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The P27 journey is gearing up - what are the main considerations for your bank?

As more milestones are reached, we are close to seeing the launch of the new P27 payment initiative. What are the main considerations banks and financial institutions should be assessing now?

Jarkko Turunen / August 31, 2020

As more milestones are reached, we are close to seeing the launch of the new P27 payment initiative. Serving the Nordic region and its 27 million inhabitants, the world’s first platform for handling multi-currency, domestic and cross-border payments will offer significant benefits to businesses and individuals.

Ahead of the game

P27 will create a harmonized payments market across the Nordics to scale and modernize payments and transactions. The flexible and secure payments platform supports real-time batch, domestic and cross-border payments. With multiple currencies in use across the region, establishing an efficient common payments initiative for the Nordic countries was the logical step to take to support a better business environment moving forward, particularly in a region with such closely linked economies.

P27 is a game-changer that will set the direction for real-time payments globally

By moving away from a siloed approach to payments, the unification of multiple payment schemes will enable real-time and cross border payments at a low cost among the Nordic countries. Financial institutions will be able to continuously evolve to changing customer demands by utilizing unique technologies to build new value-added payment services as the initiative develops.

What’s coming next?

Batch (bulk) payments are a natural first step as it will generate payment volumes, while increasing automated payment processing efficiency for all parties. This will be done in accordance with the new NPC Credit Transfer Scheme Rulebook, launched earlier this year.

Several banks have already confirmed their commitment to the P27 initiative. The banks are currently preparing to connect their systems to the P27 infrastructure and are in the planning phase for migrating payment volumes to the new clearing platform. By connecting to the system at this early stage, these front runner banks will gain the advantage of being first to offer clients new services while gaining costs savings from the new platform and harmonized payment processing. The targeted first window for joining the platform is during 2021.

Following a successful launch, we expect to see the introduction of batch clearing for the other Nordic currencies, even if the exact timeline for this has not been confirmed yet. There is also a plan in the pipeline to offer overflow functionality services to access Euro-clearing, which will generate further payment clearing cost reductions.

Beyond bulk payments

P27 will be launched stepwise. Starting with cost reduction of bulk payments is a natural first step. However, while moving funds in real-time is great, even more opportunities will arise from the introduction of request-to-pay and the possibility to simplify invoicing and bill payments for Nordic companies and consumers.

The Nordic request-to-pay will be central to P27 as it will allow banks to support the request of payments among customers of P27 participants. The service will be built on the ISO20022 message standards and will meet the future Nordic Payment Council’s request-to-pay scheme. This is a clear example of how value-added services are contributing to the future of seamless payments. We have already explored the connection between real-time adoption and value added services in our latest whitepaper that you can read here.

I look forward to the development of the new payments ecosystem and seeing the steps taken by P27 to create the Nordic cross-border instant payments infrastructure. The next months and years will definitely transform the existing payments systems in the Nordics and in doing so further improve the competitiveness of the region.

In conclusion…

The new payments initiative will bring many benefits to participants. However, to get the most out of it, banks and other financial institutions must begin assessing their existing IT landscapes and answering the following questions:

  1. What is the overall payments strategy – what customers will we serve and what services will we offer in the future?
  2. How can our existing solutions support and adopt the P27 steps and requirements moving forward?
  3. How and when can we transition to P27 SEK batch payments?

At Tietoevry, we are heavily involved in the Nordic payments sector. We support many banks and financial services providers with their account and card-based payments – both batch-oriented and real-time. In addition, we are in regular contact with payment stakeholders such as regulators, industry bodies as well as FinTech companies who extend the payment ecosystems. Our goal is to bring the greatest benefit to our customers by sharing market knowledge, providing strategy advise and delivering technical solutions to meet specific requirements.

Feel free to reach out to me if you are planning on joining P27 or require support to better understand the upcoming challenges and the optimal course of action for your business.

Jarkko Turunen
Head of Payment Products & Services, Tietoevry Banking
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