Settlement functionality for Mojaloop

1

Settlement Today (central-settlement)

1. All transfers are recorded against the Position account (per participant, per currency.)
2. The net debit cap for each account type, participant and currency is recorded as a separate entry.
3. The system only supports multilateral net settlements.
4. As a transfer completes, it is assigned to the currently open settlement window.
5. Settlements are requested by selecting the IDs of the settlement windows to be included.
6. Position accounts are updated by the amount of the settlement before the settlement completes.

2

What are the key problems with Settlement?

• All transfers are assigned to a single settlement window.
• There is no deterministic assignment of transfers to a settlement window.
• If a single transfer within a settlement window cannot settle, it prevents settlement processing for all settlements within that day.
• Although settlement models are segmented by ledger account type, there is:
• No standard way for the switch to assign a ledger account type to a transfer
• No way for a DFSP to assign a ledger account type to a transfer

3

Settlement - vNext

1. We support multiple settlement models
2. Settlement models are defined by a ledger account type
3. All transfers are recorded against the appropriate account type (per participant, per currency.)
4. The net debit cap for each account type, participant and currency is recorded as a balance in the settlement account defined for the settlement model.
5. The system supports multilateral deferred settlements and immediate gross settlements.
6. As a transfer completes, it is assigned to the correct settlement batch based on its characteristics
7. Settlements are requested by selecting the settlement model and the IDs of the settlement windows to be included.
8. For deferred net settlements, position accounts and settlement accounts are updated by the amount of the settlement when the settlement completes.
9. For immediate gross settlements, transfers are journaled across from the position account to the settlement account as they complete.

4

Settlement - Current vs vNext

5

vNext

• https://mojaloop.github.io/reference-architecture-doc/boundedContexts/settlements/

​

​

6

Central-Ledger

​

​

7

Way forward?

• Current central-settlement would require major refactor to be suitable for future Mojaloop settlement requirements
• Follow reference architecture principles, ensuring that Settlement is self managed
• How do we support Central-Services, while at the same time build for the future i.e vNext

​

​

8

Suggestion

• Review and update the reference architecture to ensure all requirements are captured (review and update)
• Build the new Settlement as part of vNext (Settlements BC)
• Build integration components into Central-Services to play nice with vNext Settlement

9

Summary

• Review / Update reference architecture based on Settlement workshops and material
• Create stories to build Settlement v2 / vNext
• Update central-ledger to make use of the new Settlement component once Settlements BC is complete
• Settlement API updates for administration API
• Implement! i.e let the magic happen!

10

Any questions?

11