Flow of the explanation in this lesson.
Joining a payment scheme: membership, adherence and the application
What you will learn
Your objective. By the end of this lesson, you will be able to explain joining a payment scheme: membership, adherence and the application and apply it to a real banking scenario.
Why it matters. For a business analyst, the scheme application is a requirements package.
Chapter objective: Joining a scheme, entering a new market, and deciding whether to build or buy
Key learning points
- Joining a payment scheme
- EPC adherence process
- Direct participation
- Operational readiness evidence
- Adherence timeline
- BA practice: scheme application requirements
Key terms
Indirect participant: A bank or institution that uses a payment system through a direct participant, without holding its own settlement account.
Direct participant: A bank or institution that holds an account in a payment system and sends and receives payments directly.
Settlement: The final movement of funds between banks to discharge obligations created by cleared payments. Settlement is usually made in central bank money or through correspondent accounts.
Payment flow diagram showing Joining a payment scheme: membership, adherence and the application.
Practise this lesson
Exercise
Apply the concept in this lesson to a real banking scenario.
Use the definition, the example and the key points in this lesson.
- What to do. Explain the concept in your own words, give a banking example with an amount, and state what goes wrong if it is misunderstood.
Correct result. A correct answer names the concept accurately, uses a realistic banking example with a concrete amount, and identifies the consequence of getting it wrong.
Why. Understanding is not memorising a definition. It is being able to explain it, apply it, and spot the failure it prevents.
Check your understanding
Practice question
Which of the following best describes joining a payment scheme: membership, adherence and the application?
Takeaway and next step
What to remember
For a business analyst, the scheme application is a requirements package.
Follow a payment through every stage, from instruction to beneficiary credit, and note where it can stop.
Open the Payment Lifecycle Simulator →
Builds on "Measuring product success: SLAs, KPIs and the numbers that matter".
Transcript and full text
Show transcript
Joining a payment scheme is a formal process, not a purchase. For SEPA, a payment service provider applies for adherence to the scheme by signing the adherence agreement and proving it meets the scheme's requirements. For a card scheme, the applicant applies for membership, and the scheme assesses its financial standing, its risk management, and its operational capability. For SWIFT, the applicant applies for membership of the cooperative and is assigned a BIC. Each scheme has its own application, its own criteria, and its own timeline, and none of them is fast. Adherence to a SEPA scheme means the provider agrees to follow the rulebook, to process payments according to the scheme's timelines, and to accept the scheme's dispute and exception procedures. The European Payments Council publishes the adherence process, and the provider must submit evidence that its systems can send and receive the scheme messages, that its cut-off times are published, and that its customer terms match the scheme rules. Adherence is not a one-time event: the provider must re-confirm adherence when the rulebook changes, which happens every year. Direct and indirect participation are the two ways to join a scheme. A direct participant connects to the clearing system itself, holds a settlement account at the central bank, and settles its own obligations. An indirect participant connects through a direct participant, which is usually a large bank, and settles through that bank's account. Direct participation gives control and lower per-payment cost, but requires a central bank account, a larger capital base, and a bigger operations team. Indirect participation is faster and cheaper to start, but the firm depends on its sponsor bank for settlement, for cut-off times, and for exception handling. The application must prove operational readiness. The scheme will ask for the firm's disaster recovery plan, its business continuity plan, its incident management procedure, and its testing evidence. For a card scheme the applicant must also prove it meets the PCI DSS security standard, and for a SEPA scheme it must prove it can handle the scheme's R-transactions, which are the rejects, returns, refunds, reversals and recalls. A firm that cannot show these will not be admitted, however good its technology is. Financial standing is assessed separately. The scheme will ask for audited accounts, capital adequacy, and insurance. A card scheme will set a collateral requirement, which is money the member must deposit with the scheme to cover its settlement obligations if it fails. The collateral is calculated from the member's volumes, and it is reviewed regularly. A new member with low volumes pays a small collateral, but the collateral grows with the volumes, and the firm must be able to fund it. The timeline from application to go-live is measured in months, not weeks. A SEPA adherence typically takes three to six months, a card scheme membership six to twelve months, and a new clearing system connection longer. The timeline includes the application, the scheme's assessment, the certification testing, the pilot, and the go-live. The business analyst must build the project plan around these dates, and must not promise a launch date before the scheme has confirmed the certification window. For a business analyst, the scheme application is a requirements package. It must include the scheme's requirements, the evidence for each one, the owner, and the deadline. The acceptance criteria must include a test where the scheme's checklist is completed and every item is signed off by the scheme. Last reviewed 7 November 2026. Further reading: the European Payments Council SEPA adherence process; the Visa and Mastercard membership rules; the SWIFT membership and BIC allocation process; the Bank of England guidance on access to payment systems.
Joining a payment scheme is a formal process, not a purchase. For SEPA, a payment service provider applies for adherence to the scheme by signing the adherence agreement and proving it meets the scheme's requirements. For a card scheme, the applicant applies for membership, and the scheme assesses its financial standing, its risk management, and its operational capability. For SWIFT, the applicant applies for membership of the cooperative and is assigned a BIC. Each scheme has its own application, its own criteria, and its own timeline, and none of them is fast.
Adherence to a SEPA scheme means the provider agrees to follow the rulebook, to process payments according to the scheme's timelines, and to accept the scheme's dispute and exception procedures. The European Payments Council publishes the adherence process, and the provider must submit evidence that its systems can send and receive the scheme messages, that its cut-off times are published, and that its customer terms match the scheme rules. Adherence is not a one-time event: the provider must re-confirm adherence when the rulebook changes, which happens every year.
Direct and indirect participation are the two ways to join a scheme. A direct participant connects to the clearing system itself, holds a settlement account at the central bank, and settles its own obligations. An indirect participant connects through a direct participant, which is usually a large bank, and settles through that bank's account. Direct participation gives control and lower per-payment cost, but requires a central bank account, a larger capital base, and a bigger operations team. Indirect participation is faster and cheaper to start, but the firm depends on its sponsor bank for settlement, for cut-off times, and for exception handling.
The application must prove operational readiness. The scheme will ask for the firm's disaster recovery plan, its business continuity plan, its incident management procedure, and its testing evidence. For a card scheme the applicant must also prove it meets the PCI DSS security standard, and for a SEPA scheme it must prove it can handle the scheme's R-transactions, which are the rejects, returns, refunds, reversals and recalls. A firm that cannot show these will not be admitted, however good its technology is.
Financial standing is assessed separately. The scheme will ask for audited accounts, capital adequacy, and insurance. A card scheme will set a collateral requirement, which is money the member must deposit with the scheme to cover its settlement obligations if it fails. The collateral is calculated from the member's volumes, and it is reviewed regularly. A new member with low volumes pays a small collateral, but the collateral grows with the volumes, and the firm must be able to fund it.
The timeline from application to go-live is measured in months, not weeks. A SEPA adherence typically takes three to six months, a card scheme membership six to twelve months, and a new clearing system connection longer. The timeline includes the application, the scheme's assessment, the certification testing, the pilot, and the go-live. The business analyst must build the project plan around these dates, and must not promise a launch date before the scheme has confirmed the certification window.
For a business analyst, the scheme application is a requirements package. It must include the scheme's requirements, the evidence for each one, the owner, and the deadline. The acceptance criteria must include a test where the scheme's checklist is completed and every item is signed off by the scheme. Last reviewed 7 November 2026. Further reading: the European Payments Council SEPA adherence process; the Visa and Mastercard membership rules; the SWIFT membership and BIC allocation process; the Bank of England guidance on access to payment systems.
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