Providing Instant Payments Messaging and Connectivity for SCT Inst with INTERCOPE
Instant payments across Europe are now upon us. The release of the SEPA Instant Credit Transfer (SCT Inst) scheme from the European Payments Council (EPC) at the end of November 2016 was a major milestone for European Payments on that journey, and the clock now ticks towards November 2017 go live for the banks and other Payment Service Providers (PSPs). Instant payments have been driven by regulators on the back of market demands from consumer groups, an increasing speed of commerce for businesses with the pressure that brings, and competition from new FinTech or non-bank payments providers offering instant payment mechanisms.
In November 2017, it will be possible to transfer €15,000 per single transaction in less than 10 seconds, 24/7/365, in an area spanning over 34 European countries. Credit transfers can currently take up to one day, and in some countries sometimes even more if the originators of the payment initiate their credit transfer during, for example, the weekend. The SCT Inst scheme will therefore offer a convenient, easy, digital-oriented, and fast alternative to conventional credit transfers. This instant credit transfer scheme, operating in a region as large as SEPA, is a world first.
The Instant Payments Solution
There are two aspects to the solution for instant payments. Firstly, an application layer – initiating and receiving payments, processing the transactions, orchestrating the various messages involved in the life-cycle of the transaction and integrating with core banking systems such as ledger, sanctions, customer information, liquidity systems, etc., to complete all steps in processing the payment.
In addition to the processing application, a gateway hub or messaging/network layer is required to deal with all messages in and out of the bank – providing secure network connectivity to the scheme compliant Clearing & Settlement Mechanism (CSM), session management, administration, disaster recovery, failover etc.
The Instant Payments Solution Challenge
The key for successful delivery will be combing the functionality required from the application and gateway layers together, to ensure a valid SCT Inst transaction can be processed – and doing this within the SLA maximum of 10 seconds for the whole chain of the transaction. This means that any given bank/PSP must perform their processing in a lot less time, as the 10 second maximum is for the whole transaction end to end including the participants. This requirement was detailed by EBA as part of the consultation phase, with normal end to end message interaction between PSPs and the central infrastructure required to be less than 1.5 seconds to allow for time to meet the overall SLA of 10 seconds (as illustrated below B+C+D+F+G+H).
These requirements for a platform and infrastructure for SCT Inst were detailed by EBA Clearing in their RFP at the end of 2015. The Italian ACH SIA signed a letter of intent in 2016 with EBA Clearing on the back of meeting those RFP requirements – to provide this clearing platform, infrastructure and network. This platform will be used for instant payments both at a domestic and cross-border SCT Inst level. To support this real-time message processing associated with Instant payments, SIA were required to show network functionality covering security, failover, authentication, 24X7 availability, failover, monitoring, etc. In addition, the message processing time between participants using SIA’s preferred network SIANet and INTERCOPE’s BOX solution was demonstrated at less than 600ms.
From the diagram above B+D+H+F on SIAnet < 600 ms (150 ms for single Exchange) This means that SIA and their network SIANet are now primed to handle the SCT Inst traffic for November 2017 with network connectivity testing for pilot PSPs with SIA scheduled for April 2017 - to ensure enough testing time for November go-live. With 2017 now well in motion and the absence of any direction from SWIFT on their intentions around SCT Inst, this places any of the PSPs who are to participate in SCT Inst with a challenge around network connectivity. The challenge is for all PSPs to have software which supports and is certified for SIANet connectivity, to ensure they can process SCT Inst payments. Many PSPs already have this in place, but for those that do not - ensuring they have SIANet connectivity support is now on the critical path for SCT Inst delivery! [/av_textblock] [av_hr class='invisible' height='35' shadow='no-shadow' position='center' custom_border='av-border-thin' custom_width='50px' custom_border_color='' custom_margin_top='30px' custom_margin_bottom='30px' icon_select='yes' custom_icon_color='' icon='ue808' font='entypo-fontello'] [av_textblock size='' font_color='' color='']
Summary and next steps
As outlined, SIANet connectivity is required for SCT Inst for November 2017 go-live. INTERCOPE provides a certified solution today for this. The solution is called INTERCOPE’s BOX and it is a SIANet certified solution supporting connectivity on Instant Payments as well as T2S, SEPA CT/DD, and all SWIFT (Fin, FileACT, InterACT, RMA) messaging standards for all business areas and EBICS support in one solution.
Please take this opportunity to let us come and talk with you today on how INTERCOPE can help make Instant Payments a reality and delivery for you in 2017!