P27: Simpler cross-border payments and much more

Nordic companies doing businesses across the region have to deal with four currencies and nine clearing systems. Look at the UK as a comparison, it has 66 million people and just one currency; and there are over 340 million people living in countries using the Euro. This complexity puts additional burden on Nordic businesses. That’s why P27’s goal to create a single clearing platform for real-time payments, both domestic and cross-border, is such a big deal.

P27 isn’t just a topic for bankers. It goes well beyond infrastructure and will affect shoppers, retailers, manufacturers and many more. It promises to simplify bill payments and other operations for Nordic businesses,  enabling them to simplify processes and expand their reach.

Tino Kam, Head of Product Management, Transactional Banking at Nordea, explained “Currently a Nordic business that is active across the region must deal with twenty, thirty, even forty payment types. In the future, this would be a maximum of ten. And nine clearing processes will be replaced by just one.”

“P27 is unique, a Nordic solution to a Nordic problem, but with business becoming increasingly global we are making sure that it conforms with European Union (EU) standards.”

An ambitious programme

Tino was open about the scale of the undertaking, “P27 is an unprecedented challenge. It will be the first real-time, multi-currency automated clearing house. And, of course, everything needs to be set up without adversely affecting day-to-day business. That’s like trying to build a plane while taxiing down the runway.”

Despite the challenges, the programme is on track to go live in 2022. One of the first big impacts for business will be “Request to Pay” (R2P). This could replace direct debits and eInvoices. But simplification isn’t the only rationale behind P27, other anticipated benefits include:

• Making it easier to build new applications, including mobile solutions, that work across borders
• Creating a robust platform that can deal with the anticipated growth in the number of payments
• Helping reduce fraud and stamp out money laundering
• Adding value to the payment process

On the subject of adding value, Tino explained, “At the moment, the payments process is purely about the steps needed to move money safely and reliably. P27 will streamline that process and create a resilient platform for financial services companies to create new products. But it won’t just simplify back-office functions, it could help businesses derive insight from payments data.”

Our recent Treasury 2025 report highlighted the untapped value of payment data. Its lead author, Johan Trocmé, Director of Thematic Research at Nordea, explained, “There is a massive amount of untapped insight in payment data. Think about it, every payment you make, every purchase of what you sell involves a payment. And each payment includes a mass of metadata. Analysing that data can provide valuable understanding of customers and trends.”

Of course it’s not just companies that will benefit. Consumers should see benefits in terms of simplification and new payment applications. The benefits the banks expect from P27 for banks mirror those to other companies, Tino said, “Company treasuries want a harmonised, transparent, simple infrastructure for their business, and it’s the same for us. By having fewer payment types, fewer clearing houses, fewer of everything, we can simplify processes for our customers.”

Coming to fruition

Realising these benefits will require significant technical changes. There’s much work being carried out within Nordea to prepare for P27. “In parallel to the development of P27 we are driving a major transformation,” Tino explained, “introducing modern technology and updating our core systems for the future. While this is complex, we expect the effort to pay off. It will mean that our P27 is more robust than if it were built on legacy infrastructure. And it will create a strong platform for us to innovate quickly in the years ahead.”

P27 is an amazing example of collaboration across an industry. Many of the leading participants, which includes Nordea, are competitors, but are working together for the good of the region. And that’s not all. Despite making up 60% of the Nordic market, the programme leaders are now reaching out to smaller and community banks.

Tino concluded, “Genuine innovation is never without its challenges, and P27 is no exception, but we expect to see phenomenal benefits. And seeing the EU add instant payments, a mirror of P27, to its roadmap is a strong endorsement of our vision. There’s lots to be done, but I’m excited to see P27 in action in 2021.”

Watch out for more updates from Tino and the Nordea team as P27 is rolled out throughout 2021 and beyond.