Payment Bancronyms - what is this?
If it looks as though I have just made up a word, you are right, however if you think this word shouldn't exist, then think again.
Banks and the finance industry are probably one of the biggest culprits when it comes to using acronyms, especially when it comes to industry regulators and industry members, but it also flows down to the payment networks, platforms and clearing house operations that work behind the scenes.
Because of these Bancronyms
, people seem to misunderstand solutions when making comparisons between what some countries currently have or are working on in the payments space, which can cause issues when companies are looking to expand and set up offices in different countries around the world.
As an example, people in Europe may believe that the NPP (New Payments Platform) being rolled out in Australia next year is the equivalent of the SCT (SEPA Credit Transfer - The first letter of the acronym is actually an acronym itself). However, the NPP is probably more closer related to the UK's FPS (Faster Payment Service), even though SWIFT (Society for Worldwide Interbank Financial Telecommunication) which sends millions of payment instructions worldwide on a daily basis, and Fiserv (not an acronym) are building the technology.
Even comparing the NPP to the FPS is still incorrect, as the FPS solution in the UK was to speed up transactions between different banks' customers accounts from what was typically a three day process under the old BACS (Bankers' Automated Clearing Service) platform to a platform that can take minutes up to 2 hours. The NPP solution is set to replace the current BECS (Bulk Electronic Clearing System) which is regulated by APCA (Australian Payments Clearing Association) which is currently an overnight/next business day process, to a process where payment values are transferred in less than a minute.
This means that the NPP is probably more closely related to the RTP (Real-Time Payments) Solution that will be rolled out in the United States by TCH (The Clearing House), but not the Same Day ACH (Automated Clearing Houses) which is managed by NACHA (National Automated Clearing House Association).
How do all of the above differ to the SCT solution being rolled out in Europe next year? Well the SCT is being developed by the EPC (European Payments Council) after being invited by the ERPB (European Retail Payments Board) to create a solution to allow instant payments throughout the SEPA (Single European Payments Area) regions. This means cross border Euro transactions will be processed instantly whereas FPS, NPP, RTP, and Same Day ACH only provides domestic payments (although Next-Day ACH will provide IAT (International ACH Transactions)).
Confused by all the Bancronyms
yet? The above has barely scratched the surface of the industry regulators, payment types, networks and clearing houses that sit behind the scenes that oversee, send information or process everyday intra region, domestic or international payments around the world.
Some (and I do mean some, as the list is quite exhaustive) of the Bancronyms
used around the world in the payments space that I haven't mentioned are: EBA, ECB, ESCB, PE-ACH, STEP2, TBF, PNS, CHIPS, CHAPS, CHATS, RTGS, TARGET, SWIFT (although I did briefly mention SWIFT and part of what they do before), HKCL, SIC, RIX, EIS, LCH, EFT, BEPS and CNAPS to name just a few.
The above Bancronyms
consist of regulatory boards and associations, payment messaging services, and clearing houses. Some of the above even utilise each-others networks and software or fall under the same regulatory board for payment messaging and processing.
Wondering why I have brought these acronyms to your attention yet and who they're for? The good news is that if you are a company treasurer or work in AR/AP, then you really don't have to worry about them. These acronyms or as they should now be called, Bancronyms
, are required to be understood by payments specialists, both locally and globally so that they can advise you (or your business) in simple terms what the processes and procedures are for making simple payments, creating batch files, payment processing times, and even what the payment reversal procedures are (just to name some of the processes). And also to allow payments specialists to understand what the process flow and regulatory obligations are.
So if you are looking at setting up offices off-shore, knowing what and how you can process your payments all comes down to finding the right payments specialist to be able to assist you with your needs.
Meet the Author
George Solomos is a passionate cards and payments specialist. His experience throughout his career has seen him manage and structure the in-house treasury and payments processes for some of the largest companies in Australia and globally.
Currently working as a private consultant, George assists start-ups and existing businesses with services ranging from establishing and streamlining payments processes, though to the most complex requirements of centralised treasury and cash management procedures.
If you have any cards or payments related queries, you can message George via LinkedIn