Payments migration: lessons from Finland and SEPA

As banks in the Nordics prepare for the potential launch of P27, Finance Finland payments expert Inkeri Tolvanen offers some payments migration insights from Finland’s experience with SEPA.

It’s been almost ten years since Finland became the first country in the eurozone to successfully migrate to SEPA, the single euro payments area.

“It was a huge effort for the banks and their customers,” says Inkeri Tolvanen, Head of Payment Systems with Finance Finland, an industry association that serves as a common voice for the Finnish financial sector.

Among other things, the process involved replacing Finnish bank account numbers with IBAN account numbers and transitioning from the country’s own national payments standards to international ISO 2022 standards, both in the bank-to-bank and corporates-to-bank space. Another important change was the conversion of direct debit payments to e-invoices.

“That was very unique and something that affected the whole of society, from consumers, to businesses, to the banks,” she explains.

A new payments migration

These days, Tolvanen finds herself at the heart of another major payments transformation process connected to the potential future implementation of P27, which aims to provide the Nordics with a single cross-border, cross-currency payments platform.

She points out that P27 could be considered SEPA “Plus” platform in that it will enable the processing of payments in multiple currencies across borders, whereas SEPA only works for the euro.

And other than a few variations to accommodate the Nordic currencies, the Nordic NPC payments schemes on which P27 will operate are based on the SEPA rulebooks and standards. As a result, joining P27 will likely be a less labour-intensive process for banks in Finland because the country is already processing all domestic payments as SEPA payments.  

“Now the other countries in the Nordics face the potential big migration from several domestic payment schemes to a common set of rules and standards,” Tolvanen explains.

Harmonized standards across the Nordics

Among the most important change P27 will bring, she believes, is a solution that offers harmonized payments across the Nordics. This will enable banks to make payments in other Nordic countries using Nordic currencies through a single platform and with the same rules and standards as with SEPA.

“In the long run, that will have a huge impact on costs for banks and for customers. It will also allow banks to develop new services for their customers,” she says.

Harmonized rules and standards will also create new opportunities for P27 to create additional services on top of P27’s basic payment services.

“The Finnish banking community is following this development carefully, particularly when it comes to the request to pay and bill payment service that P27 is currently working on,” Tolvanen explains.

Lessons for payments migration

Looking back on Finland’s successful SEPA migration journey, Tolvanen believes there are a number of important lessons that can be applied to the arrival of P27. She points to Finance Finland’s national SEPA migration project, for example, which included all banks active in payments.

“It helped avoid potential pitfalls,” says Tolvanen.

Also important was the establishment of a stakeholder forum where representatives from Finland’s public and private sectors as well as banking software providers could share experiences and address common challenges.

“The stakeholder forum was really, really important because it brought together all the key players in the payments ecosystem,” she explains.

Another key success factor in Finland’s SEPA migration was an intense and sustained emphasis on communication based on input from both experts from banks and customer organisations.

“Without strong communication, the migration would not have gone well,” she says.

P27: worth the effort

Looking ahead, Tolvanen expects P27 to further hasten the trend toward instant payments.

“I’m looking forward having the ability to use mobile to send instant payments in other Nordic currencies to friends in Sweden or Denmark just like I do to friends in Finland,” she says. 

Tolvanen is also confident P27 will bring a range of exciting new opportunities for businesses in Finland and the rest of the Nordics

“I’m convinced P27 will be worth the effort that banks and their customers need to put into implementation,” she says.

“Harmonized cross-border, cross-currency payments will go a long way toward nurturing further innovation – and also help bring our countries closer together.”

NOTE: P27 is still in a preliminary stage, and the establishment of P27 is subject to regulatory approvals and requirements.