- Royston Da Costa
- Assistant Group Treasurer, Ferguson plc
“It’s still tempting to use a fintech for payment and data processing,” admits Ferguson’s Da Costa, despite banks trying to catch up technologically. “Particularly, as I think Swift’s cross-border GPI project and the EU’S SEPA and other such infrastructure modernisation projects – which were all supposed to adhere to character-rich ISO 20022 messaging by now – have so far fallen short of expectations. They don’t yet deliver the fully frictionless data-rich, fast cross-border service I wanted to see.”
The EU’s Instant Payments Regulation (IPR), adopted this year, which builds on its SEPA services might help. It is a new legislation that requires all PSPs to offer the possibility to send and receive euro payments within seconds, 24x7, enabling competition with US-headquartered card payment schemes and others.
EU Instant Payments Regulation
Under the new rules, instant payment providers in Europe will also need to pre-verify that the beneficiary’s IBAN and name match in order to alert the payer to possible mistakes, or fraud, before a transaction is made. This requirement also applies to regular transfers, and user cost must be the same. The EU regulation also grants access for payment and e-money institutions (PIEMIs) to payment systems, by changing the settlement finality directive (SFD), with appropriate safeguards.
Message standardisation and speed of service, however, are still not universal across the sector, despite the regulatory push. “Even if banks themselves have moved to the ISO 20022 standard or delivered speed improvements, there are still delays, compliance issues, and other impediments preventing a full seamless service,” maintains Da Costa.
This lack of a universal connected, fast service is a disappointment to Da Costa, who feels: “You’re obliged to use a bank at present because you don’t want to take the risk of payment files not being converted – or financial crime or sanctions concerns in the supply chain not being covered.” Technologically, fintechs could do better if they gain traction under the new rules. It would at least be good to see them try. It seems to me that the treasury community would appreciate newcomers.”
