What does indirect connectivity in a payment system involve?

Indirect connectivity in a payment system primarily involves a sponsorship or agency arrangement. This means that entities without direct access to payment systems can still participate by working through an established participant, often a financial institution or a service provider. This model allows for the facilitation of payments without the need for every entity to establish its own direct connection, which can be costly and complex.

Through sponsorship, a smaller or less equipped payment service provider can leverage the existing infrastructure and regulatory compliance of a larger institution. This relationship enables broader access to payment networks, helping to foster inclusivity and enhancing the efficiency of payment services.

Establishing direct connections with banks or only utilizing international payment systems would indicate a more direct method of participation, which does not capture the essence of indirect connectivity. The focus on agency or sponsorship arrangements distinctly highlights how organizations can efficiently engage in payment systems without direct involvement.