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The new Instant Payment regulation has proposed amendments aimed to standardize the availability of Instant Payments throughout Europe and promote innovation in the cross-border space. Banks will need to assess their readiness, compliance gaps, and the implications on their profits and organizational strategy to navigate the changing landscape of Instant Payments in Europe.
SEPA Instant Payments: A Need for Speed 24x7
Traditional SEPA payments can take a while to settle, leaving both payer and payee in limbo. SEPA Instant Payments (SCT Inst) disrupts this by guaranteeing near real-time settlement, typically within seconds. This is perfect for real-time scenarios like online shopping or urgent bill payments, days and nights, weekdays and weekends.
Challenges of Instantaneous Transactions
However, ensuring instant settlement comes with challenges. Banks need to verify the availability of funds before authorizing the transfer. This involves querying the payer's account balance, which, for banks with legacy infrastructure, can take time and can do that only during the day.
Overall, ensuring 24x7 operations for instant payments poses challenges for Banks in terms of infrastructure, resources, and liquidity management.
Banks can support 24x7 operations for instant payments by implementing the following measures:
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Modernize back-end infrastructure and systems: Banks need to ensure that their back-end infrastructure and systems are resilient and capable of supporting 24x7 operations. This may require significant investments in new technical infrastructure and operational resources. |
Update payment initiation channels: Banks should update their payment initiation channels, such as online, mobile, and physical branches, to support instant payment messaging. This will enable customers to send and receive instant payments through various channels |
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Manage real time liquidity 24x7: Banks need to put in place processes to manage liquidity, especially during nights, weekends, and holidays when settlement accounts cannot be topped up. This ensures that there is sufficient liquidity to support instant payment transactions at all times |
Ensure High Availability: Banks should have sufficient IT resiliency in place to ensure uninterrupted operations for instant payments. This includes highly available systems and redundancy measures to minimize the risk of downtime. |
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Explore alternative options: Banks can consider exploring alternative options such as business process outsourcing (BPO) to manage the implementation of 24x7 operations for instant payments. BPO can provide cost-efficient and timely solutions for banks to comply with the regulatory requirements. |
The Secret Weapon of SEPA Instant Payments
The world of payments is moving at lightning speed. Enter SEPA Instant Payments (SCT Inst), a game-changer for the Single Euro Payments Area (SEPA) region. With implementation deadlines within months, it is going to be unrealistic for many banks to meet the deadlines. Here's where Real-time Mirroring Gateway can step in, playing a crucial behind-the-scenes role.
The Trust Builder
Real-time Mirroring Gateway essentially creates a real-time 24x7 gateway for all payment channels and to legacy back office systems for liquidity management, CRM or DDA account systems. It creates a real-time interface for instant payments with replica of the payer's account data at the bank. This replica account maintains real-time information on the available balance. It also supports real-time instant payments 24x7 on one hand and at the same time communicates and reconciles the payments and accounts data with all back offices in batch mode as and when required. When an SCT Inst payment is initiated, the payee's bank can instantly verify the funds through the Real-time Mirroring Gateway, eliminating the need for banks whole structure to be real-time and operational 24x7.
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The Future of SEPA Payments
Real-time Mirroring Gateway is a key technology underpinning the success of SEPA Instant Payments. As the technology matures and adoption expands, we can expect even faster more efficient, and secure payment experiences across the SEPA region.
Pelican AI's Instant Payment Solution
Pelican AI is an ideal partner to provide real-time payments functionality for your organisation and is an officially designated Frontrunner service provider by EBA Clearing to facilitate connection to the pan-European real-time payment infrastructure across 34 European countries.
Features:
- Comprehensive & Integrated Payments Solution: – supports multiple instant payment schemes along with SEPA Credit Transfers, SEPA Direct Debit, Target2 and SWIFT payments for cost and time efficient implementation.
- Real-time mirroring support and validation: providing a stand-in mode bridging the gap of core systems which are not 24 x 7 x 365.
- Integrated Compliance Checks: Sanctions Checks and Fraud Prevention Intelligent transaction screening back by NLP and Machine Learning supports improved detection while reducing false positives.
- IBAN - Name Checks: Real-time account verification of payee offers effective fraud prevention or losses due to human error.
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Pelican’s instant payments solution is an innovative real-time payments processing service, enabling banks and PSPs to make and receive real-time payments in multiple locations. |
