Enabling an integrated Nordic region for domestic and cross-border payments through an open-access, common infrastructure has been a key goal of Nordea and other major Nordic banks since Project 27 began in 2017.
P27 aims to replace a currently fragmented clearing landscape with a new infrastructure that brings simplicity and scale efficiencies, harmonisation and standardisation of payments, instant capabilities, modular functionality, increased transparency and a resilient design able to implement robust security measures.
Achieving new milestones
The new P27 payment platform is scheduled to go live with the first transactions in 2021 if all regulatory requirements are met. Nordea, along with Danske Bank, Handelsbanken, OP Financial Group, SEB and Swedbank have spent the beginning of 2019 consulting with central banks in the four Nordic countries as well as the wider Nordic banking community to try to define the type of modular payment infrastructure they want to see built.
The new P27 payment platform is scheduled to go live with the first transactions in 2021 if all regulatory requirements are met.
A new company called P27 Nordic Payments Platform has been established by the six banks involved in the initiative to manage the day-to-day operations of the project, select vendors and liaise with national and European regulatory authorities. Lars Sjögren, formerly of Danske Bank, has been chosen as the CEO of the company with Claus Richter, formerly of Nordea, taking on the role of COO for P27.
In order to cement the governance model for P27, the Nordic bankers’ associations have formed the Nordic Payments Council (NPC) as a standalone non-profit association to manage the Nordic payment schemes that will be used in P27. The main objective of the NPC is to harmonise payments in the Nordics and manage the rulebooks. With the first draft of the rulebooks and governance structure now established, the Nordic Payments Council has conducted an open consultation which concluded in the beginning of September. The schemes are expected to be approved by the NPC and final versions will be published in November 2019. The schemes will then go into effect one year later and signal the first possible date for payments to be made based on the new schemes.
In June 2019, P27 Nordic Payments Platform announced a partnership with Mastercard to build the infrastructure for the real-time and batch multi-currency platform and take responsibility for operating the solution. With its expertise in developing payment infrastructure and global reach, the partnership with Mastercard is considered a real milestone on the way to making the P27 project a reality.
In June 2019, P27 Nordic Payments Platform announced a partnership with Mastercard to build the infrastructure for the real-time and batch multi-currency platform and take responsibility for operating the solution.
Building on top of P27
For Nordea, P27 offers a number of opportunities for developing new market leading solutions for the bank’s customers. Working groups have already been assessing which of the potential projects to pursue first.
Søren Neregaard, Strategic Partner in Transaction Banking Solutions at Nordea, says: “We are not even starting to lay down the rails yet but we are certainly planning for that. We know where we want to go and although we don’t know exactly how to get there it’s really exciting to be in the exploration phase and to be part of finding out what we should build on top. That’s actually the big challenge for a lot of us: Not being locked down in what we have been used to doing with all of the circa 95 payment types that we have in the Nordics.”
We know where we want to go and although we don’t know exactly how to get there it’s really exciting to be in the exploration phase and to be part of finding out what we should we build on top.
Easier and more efficient
One potential area of improvement is in online channels for private and small corporate customers of Nordea. Today, this customer group are required to select their payment type and choose between domestic and cross border transfers when making a transaction. They often use card payments for online shopping or local Person-to-Person payment apps for domestic shopping. They also use local existing direct debit or eInvoicing solutions for paying bills.
P27 offers the potential to fuse the payment initiation process into one transaction type of “Nordic transfer” to make instant payments and cross-currency transactions. A new Request to Pay billing solution can also be supported that replaces direct debits and eInvoices. Multiple benefits will include a seamless initiation and execution of the P27 “Nordic Transfer” and clear information and choices for Nordea customers.
Large corporates are currently initiating or receiving a huge number of cross border transactions each year. P27 has the potential to enable instant cross-border payments that will greatly simplify processes and make them more efficient. Traditional file services and ERP systems can be supplemented or replaced with API solutions, providing detailed information and suggestions for optimising payment routines. Request to Pay billing solutions can also be supported to replace the current large numbers of direct debits and eInvoices corporates are using to bill their own customers.
We want P27 to provide the backbone of a secure, controlled and comfortable payments future that is as efficient and easy as possible for people to use. Why spend time on picking and selecting payment methods, currencies, etc, when payments can be made instantly and frictionless?
Making payments disappear
P27 is well on the way to launching in 2021 when it will reshape the Nordic payments landscape to bring benefits for society, add customer value and create industry wide systemic improvements. Nordea are exploring solutions that will benefit their customers across the Nordics by making the time and complexity currently connected to payment processes disappear into the background.
Søren Neregaard concludes: “We want to make sure we take advantage of the potential P27 will bring and develop new solutions from a customer perspective. The greatest possible benefit for our customers and their customers is the ability to simplify things. I have an inscription on the back of my iPad that says, ‘making payments go away’. We want P27 to provide the backbone of a secure, controlled and comfortable payments future that is as efficient and easy as possible for people to use. Why spend time on picking and selecting payment methods, currencies, etc, when payments can be made instantly and frictionless?”