Optimizing Payment Processing: Speed, Compliance, and Operational Excellence

News | 15. August 2024

Modern Payment Processing is defined by its ability to execute transactions instantaneously, securely, and cost-effectively, meeting the rigid demands of the Instant Payment Regulation (IPR).

For financial institutions, efficient payment processing is the heart of the business. It is a complex operational task that must reconcile the customer’s demand for speed (Real Time Payments or RTP payments) with the bank’s non-negotiable need for security and IPR Compliance. Optimizing this process requires a shift in architecture and mindset.

The New Standard: Real-Time Payment Processing

The IPR mandates that all euro credit transfers must be processed and credited within 10 seconds. This means that the bank’s payment processing engine must operate continuously, 24/7/365.

This standard fundamentally challenges legacy systems that relied on batch processing—grouping transactions and settling them hours later. The modern requirement necessitates end-to-end atomic processing where clearance and settlement are immediate.

Key Components in Modern Payment Processing

To achieve this level of speed and resilience, modern payment processing relies on strategic technological layers:

Payment Orchestration: This software layer intelligently manages and routes transactions across multiple internal systems and external providers. Orchestration optimizes the flow based on cost, speed, and success rate, ensuring compliance and maximizing efficiency.

Payments Gateway: This acts as the secure interface between the bank’s systems and the wider payment networks or merchant platforms. It is essential for encrypting transaction data and facilitating secure movement.

API Architecture: Modular, API-driven design allows the payment processing component to scale independently and integrate quickly with emerging channels like mobile payments.

Securing the Payment Processing Flow

The speed of RTP payments creates new security and risk challenges. Modern payment processing must integrate powerful tools directly into the flow:

Verification of Payee (VoP): This fraud mitigation tool is now mandated by the IPR for all credit transfers, requiring the processing system to instantly check if the beneficiary’s name matches the IBAN.

Real-Time Monitoring: While the 10-second rule prohibits transactional sanctions screening, the processing system must utilize advanced, high-speed monitoring tools to assess fraud and risk instantaneously, ensuring the bank remains compliant and secure.

Operational Efficiency is Compliance

Effective Payment Processing in the IPR era is synonymous with operational efficiency. Banks that move away from fragmented, batch-based systems to a centralized, orchestrated platform will not only meet compliance deadlines but also realize significant cost savings and agility.

Is your current payment process slowing your compliance efforts and increasing costs? Samlink specializes in guiding financial institutions through the strategic adoption of resilient, API-driven RTP Implementation.