The exact starting date for the new SEPA Instant Credit Scheme - 21 November 2017 - has got banks, Clearing and Service Mechanisms and Payment Service Providers working hard to make this date. As Payments CARDS & MOBILE explained, “It is also a challenging one, as the published the rulebook in November 2016, which left just one year for payment service providers to get ready.”

The SCT Inst scheme:

• currently sets a limit of 15,000 euros/transaction. (Although the EPC say this, “Parameter is not set in stone and might evolve further after November 2018, it might initially limit the relevance of the scheme for corporate customers.”)
• will use the ISO 20022 global messaging standards for real-time payments
• each SCT Inst transaction takes just ten seconds.

EPC progress report

The latest update from European Payments Council reported that:

• PSPs from five countries are expected to adhere to SCT Inst by November 2017. These countries are Austria, Spain, Finland, Italy and Latvia. Overall, over 600 PSPs are expected to propose SCT Inst services before the end of November 2017
• other countries will join SCT Inst in 2018, such as Germany, Portugal, Belgium, Sweden, and some PSPs from the Netherlands
• seven large CSMs have already confirmed they will be able to support SCT Inst transactions from November 2017 onwards. EPC expect other CSMs to announce their compliance with SCT Inst in the coming months.

EPC concerns

In a recent interview Jean-Yves Jacquelin, Chair of the EPC Scheme Evolution and Maintenance Working Group, listed some concerns about SCT Inst:

• Risk management: SCT Inst transactions would be highly attractive for fraud and money laundering. PSPs have to adapt their systems to prevent these risks, while still respecting the target of ensuring that each SCT Inst transaction takes just ten seconds
• PSPs are worried they might have to participate in more than one clearing solution to ensure full reachability. As yet there is no guarantee of concrete interoperability between the different CSM solutions.

CSM development

EBA Clearing and UniCredit have announced that UniCredit has started testing with the first pan-European instant payment solution, RT1, in preparation for its instant payments go-live. The new real-time payment product will first become available to UniCredit customers in Italy and Germany.

UniCredit is one of the 39 funding institutions enabling the development of the new EBA CLEARING infrastructure, which will provide a pan-European, real-time payment processing engine working 24 hours a day, every day of the year.

Other CSMs have been less public on their development of SCT Inst, but rest assured they will be ready too.

Why bother? What are the opportunities?

There have already been articles in variousl publications directed at banks as to why they should develop SCT Inst services. As instant payment systems have been rolled out around the world clear lessons/trends and market niches have emerged:

• General:
  • Once a level of service and functionality is experienced in one area consumers AND businesses expect it elsewhere, e.g. Instant payments, ability to track package progress
  • we live in a competing world of sectors without borders
• Consumer adoption niches:
  • Person-to-person
  • Person-to-SME
  • Person-to-MNC where available
• Business-to-consumer niches;
  • Low value payments, e.g. refunds, etc 
  • Payment of emergency funds
• Business-to-SME 
  • Low value payments, e.g. refunds, etc 
  • Payment of emergency funds
• Business-to-business
  • Initially very few (particularly with a €15,000 limit)
  • as limits grows the open out into all sorts of different niches.

As Faster Payments became established in the UK more and more businesses adopted so that now many quite large SMEs no longer user cheques and CHAPS. The same will happen in SCT Inst.

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CTMfile take: The use of SCT Inst will surprise us all and will be far greater than expected. Where do you expect most SCT Inst payments to come from?