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Q&A: Javier Santamaría, EPC, on SCT Inst uptake & future



Question Q1 (Neil Ainger, ed., InstaPay): What are the latest figures you have for PSP adoption across Europe of the SCT Inst scheme & are you happy with how uptake is progressing?

Answer A1: Javier Santamaría, Chair of the European Payments Council (EPC): We are delighted with the latest figures from the Register of Scheme Participants published last month, which indicate that 1,047 Payments Service Providers (PSPs) in Europe – 25% of the total – have adhered to the SCT Inst scheme, to date. For the time being, PSPs from 14 countries have come on board to the SCT Inst scheme. This number is constantly growing.

[Ed. Note: Please click here to see the ever-changing number of SCT Inst adherents & remember these are self-declared figures & include separate bank brand names under one umbrella; small and large banks, with the latter obviously impacting volume more; and so forth. Nevertheless, the EPC figures are useful, indicative and the best gauge we’ve got to assess uptake & they’re trending upwards].


Q2 (Neil Ainger, InstaPay): When do you think PSP adoption will surpass 50% & when will complete ubiquity be achieved so instant payments are accessible to everyone, everywhere across the 34 SEPA nations?

A2: Javier Santamaría, EPC: The EPC always stated that the implementation of the SCT Inst scheme would be a gradual process across the 34 countries of SEPA. As participation with the scheme is constantly growing, we envisage having 50% of the SEPA Credit Transfer scheme participants into the SCT Inst fast element around the end of this year.

The SCT Inst scheme will progressively have a broader geographical reach too, as PSPs from more and more SEPA countries implement it. But, at this moment, it is still premature to predict when complete ubiquity will be achieved. However, we are confident that a critical mass of PSPs across SEPA will have joined the SCT Inst scheme by the end of 2020.


Q3 (NA, InstaPay): What are the latest figures you have for the rollout of SCT Inst-compliant clearing and settlement mechanisms (CSM) across Europe? At launch there were nine self-certifying CSMs from eight countries offering SCT Inst payments. What is the figure now?

A3: JS, EPC: Now, there are 10 self-declared SCT Inst-compliant clearing and settlement mechanisms (CSMs) across Europe that are registered on the EPC website.

[Ed. Note: The latest to join is the SIBS FPS system from Banco de Portugal, which is slated to go live on 3rd April 2018, becoming the tenth CSM].


Q4 (NA, InstaPay): Will many more national CSMs join the ‘early adopter’ domestic automated clearing houses (ACHs) that have already refreshed their technology backbones to cope with SCT Inst and offer national immediate payment infrastructures? Or will the ECB’s Target Instant Payment Settlement (TIPS) platform due in November now pick up the slack, with EBA Clearing’s RT1 platform providing alternative cross-border pan-European reach to those lacking other options?

A4: JS, EPC: The EPC does not make any prediction in this domain. Our objective is to attain maximum interoperability and reachability as soon as possible. Each national CSM will make its own decision whether or not to support SCT Inst.


Q5 (NA, InstaPay): What role will partnerships play in achieving pan-European reach & what can Europe teach the world about cross-border interoperability for instant payments schemes?

A5: JS, EPC: The successful SEPA migration of a few years ago, covering normal credit transfers (SCTs) and direct debits (SDDs) is an example of how to achieve pan-European reach. We believe that the fast SCT Inst instrument will experience the same final outcome.


Q6 (NA, InstaPay): Will SCT Inst have to become mandatory next decade if PSP adoption isn’t as widespread as hoped and some countries lag behind others in usage? (as happened with the original non-fast SEPA credit transfer instrument)

A6: JS, EPC: As mentioned earlier we believe that a critical mass of SCT Inst scheme participants will be reached by year end 2020. We think that market forces will help create over time total ubiquity for the SCT Inst scheme.


Q7 (NA, InstaPay): Will the EUR15,000 maximum transaction limit be relaxed in future years as the scheme is proven and to encourage more corporate usage, or does the irrevocability of transactions hinder this marketplace usage?

A7: JS, EPC: We will annually review the scheme maximum amount (currently set at €15,000). The first time this will happen is in November 2018.

The SCT Inst scheme is not limited to particular use cases and business-to-business (B2B) corporate transactions are also a target, alongside retail bank, e-commerce usage and so on. A progressive increase in the scheme maximum amount is to be expected for corporates, but there is no concrete plan at this stage.


Q8 (NA, InstaPay): What do you see as the biggest technical or political obstacles to universal adoption of SCT Inst, or at the very least the most difficult challenge for established banks?

A8: JS, EPC: We see it as a technical rather than a political challenge. The PSPs willing to adhere to the scheme from its beginning had to achieve considerable changes in just one year, adapting their IT systems to make them real-time and available 24/7/365, as well as establishing back-ups for them, their operational and risk management processes such as fraud detection, their clearing and settlement arrangements, and developing and promoting this new service to their customers. These will be the challenges to be met by any PSP implementing SCT Inst.


Q9 (NA, InstaPay): Do you think basing the new European instant payments infrastructure on a traditional batch, store and forward payments system was the best solution for Europe?

A9: JS, EPC: The EPC is only a scheme manager and does not operate or prescribe any infrastructure. Market forces will determine how to support the SEPA schemes (including SCT Inst) from a technical and operational perspective, in particular in the inter-PSP domain.


Q10 (NA, InstaPay): What do you see as the biggest opportunities brought about by SCT Inst? What innovations can use the new ‘rails’ provided & will new providers emerge?

A10: JS, EPC: The main innovative characteristics of SCT Inst are its real-time nature as this new scheme allows the electronic transfer of money across Europe in less than ten seconds, and its permanent availability (24/7/365) since real-time payments will be possible at any time and on any day of the year, including weekends and holidays.     [Ed. Note: This encourages e-commerce].

Its targeted pan-European reach will also be a key advantage. Furthermore, SCT Inst can support a multitude of use cases: Individuals, businesses, and government entities will be able to use the scheme. It also provides an opportunity to replace paper-based payment instruments, such as cash and cheques.


Q11 (NA, InstaPay): With the EU’s second Payment Services Directive (PSD2) starting this year, admittedly with some delays, how will the combination of instant payments, more competition and open application programming interfaces (APIs) impact the payments scene in Europe and banks’ position within it?

A11: JS, EPC: The present times are characterised by the confluence of several key drivers for change in the payments market, such as:

  • regulation – in particular PSD2;
  • the move to real-time payments;
  • the growth of the use of mobile, wearable and connected devices and objects;
  • the importance of data;
  • & emergence of new players and the expansion of e-commerce.

This confluence is causing a blurring of many traditional frontiers. All these fundamental changes will undoubtedly reshape the payment markets over the next five years. We believe that European PSPs will remain key actors in payments – if they proactively embrace these changes with customer needs and experience in mind.


Q12 (NA, InstaPay): What lessons, if any, did you learn from previous instant payment schemes launched elsewhere in the world when designing the SCT Inst scheme parameters & advice would you offer to those following on behind?

A12: JS, EPC: When developing the SCT Inst scheme the EPC definitely benefitted from the experience of its members who had already gone through the creation and implementation of national real-time credit transfer schemes in countries such as Denmark, Poland, Sweden and the UK.

Building SCT Inst on the basis of the existing, well-tried SCT scheme was also a clear advantage as it reduced development time and facilitates implementation and operation by market players. Finally, closely monitoring the experience of early adopters was also critical to ensure that the new scheme is fit for purpose.


Q13 (NA, InstaPay): Is there anything you’d like to add or stress?

A13: JS, EPC: SCT Inst marks a major change in European payments and offers a tremendous opportunity to PSPs to satisfy their customers in the digital age and their need for fast, smooth, convenient and safe payments. Seize this opportunity.


Javier Santamaría, Chair of the European Payments Council (EPC), discusses the uptake and future of the single euro payments area (SEPA) instant credit transfer (SCT Inst) scheme with InstaPay’s editor, Neil Ainger, in this interview.

Author: Neil Ainger