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Expert opinion

The future of B2B payments in Europe - key drivers of change and trends

Thursday 18 July 2019 | 07:32 AM CET

Alain Raes, SWIFT, explained the key drivers and trends that could lead to the future of 21st century B2B payments in Europe

Ever since the creation of the internet, we have come to expect ‘always on, always available’ communications across every aspect of our lives. As the payments industry evolved from paper-based to digital, these growing expectations have proven to be challenging. In B2B cross-border transactions, for example, supply chains frequently move faster than the underlying payments, leading to inefficiencies and loss of value.

Today, a generational shift is underway in payments industry infrastructure and technology that promises to deliver 21st century speed, transparency, and efficiency to B2B payments. Within this article, we highlight key drivers and trends.

Trend 1: Instant payments will become the norm

To ensure they meet suppliers’ payment terms, businesses must usually either build a two or three-day clearing cycle into their payments processing, or pay much higher fees for same-day transfers through Real Time Gross Settlement (RTGS) systems designed for high-value payments.

Now customer demand, as well as competition from non-bank providers, are driving the proliferation of low-cost, instant or real-time payments systems in domestic markets and currencies. In Europe, some 17 countries already had implemented, or were in the process of implementing such services at the end of 2018.

Instant payments services focus on local market needs and operations, and as a consequence, they do not offer cross-border capabilities. However, regulators wanted to ensure inter-operability across the Single Euro Payments Area (SEPA) and defend against possible market fragmentation, therefore, they developed a standard message format for instant SEPA credit transfers in Euros (SCT Inst). Moreover, in November 2017, EBA CLEARING introduced RT1, an infrastructure for processing payments at pan-European level and a year later, the Eurosystem launched its TARGET Instant Payments Service (TIPS) for the settlement of instant payments in central bank money across SEPA - and potentially beyond.

With instant payments services also in place or in development in other major economies worldwide, including Australia, Japan and the US, we can expect instant payments to become the norm for domestic B2B and retail payments in the next five years.

Trend 2: All cross-border payments will be fast and trackable

In parallel with developments in instant payments, SWIFT’s Global Payments Innovation (gpi) is eliminating the delays and uncertainties associated with the traditional correspondent banking model for cross-border payments, handling more than USD 300 billion of payments daily. 50% of payments are delivered within 30 minutes and many in just a few seconds.

With a gpi payment, your bank can tell you at any time where your payment is, when it will arrive in your account and what the cost is. To date, SWIFT gpi has been adopted by 3,500 banks and by 2020, all banks will be able to track and confirm their customers’ cross-border payments end-to-end, bringing certainty, efficiency and improved cash management to businesses.

Trend 3: A common messaging platform and an information-rich experience

Words like infrastructure and standards may not excite, yet a market-wide renewal of payments infrastructure based on a common messaging approach called ISO 20022 is the most significant development in B2B payments for a generation. ISO 20022 provides a platform for developing a flexible, yet interoperable set of financial messages, and enables more and richer machine-readable information to be included into a payment message, making it straightforward to track, process, reconcile, and apply payments. More information means simplified compliance requirements, all leading to faster and more efficient payments for businesses.

What makes this a significant moment is that all major Payments Market Infrastructures (PMIs) are now adopting ISO 20022 as part of renewal projects that encapsulate instant, credit transfer and RTGS systems. PMIs moving to ISO 20022 include the Eurosystem, the Bank of England, the Clearing House and Federal Reserve in the US, Payments Canada and infrastructures in Japan, Singapore, Hong Kong, and Australia. However, Europe is leading the way, as the Eurosystem has set a date of November 2021 for migration of its RTGS system, TARGET2. TARGET Consolidation is a project launched by the Eurosystem to consolidate TARGET2 and T2S, in terms of both technical and functional aspects. The objective is to meet changing market demands by replacing TARGET2 with a new real-time gross settlement (RTGS) system and optimising liquidity management across all TARGET Services. Within the same timetable, EBA CLEARING has also announced the migration of its large-value payment system (LVPS) EURO1 to the ISO 20022 standard.

Following an industry-wide consultation, SWIFT has announced the migration of cross-border payments to ISO 20022 over a four year period, beginning in November 2021. Globally-agreed market practice will be critical to ensuring true interoperability across infrastructures; SWIFT is facilitating this work by establishing the HVPS task force (High Value Payments Plus/HVPS+) and more recently, the Cross-Border Payments and Reporting Plus group (CBPR+), a working group of international payments experts that will formulate global Market Practice and Implementation Guidelines for the common rollout and implementation of ISO 20022 for cross-border payments. The guidelines drafted by the group will lay the cornerstone for a successful migration of cross-border payments traffic to ISO 20022 beginning in November 2021. A standardised global approach will lower the implementation cost for the industry as a whole.

The financial landscape of the future

By providing a common language, ISO 20022 will give the payments industry and its users a strong yet flexible backbone for 21st century efficiency and innovation. Technologies such as cloud, artificial intelligence and APIs will also play important roles in making payments faster, more automated and cheaper. Fraud prevention and privacy tools will also need to be taken into account.

The future will bring ubiquitous connectivity between systems, counterparties and across value chains, facilitated by regulatory initiatives such as Open Banking (PSD2), but also by standardised open messaging and APIs.

This editorial was first published in the B2B Payments and Fintech Guide 2019 - Innovations in the Way Businesses Transact, which offers insightful editorials and use-case analyses on how to envision a proper regulatory and technological framework for safe and effective cross-border and instant B2B payments.

About Alain Raes

Alain Raes was appointed Head of the EMEA region of SWIFT in September 2007 and added the role of Chief Executive Asia Pacific in January 2013. Alain was previously Director of the Continental Europe region at SWIFT. During this time he covered securities and banking sales activities, spending time in Paris as well as Brussels. He joined SWIFT in 1990, following previous roles at Citibank in Belgium and Fortis Bank in Singapore.


SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 11,000 financial institutions and corporations in more than 200 countries. SWIFT enables our global community of users to communicate securely, exchanging standardised financial messages in a reliable way, thereby reducing operational risk and eliminating operational inefficiencies, while supporting global and local financial flows, as well as trade and commerce all around the world.