Payments are financial instruments that people and businesses around the world use to transfer funds and this makes them one of the most important parts of a company’s financial operations. The subject can become complex because there are often many different payment systems in a given country-and most countries have their own unique currency.

For the purposes of this paper we will deal with one method of payment using wire transfers.

Wire transfer is an electronic payment service and is considered the fastest and safest method to move and exchange funds nationally and internationally. The essence of this electronic payment is to use a cash substitute (electronic messages) to create a debit or credit that transfer’s value. The value that is being transferred is typically stored in depository accounts at banks or other types of financial institutions. The banks, in turn, are connected to a set of payment systems that they use to process payments on behalf of their customers or depositors.

In the simplest case involving the traditional banking system, payments involve four participants:

The payer: Makes the payment and has its bank account debited for the value of the transaction.

The payer’s financial institution: Processes the transaction on the payer’s behalf.

The payee’s financial institution: Processes the transaction on behalf of the payee and holds the value in an account.

The payee: Receives value of the payment by credit to its account.

In the real world the funds transfers tend to be more complex involving a network that includes central banks such as the Fed (US Federal Reserve), ECB (European Central Bank) and The Bank of England. Clearinghouses such as CHIPS (Clearing House for Interbank Payments), information transmission mechanisms such as SWIFT (Society for Worldwide Interbank Financial Telecommunications), and payment systems such as Fedwire and BojNet , both of which include information transmissions systems.
The actual exchange of data and funds necessary to complete a funds transfer transaction relies upon electronic processing, settlement, and communication systems. While the various payment and messaging systems offer differing levels of functionality, the instruction messages underlying all of these functions are primary.

In the following paragraphs we will review three important payment or messaging systems in operation in the United States. They are Fedwire, Chips and SWIFT


The Federal Reserve provides the Fedwire Funds Service which serves as the primary domestic electronic funds transfer system in the United States. The Fedwire system handles both the transmission of funds transfer instruction messages among financial institutions, as well as the settlement of payment. As a real-time gross settlement system (RTGS) it enables participants to initiate funds transfer that are immediate, final, and irrevocable once processed. Depository institutions and certain other financial institutions that hold an account with a Federal Reserve Bank are eligible to participate in the Fedwire Funds Services. The Fedwire Funds Service is generally used to make large-value, time-critical payments.

The Fedwire system is available only to U.S. financial institutions and does not permit a participating U.S. financial institution to transmit instructions or transfer funds directly to a non-U.S. financial institution.


Like Fedwire, the Clearing House Interbank Payment System (CHIPS) handles both transmission of funds transfer instruction messages among financial institutions, as well as the settlement of payment between the institutions. CHIPS is the United States main electronic funds-transfer system for processing international U. S. dollar funds transfers made among international banks. Like Fedwire, CHIPS is a real-time final settlement system.

CHIPS claims to handle 90% of all U.S. dollar- based funds trasfers moving between countries around the world.
Access to the CHIPS payment system is conditional upon a financial institution’s U.S. presence. The financial institutions using CHIPS must operate a U.S. branch office for use of the system. It is important to note that a CHIPS instruction may serve as one segment of a cross –border transfer.


The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides secure electronic financial messaging services to financial institutions. SWIFT is a cooperative society owned by its member banks and is a unified international financial transaction messaging service. SWIFT represents an extensive telecommunications network by which a financial institution in one country can communicate with its branches or correspondent institutions anywhere in the world. In contrast to Fedwire and CHIPS, SWIFT is a messaging system for funds transfer instructions, rather than a financial settlement system.

In contrast to Fedwire and CHIPS, a SWIFT message may travel directly from a U.S. financial institution to a foreign institution or vice versa. In practice SWIFT is the primary method for international funds transfer messages.

Funds transfers often involve a combination of SWIFT and Fedwire messages or SWIFT and CHIPS or other messages in the same transaction. For example, a U.S. institution may receive a SWIFT message from a foreign institution and map the message into a Fedwire or CHIPS message before passing it along to the additional U.S. financial institutions serving as correspondents.

When a funds transfer requires multiple correspondents’ participation and involvers more than one message system, one or more of the institutions translates or “maps over” the data from one message format to another. A large portion of the traffic on the CHIPS system originates from SWIFT message traffic.

Domestic bank to bank fund transfers are conducted through the Fedwire System which uses the Federal Reserve and its assignment of routing transit numbers which uniquely identify each bank (ABA number). This code serves as the banks address, so to speak, allowing funds to move to and from the banks location and individual accounts within the bank. The term ABA is used because the American Banking Association assigns these location numbers to the banks.

Most international fund transfers are executed through SWIFT. Each financial institution is provided a Bank Identifier Code (BIC) or Swift Code. SWIFT handles the registration of these codes. With the BIC/SWIFT code banks can be identified and international funds transfers processed.

As Europe is moving to the Single Euro Payments Area (SEPA), the European Union-as well as Norway, Iceland, Liechtenstein, and Switzerland-have made a series of regulatory changes designed to improve straight-through processing of payments and reduce costs. A key element was the introduction of the International Bank Account Number (IBAN). IBAN’s are assigned by the European banks to their customers. The IBAN contains information to identify the country, the account holding bank, the counterparty’s account number and check digit verification. With the SEPA, transactions will require IBAN and SWIFT-BIC identification.

In summary:

Bank wire transfers are immediate transfers from one bank to another. Bank wire transfers are fast as transferred funds are considered “cleared” immediately when received.

The bank wire transfer system is reliable. There are many redundancies built in to reduce the impact of failures. To take advantage of this method of moving funds, it behooves one to understand the systems in place and the functions used in operating the systems.

Akirix, with their expertise and robust web site, is the ideal partner in providing safe and fast movement of your funds from place to place while you are conducting your ‘business transaction on a global scale.

US Department of the Treasury: “Fundamentals of the Fund Transfer Process”
Treasury Alliance Group: White Paper “Fundamentals of payment services”
International Resource Center, TD Bank
European Consumer Centre France: Banking
Board of Governors of the Federal Reserve System: “Fedwire Funds Services”



Essentially “fraud” means different things to different people and cultures globally. At its core, is the basic principal that fraud is all about intent to commit an illegal act and revolves around this dishonesty, deceit, and intent to obtain a product or service illegally.
The world over, the telecom industry has had its share of losses due to sophisticated technology aided frauds. Globally telecom frauds are estimated to cost the industry US 40 billion1.
Telecoms fraudsters are becoming more innovative in their techniques and services and products they target. Fraud, especially across international boundaries, relies heavily on the Communication Service Provider’s (CSP) inability to respond and recover in a timely manner.
In today’s business environment, security is of vital importance. This extends to voice networks just as much as data networks and to wholesale telecom companies just as much as companies providing their own infrastructures.

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While the demand for core Telco services is flatting, growth is now being driven by demand for next generation telecommunications services. Cloud computing and services such as mobility and content service have sparked new revenue opportunities. But new market opportunities bring new risk. Both buyers & suppliers must pay close attention to potential fraud scenarios.
Within the industry, there are common fraud types and incidents being reported and these will come from a number of different fraud scenarios. Whether it is suppliers claiming to be legitimate providers, or buyers refusing to pay for services, the issue is one that must be addressed. But what are the signs of fraud? How can you tell if you’re ripe for fraudulent activity?
On the supplier side, extending service “on credit” is a tricky proposition. Anytime a supplier extends credit to a buyer-allowing traffic prior to payment-they’re exposing themselves to risk. It’s important that-before agreeing to extend credit-suppliers take all precautions necessary to ensure payment.
A red flag is a buyer’s corporate e-mail address, or lack thereof. This could indicate a quick-start-operation, with no business foundation. Under this model, buyers can quickly dismantle operations after service is delivered. Suppliers are then forced to write these transactions off as bad debt.
Yet another issue is a buyer’s lack of references. Companies build their reputations on customer satisfaction, and they grow buy earning repeat business. Fraudulent buyers have no interest in repeat business or long-term success. Their only goal is to obtain as much free service as quickly as possible, closing up shop before they need to pay.
Finally, suppliers should be wary of buyers that wish to ramp-up too quickly. Recently, there have been more than a few high-profile cases where a buyer asks for services on a weekend or a holiday. This is a sure sign the operation may be a scam.
On the other side, it’s definitely “buyer beware”. With cost of entry into wholesale telecommunications market extremely low, the risk to new carriers is almost zero. Potential suppliers need only set up a small amount of inexpensive equipment to get started. But while cost remains low, demand for minutes is by no means slowing down. Buyers across the globe are looking for more minutes at the lowest prices possible. The two are a potentially dangerous combination. With demand so high and point-of-entry so low, suppliers can very often dictate the terms. This is where extra caution must be taken.
Buyers must note when they’re asked for prepayment of services. By paying ahead of time, fraudulent suppliers have no incentive to deliver service, because the money’s already exchanged hands. Going one step further, perhaps one of the biggest signs of fraud is dramatically discounted prices. Because completion in the market is so fierce, suppliers often need only compete on price to win business. The lower the price, the more business they can win. But sometimes low prices are just too good to be true. A supplier perpetrating fraud wants to get new business quickly-with as many buyers signing on in a short timeframe. This enables them to quickly collect prepayment for services that were never intended to be delivered.
The threat is real, and both buyers and suppliers must take extra care to protect themselves from losses. But what measures can be taken to guard against fraud? What tools are available to keep them safe?
What is needed is a balanced approach that takes into consideration Technology, People, and Processes working together to create an effective Fraud Strategy. The purpose of a Fraud Strategy is to ensure an appropriate mix of people, processes, and tools are in place.
Part of this Fraud Strategy can be a strong relationship with companies offering time-tested solutions that protect interests of both buyers and sellers.
A partnership with a third-party global funds disbursement company, such as Akirix LLC, is critical to safeguarding parties involved with necessary protection. These companies offer clearinghouse and disbursement services specifically designed to secure financial transactions between multiple telecom parties.
Companies such as Akirix act as third-party intermediary, not only securing transactions, but offering complete financial security, transactional visibility and protection of confidential network relationships. An optimal vendor is one that allows users to easily setup, track and manage all of their telecom trading transactions in real-time from anywhere and at any time via an online portal.
Leveraging such a vender, each transaction between the customer, provider and/ or reseller is setup as an individual account, where all commercial details are clearly defined between each party and disbursement of funds are executed in accordance to the terms of the contract and fulfillment of the required conditions. Additionally, this secure infrastructure provides comprehensive confidentiality and security to all parties involved. Multi-party contracts can be entered without risking circumvention of current or future contracts.
Of equal importance is the ability to conduct collections and resolve disputes. Many disputes are often caused by lack of effective traffic monitoring. Usually, technical deficiencies are to blame for discrepancies in usage and billing. To avoid these inefficiencies, it’s important for traders to diligently monitor their traffic. More often than not accurate monitoring can resolve issues even before an invoice is cut.
To stay protected and remain successful, companies must fully integrate a security strategy into their business plan.

1) Communications Fraud Control Association
KPMG- India fraud survey-by Swati Prasad for Inside India 40b-globally-7000008466/ 3-12-14
White paper “Waveroad Securit” by Stephen Brown (
White paper “Telecoms Fraud Management who is winning the battle” by Praesidium Business Consultancy (
“A fraud detection model for Next-Generation Networks” by M.A. Bihina Bella, M.S. Olivier and J. H. P. Eloff, Information and Computer Security Architectures (ICSA) Research Group, Department of Computer Science, University of Pretoria South Africa.
“Telecom Fraud Management: A Strategic Perspective” Equinox (

Vertical Market

Vertical Market

“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be”

-Wayne Gretzky-
The telecommunications industry has developed almost analogously to the computer industry in terms of information created, handled and presented. Much like the early computer processes, which were tied to the rows and columns of databases, early telecommunications relied on and were restricted by, strict rigidity and structure. The sector has, however, grown significantly into the multi-faceted entity it is today, pushing information reactively and proactively to billions of users every day through SMS messages, telephone calls, television, radio and the internet. As has been pointed out in previous blogs, the traditional sources of income in telecommunications, voice services are on a decline, even with wireless carriers providing the greatest revenue opportunities. However wireless carriers also have suffered with voice revenues having declined 7 % over the last 4 years, however; data revenues have soared 132% and now accounts for about 35% of the total revenue for the wireless industry.1 This trend is set to grow significantly, and with it the need for the development of such technologies as cloud computing (bringing the cost of management of large data bases to an acceptable level and providing the opportunity for virtual and custom designed platforms.) Couple this with the enhanced development of Machine to Machine (M2M) technology and you have created new revenue opportunities where services rather than hardware per say, are thought to represent a greater source of value. Services are defined in the context of emerging mobile business models in popular consumer and enterprise areas such as entertainment, social networking, Mobil payments, Mobil cloud services etc. As competition drives down margins, solution selling into vertical markets (a market where vendors offer goods and services specific to an industry or other group of customers with specialized needs) enables real competitive differentiation and allows increasingly sustainable profit margins. Vertical marketing open new doors, taps niche markets and builds customer loyalty. When telecom providers focus on vertical solutions, and they move away from the commodity voice sale and toward higher-margin, value-added services. The following is a sample list of vertical industries as defined according to Standard Industrial Classification (SIC) developed by the US Department of Commerce: Healthcare

Financial Services





1) Open Mobile-The Growth Era Accelerates- The Deloitte Mobile Survey 2012

Other Sources:

Top 10 Predictions -IDC, Global Headquarters 5 Speen Street Farmington, MA (

Telecom Services in Vertical Markets, 2012-2016- The Insight Research Corporation

White Paper, 2013 Outlook on Telecommunications- Deloitte

White Paper, Telecommunications in Vertical Markets: Challenges and Opportunities-Alcatel-Lucent

White Paper, Open Mobile Survey 2012 Deloitte

Machine to Machine (M2M)



M2M (machine to machine) is a technology that allows both wireless and wired systems to communicate with other devices.
M2M uses a device to capture an event which is relayed through a network (wireless, wired, or hybrid) to an application (software program).
Personal Communication has evolved from traditional phone calls to today’s text messaging using Short Message Services (SMS) or multimedia content through Multimedia Messaging Service (MMS). Cellular M2M communications use similar types of mechanisms to send short data bursts of information. (For example reporting residential meter readings)1 As mobile phone networks grew M2M applications have expanded. Specifically it is used in a wide range of fields including remote monitoring of elevators, crime prevention such as car and home security, mobile payments such as credit card authentication terminals and telematics for luxury cars.2
Starting at the end of 2000 M2M began a period of change similar to the expansion of mobile phone networks in the 1990s, brought about by the advent of cloud computing.2
Today with the improved performance of communication devices, Mobil communication, expansion of IP networks across the world and Cloud computing, the Machine to Machine market is poised for the biggest transformation in its 10 year history.3
Cloud analyst & author of the latest research report from Maravedio-Rethink, Bill Leieur said that Cloud computing will help address many of the biggest challenges to mass market M2M adoption, the main two being deployment cost and scalability.3 Through Cloud connectivity and increased cellular and wireless connection speeds, providers of M2M solutions now can offer Platforms as a Service (PaaS) which simplify machine networks allowing users to manage developments remotely. Such a central PaaS can also offer Application Program Interfaces (API) that can be used to develop custom applications.
Berg Insight, an independent wireless analyst firm, has stated that the number of cellular network connections for M2M communications was 47.7 million in 2008 with the forecast for 2014 to grow to 187 million.4
Jasper Wireless and Machina Research (a specialist and M2M research consulting firm) has announced the results of an industry research project summarized in a White Paper. (, to down load White Paper)
The White Paper found that mobile network operators (MNO) that implemented a cloud-based M2M services management platform could potentially see a five- fold profit increase.
The White Paper investigates purpose-built M2M platforms and the potential to significantly enhance a mobile operator’s prospects in the M2M space including:

*Supporting the need of clients, who are looking for partners to integrate into end-to-end business processes, rather than simple providers of connectivity. To this end, clients of cloud-based providers of M2M platform services are also able to benefit from the wider operator and M2M ecosystem across different geographies.

*Maintaining a leading edge proposition in a rapidly changing, and technically sophisticated, marketplace. A third –party, cloud-based, M2M platform capability can potentially be positioned as a competitive differentiator in this context.

*Supporting multi-country client solutions. Given the level of systems integration that is required between mobile operators and companies offering (or using) M2M solutions, there is a considerable benefit in using the same platform to support solutions in multiple geographies.

*Reducing operator costs, in the context of a typically low-ARPU environment. Cloud-based platforms offer operators a low-cost, low risk entry into providing M2M connectivity and associated services without disrupting or burdening their core lines of business.
M2M is widely recognized as being a significant future growth opportunity for mobile operators. Machina Research predicts that there will be 2.1 billion cellular M2M connections worldwide by 2020 and expect that the addressable market for mobile operators in M2M will total USD 373 billion in 2020.5

1) White Paper by Juniper Networks ( “Machine-To-Machine (M2M)-The Rise of the Machines”

2) White Paper by Tatsuzo Osawa ( “Practice of M2M Connecting Real-World Things with Cloud Computing”

3) RCR Wireless News Americas (

4) M2M Machine Evolution Article (M2M Connections May Reach 187.1 Million by 2014) & SmartBrief Press Release

5) Jasper Wireless ( & Machina Research ( White Paper

Additional references:

Atlantic-ACM (”Luck ’13 Wholesale Forecasts

Capacity Magazine “Current Analysis Cloud Survey 2012”,” Wholesale Reborn”

M2M World News ( market research report “Machine to Machine (M2M) Market

Global Forecast & Analysis (2012-2017)by Hardware Components, Technologies & Applications.

Companies and Market.Com ( “Global M2M Wireless Market to Increase by 23% Over the Next Five Years”

Wikipedia “Machine to Machine”

U.S. Wholesale Market Trends

The US wholesale market, estimated to decline in revenue generated from TDM voice and traditional data products the next five years, is projected to remain relatively stable due to adding an estimated $700 million through new revenue sources such as wireless wholesale and M2M (machine to machine technology). These new emerging growth engines will help stave off the decline driven by migration of buyers to IP based voice services and Ethernet based transport services.

Wireless backhaul has been the wholesale growth engine for several years due to the heavy demand for data provided to users, smartphones and apps. The use of Ethernet has been increasing as a result of the demand1.

Atlantic-ACM2 estimates that the total US VOIP wholesale TDM voice market will decline by a CAGR (compound annual growth rate) of 11% from 2011 to 2017. At the same time the emergence of voice-over-LTE3 will help drive traffic toward a greater amount of IP-based voice traffic, enabling greater interconnection and direct connection. The wholesale voice system will undergo an immense shift over the next five years as companies roll out the next generation of wholesale voice services1.

1 Information from report on US Wholesale Telecommunications Industry (Atlantic-ACM)

2 An independent research consultancy serving the telecommunication and information industries.

3 A standard for wireless communication of high speed data for mobile phones and data terminals.

2013 International Telecoms Week Tradeshow


Akirix will be on display at the 2013 International Telecoms Week tradeshow in Chicago, May 14-16. Stop by and meet the team and see how we can increase the efficiency of your business with Simplify, our proprietary software platform. We’ll have on-site demonstrations and training. We can’t wait to see you.

Welcome to Akirix!

Akirix simplifies the world of business by providing the means to transform how business is paid for. With Simplify, our Secure-Online-Payment-Platform, you and your business associates can now easily unify your invoicing, guarantee your payments and make your payments worldwide from the convenience of your computer, while resting assured that your assets are rock solid secure and protected.