - so also, the same customer can pay a fee of his consumer credit at any business near his home,
  • Balance Check - you can also check for the balance of your checking or sight account.
  • Transfers between accounts of the same client - you can make transfers to other accounts.
  • Mortgage Credit Payment - pay a fee on your mortgage loan.
  • Payment of Electricity, Water, University Credit fee, etc. - you can make payment of services from any Point of Sale.

In a simple sentence, in this scenario, the constituents (a bank for example) extend their "offices" to all the neighborhoods and small towns of the country.

Technologies Involved

To make all this work, you must have knowledge in the following topics:

  • Concept, knowledge, and development of SWITCH - software to route transactions to different constituents
  • Development of Transaction Flows - piece of software that works within the SWITCH to serve a specific transaction
  • Encryption system, use of HSMs - since all transactions must be encrypted under security keys of the owners of each zone, you must have knowledge and ability to use HSMs for the translation and management of encryptions.
  • POS programming
  • Interconnect with constituents - must be able to connect different types of constituents, both passive and active. A passive principal provides a service to the world and waits for the SWITCH company to connect to them. An active principal takes the initiative to make the connection and then exchanges transactions with the SWITCHES.
  • ISO8583 - most widely used data format protocol in the banking and financial world. A solid knowledge and management of this standard is required.

CHILE-OFFSHORE already has all these technologies at a higher level.