Key ingredients of instant payment systems success

Carlo Palmers, Swift: key ingredients of instant payment systems success

Those attending the Tuesday morning SWIFT conference session (23 October, 9:00-9:45 – SWIFT Hub L2, SWIFT Hub 1) will gain a unique insight into how SWIFT is driving instant payments.

Some countries have already implemented instant payment frameworks, such as the UK, whose Faster Payments system has been operational since 2008 (and is now coming up for renewal). However, for many countries this is a brand new endeavour, and we are assisting them with their payment modernisation efforts.

A notable case is Australia, where the New Payments Platform (NPP) went live in February this year following a joint project between SWIFT, local financial institutions and the country’s regulator. The take-up has been impressive, and Adrian Lovney, CEO of NPP, will be speaking at our Tuesday conference session, demonstrating on stage how convenient the service is and looking at the SWIFT solution that makes the platform work.

SWIFT is also working with two major pan-European players – the Eurosystem on its TARGET Instant Payment Settlement (TIPS) service and EBA Clearing on its RT1 instant payment system. The latter is already live and will start offering SWIFT connectivity from 20 November this year. It will be promptly followed by the TIPS go-live, which is scheduled for 26 November.

Petia Niederländer, chairperson of EBA Clearing, and Lorenzo Giammo, head of the Eurosystem MI Division at Banca d’Italia (Italy’s central bank), will join NPP’s Lovney at the Tuesday morning SWIFT conference session. They will all be available for a Q&A session afterwards, held in the SWIFT Knowledge Bar (09:45-10:30 SWIFT Hub L2, SWIFT Hub Knowledge Bar).

One of the issues for discussion is the Eurosystem’s planned consolidation of TARGET 2 (T2), TARGET2-Securities (T2S) and the aforementioned TIPS onto a single platform with a European Single Market Infrastructure Gateway (ESMIG) sitting at the front. The objective here is that the payments and securities markets participants will use ESMIG as a single gateway to connect to a consolidated market infrastructure.

The solution that we are now rolling out in Europe for TIPS and RT1 is the first stage for our participants to be connected to the new unified market infrastructure, and we are putting forward three examples of its added value:

1. It is the initial step towards ESMIG.
2. It re-uses the SWIFT infrastructure that participants have already in place in terms of procedures, connectivity to the operating centres and support facilities as well as the security features that are used to sign the messages.
3. Our SWIFTNet Instant solution is what we call “multi-CSM” (clearing and settlement mechanism) – a single interface that market participants can use to connect to EBA Clearing’s solution or the Eurosystem platform or indeed any other future payment solutions that will offer such connectivity.

This means that customers will not have to install a new payment gateway every time they want to connect to a new instant payment system, saving them time, resources and money. This is vital to a rapid deployment of faster payment systems.

By Carlo Palmers, head of payment market infrastructures, SWIFT

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