SEPA Instant Credit Transfer The time to act is now! SEPA Instant Credit Transfer| The time to act is now!

Contents

SEPA Instant Payments - The time to act is now! 01 What is SCT Inst and what are key use cases? 02 What are Key drivers for SCT Inst? 03 SCT Inst – Current Participation Statistics across SEPA Zone 04 Route to Instant Payments adoption across Europe 05 Emergence of P27 - Nordics 06 Irish Outlook 07 Request to Pay – Game changer? 08 Offering Instant Payments 09 - Considerations for Banks - Considerations for Corporates What does the future hold for Instant Payments? 15 Ending Notes

02 SEPA Instant Credit Transfer| The time to act is now!

SEPA Instant Payments - The time to act is now!

SEPA Instant Credit Transfer (SCT Inst) has been launched since Nov 2017 across EU as an optional Payment scheme for banks to participate in. Adoption has been mixed across the EU due to PSD2/Openbanking implementation deadlines.

However many countries have taken a pro-active stance and have implemented SCT Inst at a domestic level with collaboration between banks and involvement of the Central Bank.

These countries have a head start and have already started looking beyond SCT Inst to start offering various overlay services like making payments using Proxy details (Mobile Number/ Email addresses), reducing the time limit for execution of instant payments, developing new services like Request to Pay to support wide variety of use cases.

It is clear from countries where SCT Inst is already live that collaboration between banks is a key factor for successful launch.

With the final deadline for PSD2 passed, banks need to start looking at SCT Inst in conjunction with Open Banking to maximise the opportunities both offer.

01 SEPA Instant Credit Transfer| The time to act is now!

What is SCT Inst and what are key use cases?

SCT Inst allows instant payment non-business hours. Banks can achieve incurring any penalties. Other use cases transactions in EUR currency to any significant cost savings by reducing cash of C2B also include ‘pay-on-delivery’ of beneficiary within Euro Zone within 10 costs arising from the distribution of cash, physical goods and ‘pay-per-use’ services. seconds. SCT Inst has potential applications ATM maintenance and security costs. in a variety of customer segments. Banks Increased usage of instant payments Business-2-Business (B2B) will have to develop a value proposition solution in the P2P segment will ultimately SCT Inst will be widely accepted for taking into considering existing use case, lead to a . corporate payments if limit is increased solutions available in the market and the (>€15,000). Banks can develop overlay characteristic of the service made available Consumer-2-Business (C2B) services around B2B invoice payments for to target customers. Following are some of A merchant can provide consumers corporates to implement ‘Just-in-time’ cash the relevant use cases with an alternate payment instrument management practices. Firms can achieve to cards for e-commerce and PoS retail cost savings by efficient use of cash and the Peer-2-Peer (P2P) transactions. This will lower the payment streamlining of the reconciliation process. Instant payments are likely to replace costs for merchants and reduce credit risk cash and checks for everyone with a bank for e-retailers on the sale of digital content Business-2-Consumer (B2C) account. The most suitable use case for such as music, movies and books. The Organisation can use instant payments for SCT Inst in the P2P segment includes: merchant can then pass the cost savings to salary and pension payments. This would emergency money transfer, remittance, customers in the form of loyalty rewards. provide the recipient with faster access to rent payment, restaurant bill split, and Likewise customers also have convenience funds. payment for second-hand good during with paying bills at last minutes without

3:00 pm 3:01 pm 3:02 pm 3:03 pm 3:04 pm 3:05 pm 3:06 pm 3:06 pm

01 02 03 04 05 06 07 08

C2B B2B B2C P2P

Customer purchases an Funds are instantly “Just-in-Time” Funds are credited Publisher initiates Funds are Author remits Funds Funds are online book and pays credited to online cash management to publisher royalty payment to credited to to their family via available for via instant payment retailer account engine account author via instant author account Peer-2-Peer Instant author to be method available on initiates an payment as per Payment App withdrawn from retailer website automated instant contractual terms Bank ATM payment to the publisher from sale proceeds

Stats: European Payments Council 09/09/2019

Figure 1. SCT Inst – Use Cases

02 SEPA Instant Credit Transfer| The time to act is now!

What are Key drivers for SCT Inst?

The psychology of Instant gratification is has provided organisations with a cheaper defining the characteristics of modern alternative to traditional payment methods. society. The expectation of the tech- Leading money transfer services and online savvy generations and digitalisation have retailers are increasingly looking to provide resulted in greater speed in all areas of virtual currency as an additional payment life. Furthermore, regulations like PSD2 are option to its customers. opening up banking ecosystem, fuelling the development of real-time payment Evolving regulatory landscape and platforms by FinTech firms. alternative to card payments PSD2 and SCT Inst will bring more Changing Customer Preferences competition to the cards market by offering ‘Power of Now’ – The demand for instant alternate payment options compared to services has forced the customer to traditional card payments offering range look for real-time solutions in social of choices to consumers and merchants. and commercial spaces. Consumers If the card industry fails to innovate at a increasingly expect convenience, 24*7 similar pace, PSD2 and Instant Payments availability and money that moves as fast will start giving a tough competition to as an email. Furthermore the adoption of existing card payments. mobile for daily activities and use of digital wallets solutions to transfer funds have EC has defined a clear objective to have increased drastically due to ease of use. pan-European instant payment solutions, such as paying for goods with a mobile Market Demand device or allowing money to move from Changing customer preferences has given any account to any account, anywhere rise to new service delivery model. The last in Europe in real time and 24/7. These decade witnessed the emergence of firms are seen as alternative to Cash and Card focussed on providing services that are payments. instant, easily accessible and available 24*7. Likewise there is increasing pressure from To support this objective, ECB developed the market for instant payment for services a pan-European Instant Payment rendered at low processing cost. system called TIPS which offers final and irrevocable settlement of instant payments Digitalisation and technological in euro, at any time of day and on any day advancement of the year. The adoption of new technology has drastically transformed the payments landscape over the past few years. The emergence of virtual currencies like Bitcoin and Ripple with near real-time settlement

“TIPS could have the capacity to disrupt existing payment solutions - including cards, at least for euro denominated payments. With Instant Payments and the PSD2, Europe has launched two ambitious initiatives. Now we need to work together to create a fully digital European payments system that is open and fair for existing and new operators.“

Valdis Dombrovskis, VP Financial services, EC 03 SEPA Instant Credit Transfer| The time to act is now!

SCT Inst – Current Participation Statistics across SEPA Zone

2069 PSPs

22 Countries

Sweden (1) Finland (4)

51% European PSPs Estonia (5) UK (14) Latvia (4) Denmark (1) (15)

Netherlands (8) Republic of Ireland (2) (1282) (1) Austria (445) Belgium (20)

Luxembourg (2) (125)

Bulgaria (2) Spain (88) Portugal (15) Italy (30)

Monaco (1) Cyprus (1)

Malta (4)

Source: European Payments Council 04/11/2019

Figure 2. SCT Inst – Adoption across EuroZone

04 SEPA Instant Credit Transfer| The time to act is now!

Route to Instant Payments adoption across Europe

Banks across Europe have adopted a After a period of extensive end-to-end Scheme. Similarly hard timeout deadline collaborative approach for implementation (E2E) testing, the instant payments is 7 seconds compared to 20 seconds of SCT Inst to reap full benefits of the infrastructure went into production. Since under the SCT Inst Scheme. Also there is scheme. Below are some chosen examples then, banks have been gradually turning no maximum amount limit for transaction on how banks have taken up the instant up the volume: opening to more and more within Netherlands. payments journey in Europe. customers using mobile and internet banking channels. The potential single The E2E performance is more than Netherlands instant payment volume in these channels satisfactory: almost all transactions The four largest Dutch banks committed amounts to one billion transactions (>99.5%) are within 5 seconds. Uptime in early 2015 to build an instant payments annually. The implementation approach (24/7) is high and stable (>99.5%) and infrastructure under the programme is based on a controlled, stepped rollout Reject rate is well below half a percent. guidance of the Dutch Payments rather than a big bang. Association. All relevant stakeholders, including the Dutch Central Bank, have Currently 4 banks are member of the been involved from the start. From the SCT Inst scheme participating through beginning, the view has been that instant Equens Worldline as choice of CSM. Equens payments should become the new provides pan European reach through normal. Customers – both consumers and its TIPS Gateway offering. Domestic businesses – expect to get service instantly, transactions within Netherlands have a 24/7 from there, especially when it comes SLA of 5 seconds for processing compared to payments. to 10 seconds required by SCT Inst

Detailed Start Start E2E First live Controlled design building testing transactions Roll-Out

May 2016 July 2016 July 2018 Jan. 2019 Spring 2019

Design Detailing Build Test Try-Out Live

H2 2015 H1 2016 H2 2016 2017 H1 2018 H2 2018 H1 2019

Source: Dutch Payment Association

Figure 3. Netherlands – Road to Instant Payments

05 SEPA Instant Credit Transfer| The time to act is now!

Emergence of P27 – Nordics

P27 is a project driven by six major Nordic interoperability between existing solutions in June, as another important milestone, banks (Danske Bank, Handelsbanken, like the current schemes NPC launched an open consultation on Nordea, OP Financial Group, SEB and in the Nordics that are very popular, but its rulebooks that will continue until 6 Swedbank). The overall vision of P27 is to used only domestically. September, 2019. create the world’s first integrated region for instant payments in multiple currencies, On the governance of P27, the six banks P27 rulebooks will mimic SCT Inst to the which is SEK, DKK, EUR and ideally NOK, have established a company named P27 extent possible to harmonise payment through an open access infrastructure Nordic Payments Platform which will be products, but some deviations would be capable of delivering state of the art responsible for the operational activities, required. payment services to customers across the including outsourcing towards vendors, Nordics. The name refers to the 27 million and act as a system owner. P27 NPP has Mastercard, through the acquisition of people who live in the Nordics. been registered in , but will be and its expertise in building true Nordic company. Yet, being a Swedish bank account real-time payments One concrete deliverable of P27 will be to aktiebolag, AB, the company should apply infrastructures, was recently selected as allow for instant cross-border payments for a clearing license from the Swedish the trusted partner for the P27 project. across the Nordics. This would really be Financial Supervisory Authority, which is Mastercard/Vocalink’s real time payment breaking new ground in terms of being able being prepared. technology will help to connect Nordic into to do cross currency payments in real time. one regional payment area, transforming Payments would instantly transform into Another key legal entity is the Nordic how money moves across the markets for the other specific currency and P27 would Payments Council (NPC) which has been consumers, businesses and governments. execute the foreign exchange transaction established as a separate non-profit and accompanying screening in real time. association by the Nordic bankers In a highly integrated region as the Nordic associations. The NPC will manage the countries, this will provide huge benefits Nordic payment schemes to be used to both consumers and businesses. This is in P27. Members of the NPC will be particularly the case when such a service is payment service provides that adhere supplemented by functionalities to enable to the Nordic payment schemes. Earlier

Developed Co-operated modular Onboarded closely with payment Selected leading Nordic national infrastructure preferred payments central banks solution vendor professionals 2017 We Start P27 are project here

2018 2019

Designed a future-proof system tailored to Consulted wider Conducted Completed Set up P27 Nordic region Nordic banking rigorous first draft of Operations community vendor rulebooks and interim company selection established governance

Figure 4. P27 - Roadmap

06 SEPA Instant Credit Transfer| The time to act is now!

Irish Outlook

Ireland is one of the few countries in proxy lookup) to facilitate pan European "‘The five main retail Europe in which none of the Domestic mobile account to account payments. banks have a SEPA SCT Inst offering. In a banks here recently market where over 90% of SEPA payments Key Challenges provided BPFI with a are domestic in nature, it can only make While there a lot of considerations listed sense for an Irish bank to deploy SEPA further in this document for banks to mandate to examine instant when the majority of other Irish consider when implementing SEPA SCT the development banks can at least receive SEPA instant instant, the key challenge for any institution payments (as Beneficiary Bank). is the prioritisation of the implementation of an industry-wide against other change projects. As SCT Inst consumer and merchant Overlay Service is not mandatory it needs to be prioritised While the Irish Banks are considering SEPA against many mandatory regulatory change mobile-based payment instant deployments, Irish Consumers projects such as, for example, PSD2. proposition for the Irish have started using faster payment overlay Given that payments will be instant, services where available. This can be many banks will have to review their market." seen in the rise of Revolut and N26’s current payment infrastructure and - Richard Walsh, Head of Digital & Irish consumer base and the usage of evaluate its suitability for high volumes Payments Strategy, Banking and their respective P2P services. Indeed the of instant payments. Considering that Payment Federation of Ireland. term ‘I will Revolut you the money’ is fast many payment platforms have evolved becoming a term for Irish consumers over many years in a batch payment transferring payments between each other environment, this evaluation may uncover instantly. that a platform upgrade is required. This may add substantial cost and deployment While these are closed loop payment effort to Banks in their SEPA SCT instant offerings (both payer & payee need to implementation. be Revolut customers), they are steadily gaining market share through their A SEPA SCT Inst implementation should not perceived broad reach. Given its customer be treated as a technology-only project. base, there is still an opportunity for Irish It is key for institutions to develop their Banks to collaborate on a mobile payments payment strategy on how they will leverage solution that would leverage a SEPA SCT the infrastructure and look at what Inst platform. Many European countries compelling services it will offer to both its have successfully developed such a retail and corporate customers. Lessons solution; Jiffy in Italy, Payconiq in Belgium, should be learnt from other jurisdictions in Norway, and Swish in Sweden are where SPEA SCT instant services were some of the mobile payment solutions initially offered as a premium service worth mentioning. and priced as such to end consumers. This pricing quickly reduced with active The EPC is actively encouraging such competition between the banks in that innovation and is providing key pieces of market. infrastructure such as the SPL (standard

07 SEPA Instant Credit Transfer| The time to act is now!

Request to Pay – A game changer?

One of the most talked about overlay Countries which have mature instant level EPC has setup a Request to Pay service for instant payments is Request payments infrastructures are already Multi-Stakeholder group in 2019 with an to Pay (R2P). R2P offers wide range of use offering R2P services. E.g. ‘UPI Collect’ objective to analyse R2P messages and its cases across consumers and businesses. It option in India, using underlying UPI inter-operability between various actors also offers an alternate option to traditional infrastructure, offers both P2P and B2C with option to include these messages in Direct Debits and Card Payments. use cases. Customer can request for funds the SCT and SCT Inst Schemes. Some of the standard use cases of R2P from their friends and Businesses can include P2P payments, E-billing/Invoicing, request payments for any purchases from However to fuel the adoption, there are lot E-commerce payments, Point of sale customers. of challenges which needs to be addressed payments, etc. like feasibility of Recurrent R2P, Pay Later There are lot of R2P initiatives which R2P, addressing customer protection R2P in near future will give alternate means have been launched recently in Europe issues like Refund Rights similar to Direct of payments for E-Bill payments, Card to maximise full potential of instant Debits and Chargebacks similar to Card Transactions and also traditional Direct payments. In the UK, Pay.UK is leading the transactions. Debits. development of secure messaging service for R2P with draft specification to be ready Banks need to understand the benefits and by summer of 2019. At pan-European challenges these overlay services offers and include it in their long term Instant Payment Strategy.

Payer Requests Retailer/ to Pay by Bank at Merchant enters Point of Sale or payee details, online checkout amount, validity of request, execution date and initiates RTP Payer gives Payer consent / authenticates authorisation with their for initiating bank the payment

Retailer / Merchant gets Payer Bank initiates confirmation a SEPA Inst Credit on acceptance Transfer to Payee Bank of RTP

Service / Good delivered

Figure 5. A typical request to pay journey (Ecommerce/Point of Sale) 08 SEPA Instant Credit Transfer| The time to act is now!

Offering Instant Payments

Considerations for Banks Low latency inevitably have to be redesigned to enable Most of the banks aiming to provide instant Until recently, payments were executed the simultaneous performance of some payments through the SCT Inst scheme will by completing a series of actions on a actions. Furthermore, these actions, face one major challenge: how to handle sequential basis. Payment processing even if performed at the same time, will a payment in less than 10 seconds when used to take a few days in its entirety have to be carried out within a drastically current payment processes run in minutes when cross-border and cross-currency shorter timeframe. In fact, the clearing for the most efficient, and hours or days transactions were involved. Even though and settlement of payments will take no for the rest. In particular, we identified few the entry into force of the revised more than one second. Some clearing and main aspects to analyse. Payment Services Directive (PSD2) is settlement mechanisms (i.e., CSM) that decreasing the execution time to one are fully compliant with the SCT Inst have business day for EEA-currency payments, already been established to enable the some progress is still needed to reach processing of these real-time payments. the 10-second target. The process will

24*7 Availability across systems

Choice of Low CSM Direct Latency Vs Indirect

Key Considerations

Liquidity Implementation Management Strategy

Legacy Fraud / AML Systems processes

Review existing architecture

Figure 6. Instant Payments consideration for banks

09 SEPA Instant Credit Transfer| The time to act is now!

Availability forecast instant payment patterns. To "Real time payments Instant payments do not only need to be tackle this liquidity concern, the ECB is solutions in the United executed in real-time, they must also be revising its Central Liquidity Management accessible on a 24/7 basis. This implies a (CLM) by 2020 to provide a harmonised States have passed an constant availability of payment systems and standardised management of liquidity inflection point, driven by to enable the initiation of payments in the European payment framework. outside regular business hours. However, High volume payments will be settled a significant increase in many commonly used payment systems through the Real-Time Gross Settlement awareness and 'pull' from are incompatible with the execution of (RTGS), while low-value instant payments real-time payments, since they rely on will be through TIPS. Financial institutions those who have the most the processing of transactions in batches. will be able to allocate their liquidity to to gain, large corporate Payments are collected during the day each service (i.e., TIPS, RTGS and T2S) in and reconciled for processing through a which they hold a Dedicated Cash Account billers, corporates and batch-based system on a cycle basis. When (DCA). Connectivity with the various merchants. providing instant payments, systems need clearing and settlement mechanisms to be able to submit payments to clearing (e.g., TIPS, RT1) should be ensured by core services at a transaction level. Instead systems’ gateways. The connectors could The banks that are of processing batch files of payments at be multiple in case the bank decides to specific times of the day, banks must have participate in various CSMs to reach a live on the primary US the capability to process a large volume wider network. system today, and the of individual transactions at any time. In order to remain constantly available, Fraud/AML prevention processors that will banks’ payment architecture could rely on As the speed of execution decreases, so provide access to these multiple datacenters that would allow one does the time dedicated to anti-money datacentre to go down while the other(s) laundering (AML) analysis and fraud solutions have stepped take(s) over processing the payment detection. Although this time becomes up their investment in the transactions. This active/active processing almost insignificant in the execution of would require the core banking system to instant payment transactions, it remains rollout schedule Deloitte stay online at all times. a major step that banks must perform is helping to lead across in order to ensure a secure payment Liquidity management environment for both customers and the largest financial For banks, one of the main day-to-day financial institutions. In an instant payment institutions and their challenges is liquidity management. scheme, in just a few seconds, banks This challenge takes on more weight will match customer and transaction consortiums." when offering instant payments. The information against sanction high risk processing of payments through a lists and fraud rules. The implementation Brian Shniderman, Global and US batch-based system has so far allowed of instant payment shall in no case be Cross-industry Payments Practice banks to have foreseeable liquidity a legitimate excuse to jeopardise an Leader, Deloitte Consulting US. flows. With real-time payments, liquidity efficient AML compliance screening or management becomes an important fraud detection process. Therefore, banks factor of uncertainty. Even though the processing real-time payments shall challenge of striking a thoughtful balance optimise their AML screening and Fraud between keeping sufficient liquidity to detection processes while efficiently process incoming payment orders and not managing client-related risk. In order keeping useless cash that could be used to fill this gap, an increasing number of to make investments remains the same, it third-party providers are offering real-time is intensified with the provision of instant payment fraud detection software that payments. Inflows and outflows occur at enables the AML checks and sanctions any time of day and are unpredictable. screening processes to be carried out Therefore, liquidity has to be effectively within seconds by using cutting-edge managed on a much more frequent basis technologies such as artificial intelligence. and banks will attempt to accurately

10 SEPA Instant Credit Transfer| The time to act is now!

Choice of CSM and participation model an efficient improvement to the payment Banks will have to decide which route to chain and an opportunity to modernise take to participate in the SCT Inst scheme. the whole payment architecture. Various CSMs offer direct and indirect participation model. Depending on the • Implementation of a parallel payment existing technical capabilities, future chain that will be dedicated to the payments strategy, banks will have to processing of the SCT Inst messages. It decide which participation model aligns will be completely independent from the best to its needs. other current payment chains and will therefore have a limited impact on them. There are multiple CSMs which offer SCT There has been emergence of Payment Inst across Europe. At a Pan-European level solutions which offer Cloud based EBA Clearing’s RT1 was the front runner Payment as a Service (PaaS) offerings for in terms of offering SCT Inst services from SCT Inst. Depending on the banks’ cloud Nov 2017. ECB came up with TIPS in Nov strategy that can be one of the option to 2018 to foster competition in this space. explore and adopt. Then there are domestic players within Europe like Equens, STET, etc. • Enhancement of the legacy system by adding additional components that will Depending on the market they operate take over when the back-end systems are in, banks will have to consider all the not available. The major benefit of this participation models and all the CSMs as solution is the low investment and rapid they plan to adopt SCT Inst. time-to-market; nevertheless, it is not a suitable long-term strategy since it will Implementation Strategy only add more complexity in an already To overcome all these challenges and complex architecture. Regardless of the technological prerequisites to providing chosen solution, an instant payment instant payments, banks have various architecture shall demonstrate both options. Some of them will decide agility and scalability for the simple to treat Instant Payment separately, reason that real-time payment is by implementing additional modules expected to be the new standard. independent from their existing payment processes, while others will undertake a complete redesign of their payment architecture. In a nutshell, banks could decide to go through one of the three following solutions:

• Implementation of a new payment hub able to handle all types of payments, including instant ones. This solution consumes time and money, but it offers

11 SEPA Instant Credit Transfer| The time to act is now!

Considerations for Corporates 2. Planning the roll out in a phased corporates a head start in their journey Corporates who are planning to adopt manner towards operationalising Instant SCT Inst need to take into consideration a A corporate may choose to offer Instant Payments. variety of factors to ensure they fully unitise Payments as a payment method to the benefits SCT Inst offers. SCT Inst allows selective customer cohorts based Technology and operational impact for immediate payment of a supplier for on internal parameters (e.g. payment should be assessed across the payments delivery against merchandise, to instantly history – customers from low income value chain starting from capturing correct a wrong payment or even to repay groups, customers with high number payment preferences and payment a customer directly upon return of their of NSFs etc.) and have a phased roll-out generation to clearing and settlement, purchase. for other cohorts over a defined period. reconciliation and posting. This Depending on the internal parameters assessment exercise can help corporates Internal considerations identified by the corporate, multiple build a roadmap to transition to a new 1. Building a case for change cohorts may also be selected for the payment process, identify additional cost Building a strong case is critical in roll-out. However, corporates may and resource requirements and ensure successfully operationalising Instant also choose to offer Instant Payments a consistent customer experience across Payments using SCT Inst in any as a payment method to all its new channels. organisation. The first step in this regard customers signing up for the first time. is to assess the current state payment Small-sized corporates whose banking options and identify the associated It is critical to define the customer partners do not have the technical gaps. Understanding the cost and cohort(s) to roll out Instant Payments capability, or the required expertise, benefit drivers associated with Instant before making internal technological and can work with a third-party payments Payments and socialising them within the operational changes. processor to gain a better understanding organisation can help corporates build of how existing payments systems may a case for implementing and offering 3. Building technology and operational be impacted by the adoption of Instant Instant Payments to their customers. readiness Payments, and how workflows can be Corporates can assess benefit drivers Introduction of a new payment configured to mitigate any potential risks. such as impact on bill presentment costs, method affects the existing technology traditional payment methods, working infrastructure and internal operations capital management, reconciliation and within an organisation. Assessing the operational efficiency. Cost drivers can impact of Instant Payments technology be measured as one time set up costs infusion on business processes, and recurring costs associated with current IT infrastructure and payment offering Instant Payments as an option operations (internal processes such as for customers. Corporates also need to reconciliation, cash flow management take into consideration the transaction etc., and internal functions such as limit offered under SCT Inst. accounting, finance etc.) can give

12 SEPA Instant Credit Transfer| The time to act is now!

External considerations services, corporates need to weigh 1. Choosing the right banking partner several factors to determine which bank Selecting the right bank is quintessential best aligns with their organisation’s in building the Instant Payments objectives, payments strategy and capability within an organisation. customer needs. Corporates need a well-defined framework to evaluate the services Below are the key drivers for selecting provided by the banks that will support a bank as an Instant Payments service and accelerate their Instant Payments provider – roadmap. While many banks offer similar

Key drivers for selecting a bank as an Instant Payments service provider

Initial implementation and ongoing maintenance costs of the API / bank interface provided

Cost Cost of additional services/ modules and flexibility in selecting the services/ modules with minimum disruption to existing business processes / technical infrastructure

Launch time for a prototype for the selected use case Time Time to market for the solution

Core payment capabilities offered

Additional payment capabilities offered (e.g. directory services, real time APIs)

Fraud and risk monitoring services Technical depth Alignment with global messaging protocols for the payment solution

Omnichannel integration

Level of technology support offered (SLAs adhered to)

Alignment with Fit with broader payments and IT strategy payments strategy Deployment options (e.g. on-premise, cloud)

Experience with Instant Payments

Solution maturity Number of corporates already working with the bank for Instant Payments implementation (success stories etc.)

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2. Educating the customers 3. Setting up regulatory and security These internal and external With multiple competing payments controls considerations can be used as guidelines services in the market, it becomes While there are multiple benefits by corporates to move ahead in their difficult for customers to clearly associated with Instant Payments, there journey towards Instant Payments. distinguish one from another. Creating may be potential associated risks as well. Success in operationalising Instant top of mind recall requires significant Implications of operationalising Instant Payments will depend on how effectively investment in educating the customers. Payments on customer data should be corporates can work with different For Instant Payments to be brought to understood by working with regulators, stakeholders in the ecosystem to provide market, the industry needs a broad- financial institutions, processors, as well customers with a simple, easy, quick and based education program aimed at as other payments service providers, seamless payments experience across customers that outlines the myriad and additional security measures and different payments channels. opportunities and benefits of Instant controls should be set up accordingly. Payments. To effectively drive the Corporates can collaborate with their adoption, education must address two financial institution or payments key challenges – lack of understanding processor to enhance real-time of what “Instant Payments” really is, and monitoring and alerting capabilities for lack of awareness of its benefits to end their business. customers.

14 SEPA Instant Credit Transfer| The time to act is now!

What does the future hold for Instant Payments?

As domestic Instant payments schemes as sending funds within a country. 13 seconds. SWIFT carried out a similar across the globe (including pan-European Recently SWIFT released the results of a trial with SWIFT gpi Instant and TIPS with SCT Inst) gain momentum in terms of global trial to integrate SWIFT gpi Instant, involvement of 19 Banks across EMEA, adoption, International cross-border its cross-border instant payments service, Europe and US. Payment was initiated from Instant Payment Transfers will be the into Singapore’s domestic instant payment and credited to beneficiary in new norm in future. SWIFT gpi initiative is service, Fast And Secure Transfers (FAST). Madrid in 59 seconds. already proving to be a game changer for cross border payment transfers across the The successful trial, which involved Below is the world map of various instant globe. With many of the global countries 17 banks across seven countries, saw payments initiatives across the globe. along with Europe on cusp of offering payments across these continents settling domestic Instant Payments, sending funds within 25 seconds, with the fastest from USA to France instantly will be as easy between Australia and Singapore in just

SEPA SCTInst (2017)

Countries with instant payment schemes

Countries with instant payment schemes under development

Countries with live instant payment schemes

Austria - NPP (2017) Ghana - GhIPSS (2016) Nigeria - NIP (2011) Sri Lanka - SLIPS (2013)

Bahrain - EFTS (2015) Hong Kong - FPS Poland - ELIXIR (2012) Thailand - PromptPay (2017)

Brazil - SITRAF (2002) India - IMPS (2010) Singapore - FAST (2014) Turkey - BKM (2013)

Chile - TEF (2008) Italy - Jiffy (2014) South Africa - RTC (2006) - FPS (2008)

China - IBPS (2010) - Zengin (1973) South Korea - HOFINET (2001) United States - RTP (2017)

Colombia - CENIT (2014) Kenya - PesaLink (2017) Spain - Bizum (2016)

Denmark - NETS (2014) Latvia - ZIBMAKSÁJUMI (2017) Sweden - BIR (2012)

Finland - Siirto (2017) Mexico - SPEI (2004) - SIC (1987)

Figure 7. Instant Payments initiatives across the globe 15 SEPA Instant Credit Transfer| The time to act is now!

Ending Notes

The emergence of instant payment along or email addresses replace the traditional No matter how banks decide to stay in with the entry into force of PSD2 and the IBAN; while others are reducing the the instant game, the long-term strategy trend toward Open Banking is leading time limit for banks to instantly execute should be considered carefully in the banks, and especially traditional credit payments. decision-making process, since instant institutions, to make major changes to payment is undoubtedly here to stay. their payment Architecture and business These examples demonstrate that processes. Some players have already cooperation between banks could be decided to go beyond SCT Inst scheme a non-negligible alternative to being at requirements by offering proxy overlay the forefront of the race toward instant services like allowing the initiation of payments. instant payment where phone numbers

Contributors

Jaydeep Thumar Matt Ryan Sebastien Genco Brian Shniderman Tanya Chakraborty Senior Manager, Director, Payments, Director, Principal, Global Cross Manager, Real-Time Payments, Deloitte Deloitte Consulting Technology & Industry Payments Payments Specialist, Consulting Ireland Ireland Enterprise Application, Leader, Deloitte Consulting US Deloitte Luxembourg Deloitte Consulting US

Irish Contacts

Donal Lehane Adam Kissane Partner, Consulting Director, Consulting [email protected] [email protected] +35314172807 +353873621038

Matt Ryan Jaydeep Thumar Director, Consulting Senior Manager, Consulting [email protected] [email protected] +35386170193 +353872544113

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17 Contacts

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Deloitte Ireland LLP is a limited liability partnership registered in Northern Ireland with registered number NC1499 and its registered office at 19 Bedford Street, Belfast BT2 7EJ, Northern Ireland.

Deloitte Ireland LLP is the Ireland affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

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