Santander and Iberpay pioneer cross-border instant transfers

Santander and Iberpay have exchanged the first international instant transfers based on the OCT Inst system, as recommended by the European Payments Council. As the first European bank to join the program, Santander is now able to offer instant cross-border payments that comply with European standards. After two years of consultation and debate, the system should make it possible to meet the political expectations expressed by several international organizations concerning cross-border payments.

FACTS

• On May 14, Santander and Iberpay carried out the first international instant transfers based on OCT Inst: the One-Leg Out (OLO) Instant Credit Transfer.
• The bank and the payment infrastructure provider have been chosen by the European Payments Council (EPC) as the first participants in the program.
• Iberpay acts as a clearing and settlement mechanism (CSM) for transactions via Santander ;
• The bank acts as payer/payee on the euro side of transfers, and as PSP of entry and exit.
• Managed by the EPC, this One-Leg Out system enables payment service providers to carry out transactions in the same way as SEPA instant transfers (SCT Inst), but with a payer or payee outside the euro zone.
• The OCT Inst system offers several advantages:
• Payments are made instantly, i.e. in less than 10 seconds;
• Payments can be made in multiple currencies;
• The system operates 24/7;
• Payments are transparent and traceable from end to end.
• Following this step, the Spanish banking community has set its sights on full adoption of the service by banks in October. Banks have until then to approach Iberpay and connect to the service.

CHALLENGES

• Promoting the development of the European payments ecosystem: OCT Inst should be an advantage on several levels. It will greatly enhance the user experience in international payments, facilitate the creation of new use cases, and foster the development of innovative European payment solutions, helping them to compete more easily internationally.
• Leveraging the SCT Inst infrastructure: The One-Leg Out scheme aims to build on the work done for the SCT Inst system, particularly in terms of standards. Indeed, OCT Inst aims to benefit from the standardization of instant payment systems based in Europe, to ensure quick and easy adoption.
• Meeting political payment expectations: The OCT Inst system is designed to anticipate the demands made by governments and international organizations. The G20, the European Commission, the World Bank and the International Monetary Fund have all expressed the need for international payments to evolve towards a faster, less costly system. The aim is to rationalize deadlines between currencies, overcome the problems of time zones and therefore availability, reduce costs and finally make these exchanges accessible and secure.

MARKET PERSPECTIVE

• As a reminder, the EPC was due to launch the OCT Inst system in November 2023. The postponement of the implementation of the SEPA ISO 20022 version to March 17, 2024 had forced participants to delay the launch of the operational phase of the OCT Inst system, so that the new ISO standards could be applied directly to One-Leg Out credit transfers.
• This news illustrates the Spanish banking system's commitment to innovative solutions such as instant transfers. This investment can be explained by the fact that 53% of transfers carried out in Spain today use the SCT Inst system.