The European payments landscape is in the midst of great change. Massimo Arrighetti, CEO of SIA, outlines to Joy Macknight his vision of a future payments ecosystem. 

Massimo Arrighetti embedded

On the second anniversary of the Single Euro Payments Area (SEPA) becoming fully operational in all eurozone countries, Massimo Arrighetti, CEO of SIA, an Italian technology infrastructure company, argues that only now is the move to a common payments standard beginning to pay off.

“Payments are cheaper and simpler for both consumers and corporates because it is now possible to open an account anywhere in the eurozone and use the same procedures and processes to make or receive payments,” he says. “In addition, the common standard allows the banking industry to truly compete across the whole eurozone.”

In an instant

Another major infrastructure change coming down the pipeline is the roll out of instant payments, which is expected to become a reality towards the end of 2017. EBA Clearing has selected SIA as a partner in developing a real-time payments system for the 34 countries in the eurozone. Forty banks have reportedly committed to supporting and funding the development of such a solution.

The idea is to build on Step2, the pan-European automated clearing house platform launched in 2008 to process SEPA credit transfers and direct debits. “We recommended leveraging Step2 because banks have already invested a lot of money to first create the platform and then integrate it into their systems,” says Mr Arrighetti. According to him, this is SIA’s modus operandi – to repurpose existing infrastructure, in this case to minimise the banks’ investment and deliver instant payments as soon as possible.

“Instead of creating a completely new infrastructure, we can use the existing one and provide banks with an access module that is easy to integrate. This means that they can activate instant payments with marginal investment.”

The platform will be compliant with the SCTinst parameters set out by the Euro Retail Payments Board, based on ISO 20022 global messaging standards, and it will be able to support “any payment product that could possibly be implemented in the eurozone”, claims Mr Arrighetti.

“Our goal is to provide an infrastructure available to any player that wants to create a 'last mile' instant payment service,” he adds.

He believes that the biggest drivers for instant payments are born out of the changing nature of global manufacturing and trade. “Many companies are keeping low stocks or work without stock, ordering just in time to carry on production. But the seller wants to be paid promptly,” says Mr Arrighetti. “Hence there are many reasons for corporates to evolve from a payment that takes 24 hours or longer to settle, to one that settles immediately. I am in no doubt that corporates will be even more interested in real-time payments than consumers.”

Supporting payments

According to Mr Arrighetti, SIA’s role within the payments ecosystem is as an agnostic infrastructure provider for all players, whether banks, corporates or start-ups. He sees SIA as a facilitator that enables others to create and deliver services to their customers.

Consequently, the company views the new financial technology (fintech) start-up community in a collaborative way. For example it worked with other firms to launch Jiffy, a person-to-person smartphone real-time payment service.

“At SIA we look for opportunities; we try to understand what it is that the innovation does better and then do the new thing even better than the innovator,” says Mr Arrighetti. The company set up its own innovation lab in 2014.

Payments, previously considered a service provided by banks, are now attracting other players to the market. But not all new entrants are truly interested in the business itself, according to Mr Arrighetti. Instead they view payments as a way to capture consumer behaviour information to be used for marketing purposes. Although these two worlds will continue to compete as they do today for a while longer, he believes that a more convenient way to co-operate will be found, leaving the payment element to the market players that have an established track record.

“Making and processing payments is not just a technical job, but has a lot to do with risks – operating risk, cyber crime, etc. Many businesses aren’t able to cope with this risk,” he says. “So maybe there is a more co-operative way for the new entrants to receive the information they need, while leaving payments to the ones that know how to deal with risk.” He predicts that in the end the winner will be the company that provides the easiest, most secure service.

Interestingly, Mr Arrighetti is not convinced – yet – that the Payment Services Directive 2, which encourages banks to open up to external application programming interfaces, will revolutionise the industry. “Will the new entrants be more efficient or add greater value to the consumer compared to what the bank or payment institution is providing today? If the answer is yes, then there will be major changes. If the answer is no, then there will be a bit of experimenting but in the end there won’t be major changes,” he argues.

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