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Can instant payments solve the complexities of cross-border B2B payments? – interview with Javier Santamaría, EPC

Thursday 11 July 2019 | 08:34 AM CET

Javier Santamaría, Chair of the European Payments Council, spoke with The Paypers about cross-border B2B payments, PSD2, and use cases, new service opportunities and business models in instant payments

What are the latest figures for the adoption across Europe of the SEPA Credit Transfer Inst scheme, among both banks and other PSPs?

The Register of Scheme Participants published in June 2019 reveals that the SEPA Credit Transfer SCT Inst scheme now includes 2,089 PSPs (51% of the total) from 20 countries in Europe. The countries with the largest number of registered PSPs are currently Germany (1,300 Payment Service Providers (PSPs), Austria (465 PSPs), and France (126 PSPs).

From this 51% of PSPs that already joined the scheme, SCT Inst largely enumerates those having the most significant volumes in their countries. We remain confident that a critical mass of SCT Inst scheme participants will be reached by the end of 2020 particularly in the euro area.

What were (and still are) the challenges for PSPs and banks in moving to instant payments?

The PSPs willing to adhere to the SCT Inst scheme need to have a substantial amount of resources to be allocated to the rollout of an instant payment solution. They are urged to adapt their IT systems to make them real-time and available 24/7/365, as well as to establish back-up arrangements for them, upgrade their operational and risk management processes such as fraud detection, their clearing and settlement arrangements, and develop and promote this new service to their customers. Therefore, the EPC did not expect all PSPs from all SEPA countries to join immediately in November 2017, but instead anticipated a progressive implementation.

Notwithstanding the challenges PSPs face, so far, the scheme is being deployed in line with expectations and the EPC has not identified any significant obstacles.

What are the main use cases, new service opportunities and business models in instant payments? How will instant payments solve the complexities of cross-border B2B payments?

A boundless list of examples of SCT Inst use cases shows in which situations instant payments could bring benefits to payers and/or payees, such as: buying goods online from another consumer, purchase on online/internet stores, immediate reimbursement by a merchant of a returned good bought by a consumer, payment of insurance claims, payment of tax, fines or penalties etc.

Accordingly, PSPs may also continue to introduce new services based on instant payments and/or their internal instant infrastructure, which could lead to new use cases. However, PSPs choose individually their offerings and business models; therefore, we do not have concrete data about them.

In cross-border B2B payments, the SCT Inst scheme delivers faster services by enabling pan-European credit transfers with the funds made available on the account in less than ten seconds. The maximum amount of the scheme (currently set at EUR 15,000) is expected to be raised over time, thereby addressing more B2B payment use cases.

The combination of PSD2 and instant payments has a huge potential to disrupt existing business models. How will this change the game and what is the impact that it will have on TPPs and banks alike?

The objectives of PSD2 are to make payments safer, increase the consumers’ protection, foster innovation and competition while ensuring a level playing field for all players, including new ones.

The combination of PSD2 and instant payments may impact the European payment markets over the coming years. Nevertheless, we believe that existing European PSPs will remain key actors in payments if they proactively embrace these changes with customer needs and experience in mind, as TPPs could strive to leverage SCT Inst to enhance their offering.

What plans do you have for the further evolution of SCT Inst over the next few years?

Obviously, the SCT Inst scheme will progressively have a broader geographical reach, as PSPs from more and more SEPA countries implement it. The key to maximising the potential of the SCT Inst indeed lies in its reachability.

Moreover, we have no doubt that the SCT Inst scheme will further evolve based on experience, market demand and technological advances. Some new features have already been implemented, like the repayment functionality (effective in November 2019), and others will be developed in line with the EPC’s scheme management process, which involves interested stakeholders closely followed by market needs.



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 Javier Santamaría

Javier Santamaría has been the Chair of the EPC since June 2012 and a member since its creation in 2002. Owing to decades as a bank employee, Mr Santamaría has accumulated a broad and balanced expertise in the intertwined dimensions of payments – business-related, operational, technical – across different client segments and product lines in both the legacy and innovative spheres. Mr Santamaría is also Chair of the Iberpay Board.

About European Payments Council

The European Payments Council (EPC), an international not-for-profit association, representing payment service providers, supports and promotes European payments integration and development, notably the Single Euro Payments Area (SEPA).