Instant payments and the need for interoperability

As Europe’s payment landscape evolves, the need to be able to send and receive immediate payments is becoming increasingly central. However, efforts to achieve the level of interoperability needed in an instant payments environment are still a work in progress, as one of the sessions at our upcoming Finastra Universe event will explain.

In this 30-minute panel discussion, industry experts Hays Littlejohn, CEO of EBA Clearing, Gareth Lodge, Senior Analyst, Global Payments at Celent, and Anni Mykk?nen, Senior Policy Adviser at European Banking Federation, will explore the need for interoperability in light of developments like the European Payments Initiative (EPI) and the EU’s Retail Payments Strategy. The discussion will focus on what the EU is trying to achieve, how much progress is still needed – and what the new landscape could look like if all goes to plan.

Highlights include:

• Opportunities for change. As Littlejohn will explain, SEPA Request-to-Pay is a “real game changer” that can be used across a wide range of use cases, and will support banks in their digital transformations going forward. 
• Acceptance and education. While SEPA Credit Transfer and SEPA Direct Debit are well established, the SEPA Instant Credit Transfer scheme (SCT Inst) is the ‘new kid on the block’, with infrastructure currently ahead of the products and services that participants are able offer. The scheme itself is performing well – so what more needs to be done to improve acceptance and education?
• Level playing field. As well as presenting an opportunity for European-based organisations, the Retail Payments Strategy will also create a level playing field – with the possible unintended consequence that Third Party Providers (TPPs) could come from anywhere in the world. According to Lodge, forward-thinking organisations should welcome the opportunity to decouple from old ways of working – but “If you see this as a threat, it’s likely to come true for you, because others will make the most of this opportunity.” 
• Avoiding a two-tier landscape. While guidance has been issued on the SCT Inst standard, it is not yet fully clear how this will work going forward. For smaller banks, making the necessary changes may become a much larger proportional effort – so is there a risk that adoption could result in a two-tier market, with a divide opening up between large banks and smaller banks?
• Competing initiatives. Numerous initiatives are currently focusing on end user solutions for instant payments, including the European Payments Initiative (EPI). As such, a key question is how to address the interoperability of domestic solutions at the point of sale. Mykk?nen argues that to a certain extent, they can coexist – “But I think we all know that there isn’t too much space – consumers tend to use a limited amount of payment instruments.”

As the experts will explain, there is much that needs to happen before interoperability can be achieved – but once this has happened, it will bring some exciting opportunities to drive change across the industry. 

If you want to hear more from the panelists about the need for interoperability, register here.