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P27 - Real Time Cross Border Payments for Nordics

P27 - Real Time Cross Border Payments for Nordics
December 09, 2019


When it comes to innovation and adoption, Nordic countries are one of the foremost in the world. The region is already a global leader in electronic payments with very less reliance on cash.

But now, Europe’s most Northern members are launching a Pan Nordic Payment infrastructure also referred as P27 which would cater to the 27 million inhabitants of Sweden, Finland, Denmark and Norway. P27 project aims to establish world`s first real time cross currency, an ISO 20022 enabled payment infrastructure that would immensely improve business payment. Currently, these countries have different currencies and a real time infrastructure would mean that the foreign exchange and the screening would be done real time with the money getting realized in fraction of seconds.

The Nordic real-time payments infrastructure will be developed in collaboration with Nordic banks such as OP Financial Group, Danske Bank, Swedbank, Nordea, SEB and Handelsbanken.

Current Pain Point

At present, cross border payments are facilitated by SWIFT infrastructure and for any cross border payments, banks need to pay a fee to SWIFT to complete a transaction. The inter dependency between the Nordic countries are huge and most of the big Nordic banks end up paying millions of dollars as transaction fees to SWIFT.

With the current cross border market valued at 25 trillion dollars and estimated to reach 47 trillion dollars by 2026, the fee paid to SWIFT will increase significantly in the coming years.

Business Benefits

P27 will enable banks to send cross border and domestic payments at a low cost on a secure and modern platform. The real time domestic payment infrastructure might have existed in Nordics for a while, the new infrastructure aims to offer payments across countries both in real time and batches.

Project P27 also aims to build a future proof and versatile infrastructure that will enable newer technologies to be adapted faster. The adoption of ISO20022 messaging standard will modernize and harmonize the existing platforms and bring transparency, lowering the cost for both domestic and cross border payments.

Collaboration between the Nordic corporates will increase and it would help ease the trade, consumer loans, mortgages etc.

Implementation Phases

Phase 1 – The platform will provide support for instant payments, batch payments, request to pay, and book payments.

Phase 2 – The platform will provide support for direct debits, mandate management, and proxy services via mobile numbers, email ID etc.

Phase 3 – The platform will support overlay services, country specific products, and region specific products.

MasterCard and P27 have announced a partnership to provide the infrastructure. The pilot program will go live in the second quarter of 2020 and the infrastructure is scheduled to go live during the same period as well.

Governance Structure

Like other schemes in the Nordics, for P27, central banks of each country will carry out the settlement of the currencies. A body similar to EPC (European Payment Council) will be established which will be named as NPC (Nordic Payment Council). NPC will help govern the rule book and also how the payment will flow in the region.

To run the infrastructure, NBA (Nordic Banking Authority) will be established, which provide the oversight for modernization and maintenance of infrastructure. Both the NPC and NBA will run independently so that they can cater to the needs of all the banks in the Nordic region and not stay confined to the sponsor banks only.

Potential Customer Benefits

P27 would:

  • Enable P2P payments across currencies
  • Provide instant capabilities for domestic and cross border payments across the Nordics Lower transaction costs
  • Provide higher security and enhanced fraud prevention in payments
  • Provide new overlay services and products from banks

HCL Capability

HCL is a trusted consulting partner with more than 300 industry experts who have helped implement over 50 transformation programs across geographies for big banks in consulting and regulatory compliance. The implementation includes various payments programs such as SEPA Credit Transfer, SEPA Direct Debits, SEPA Instant Transfer, BACS, Faster Payments, PSD2, CMA etc. With an experience in implementation of various payment schemes, HCL is best placed to be partnered for the implementation of P27 as an integration and solution partner.