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SIBOS day 2 – What Europeans can learn from Australia's Instant Payments experiences

SIBOS day 2 – What Europeans can learn from Australia's Instant Payments experiences

Tom Nijenhuis

Division Manager Corporate Affairs

23 October 2018

SIBOS day 2 – What Europeans can learn from Australia's Instant Payments experiences

Most payment experts believe that Instant Payments (IP) will become the primary payment method in the future. This is one of the conclusions of the Really a real-time reality session on day 2 of Sibos. During this session, NPP Australia, EBA Clearing and the ECB shared their IP experiences. This session came at a perfect time, as the pan-European infrastructure TARGET Instant Payment Settlement (TIPS) will be launched by the ECB in Europe next month.

Learn from a player that operates outside the Eurozone

Only 18 percent of the richly filled room was skeptical about Instant Payments becoming the primary payment channel, the remaining 82 percent expect this to be the case before, or at the latest by, 2025. At equensWorldline we share this view, as we believe that we are moving towards instant and standardized payments all over the world. Besides a representative of EBA Clearing and the ECB, there was also a guest from NPP Australia, the Australian Instant Payments platform that was launched last February and now has 2.5 million IP transactions per week and is growing by no less than 20 percent each week.

It was interesting to learn from a player that operates outside the Eurozone in this session. In Europe, as is probably the case for other continents, looking at developments beyond our borders isn’t always a given, while there are plenty of notable payment developments around the world. Take Australia, for example, where they have made major strides in the field of IP since February this year. A great opportunity to look beyond local regions, as I mentioned earlier in my blogs.


Time for the roll-out to the corporate side

Building this new infrastructure in Australia was easy, according to CEO Adrian Lovney of NPP Australia. Back-office integration, that was much more difficult due to legacy systems of banks that make it hard to implement new IT-solutions. Lovney indicates that previously the focus was on retail and mobile. Now it's time for the roll-out to the corporate side. “We are now going to develop data standards for corporate use.”

Lovney also expects that domestic IP will be used as part of multicurrency transactions. This is also illustrated by the fact that SWIFT recently announced a successful test of its new concept of direct cross-border payments, alongside banks from Australia, China, Singapore and Thailand. The trial used the NPP, which allows money to be transferred from one person to another almost real time, using an e-mail address or mobile number (a PayID) instead of the traditional BSB or account number.


Use cases beyond P2P payments

The panelists see peer-to-peer (P2P) payments as the most obvious use case for IP at this stage, but what is next? The audience was asked to share their expectations. IP for point of sale (PoS) payments scored highest with 44 percent, followed by cross-border IP for e-commerce purposes scoring 24 percent and IP for B2B transactions such as invoices with 21 percent. I could tell that the panel was surprised by this outcome, since experiences with the current use cases suggest that delivering IP for PoS will not be easy. At equensWorldline we also consider IP for PoS to be an interesting use case. It was one of the four use cases of Instant Payments we presented at the TIPSapp Challenge in February this year. For NPP Australia, EBA Clearing and ECB one thing is clear: there is a lot of potential for IP.


TIPS is coming

In the European market EBA Clearing launched its IP infrastructure in November last year. Petia Niederländer, Chairlady of EBA Clearing, said they are progressing well with around 70 thousand IP transactions per day. There was also some good news about TIPS. Karen Birkel, Deputy Head of Division of the ECB, said that TIPS is currently being tested and is on schedule to be launched on 30 November. “We will start small, with 20 banks by end of November, but expect many banks to follow in the course of 2019.” Naturally I am, like everybody else at equensWorldline, thrilled to see ECB’s Instant Payments platform becoming a reality in Europe shortly too. Evidently, we support TIPS and will provide our clients with a gateway to this platform. It’s a great step forward for both banks and customers and a clear statement that the world of payments is embracing the modern-day innovations as well as its inseparable customer demands.