The Nordic Payments Council: an insider’s view

The Nordic Payments Council plays a critical role in the ongoing development of a new cross-border payments system in the Nordics. In an exclusive interview with P27 News, Secretary General Jenny Winther offers an insider’s view of the organisation and its operations.

Jenny Winther is passionate about payments.

Or more precisely, payments infrastructure.

“The magical thing about Infrastructure is what it enables going forward,” she explains.

And as head of the Nordic Payments Council (NPC), she finds herself at the centre of a complex process set to radically transform the region’s payments infrastructure.

Based in Stockholm, the NPC is an independent, member-based non-profit that grew out of the same project that spawned P27.

“The vision and goals of NPC and P27 are the same, but we are two distinct, separate organisations with different responsibilities,” she adds.

Since its founding in December 2018 and official launch in June 2019, the organisation has been hard at work drawing up what Winther calls “the blueprints” for building up an entirely new payment system in the Nordic region.

“Our ultimate goal is to create payment related schemes with rules, processes, and formats for harmonized payments in the Nordics,” she explains.

Building a payments ‘railroad’

In practical terms, this means creating rules that enable the same payment processes regardless of currency. The vision of the NPC is to harmonize towards the euro, for which payments schemes have been in use since 2008. The first NPC payments schemes are based on and in most aspects similar to existing payments schemes for the euro.

To start with, the NPC is developing schemes for Swedish kronor and Danish kroner. But the new set of rules – which are based on ISO standards backed by the United Nations – can in the future also be applied to other currencies.

“We want to make common rules and processes that de-fragmentise the payments market in the Nordics. To make it simpler for payment service providers to develop new payment services for their users,” she explains.

Winther likens the effort to transform payments infrastructure in the Nordics to building the railroads. The NPC’s role is to make sure that track sizes match up throughout the region so that things can move smoothly along those rails from one country to another. But the organisation isn’t involved in building the rails themselves or determining what the trains look like, she adds.

“We don’t do technology or product development; we’re simply creating rules and processes that all stakeholders in the Nordics can use and follow,” she says.

Of course, balancing the needs and interests of stakeholders across the Nordic region is no simple task. And striking that balance gets at the heart of the Nordic Payments Council’s role in the entire process.

“Developing common rules, processes, and format specifications is always difficult, especially as each payments system historically has been developed based local traditions and conditions in each of the Nordic countries,” says Winther, who joined the newly-formed NPC from Swedish clearing system Bankgirot.

“This is a big change that requires everyone to compromise. But ongoing dialogue and cooperation help ensure buy-in from all members. We have a long history of Nordic collaboration and many of the banks have operations in several Nordic countries which makes things easier.”

The Nordic Payment Council community

The NPC currently has 29 members including banks and credit institutions from across the region, as well as bankers’ associations from Denmark, Finland, Norway, and Sweden. However, Winther expects more members to join in connection with the expected launch of a new payments infrastructure in the region in 2021.

And not only is the NPC developing payments schemes similar to those in place for the euro; the NPC’s structure and approach are also inspired by the European Payments Council, the body responsible for the euro schemes that emerged ahead of the currency’s launch to help ease the transition for various stakeholders.

This “community-based” approach, which also draws on the long-standing spirit of cooperation among the Nordic countries, relies heavily on working groups that include representatives from across the region. This model ensures that multiple perspectives are heard before any decisions are taken.

“The goal is to get everyone aligned,” says Winther.

During 2020, the NPC published all documentation concerning its first two payments schemes for both a credit transfer scheme and an instant credit transfer scheme. And in August, the organisation began its next change management cycle by issuing call for change requests.

This process allows any stakeholder to submit proposed changes to the existing schemes that will then be considered ahead of the next scheme publication in November 2021.

“The two guiding principles we have are increasing interoperability and reach. By developing common rules and process that apply across the region, we can reach a point where all payments are processed in the same way regardless of currency or service provider,” Winther explains.

Enhancing payments innovation

While the NPC has made significant progress during its first year of existence, striking the right balance between common rules and processes that provide clarity and consistency without unintentionally hampering future innovation remains a challenge.

“We believe well-developed payment schemes should enhance innovation. But it’s hard to predict where the market and new technologies will lead. That puts an extra burden on us to design a certain level of adaptability into the payment schemes we develop and to keep an ear to the ground through the stakeholder forum we will launch this autumn,” she explains.

But despite the hard road ahead, Winther relishes the opportunity.

“The impact will be enormous, and that’s a magical thing. I feel fortunate to be a part of it,” she says with a smile.

“Payments in the Nordics already work well domestically, and if we can leverage that to create something that also works across borders, it will be beautiful.”