Overview

Due to the increasing widespread use of mobile devices, consumers now expect instantaneous responses. This expectation creates an increasing demand from consumers for faster completion of electronic payments.

This demand, and the widespread availability of new technologies, are driving initiatives that are ongoing in many countries and regions around the world. In some cases systems are operational, while others are in consultation or implementation phases. Various terms are used interchangeably with payments to describe or name such systems, such as immediate, instant, real-time, near real-time, and faster.

Immediate payments systems share several characteristics:
  • Provide an electronic payment capability for retail payments.
  • Payments are sent, confirmed, and the value is available to recipient within seconds.
  • Payments are irrevocable. When they are sent, they cannot be recalled.
  • Payments that are sent to a beneficiary bank or others in the financial supply chain are actively acknowledged or rejected. This response gives certainty to the sender that the payment was or was not successfully received.
  • Payments can be made at any time of day every day of the year.
  • Delayed settlement. Typically, net settlement between participants is completed periodically after the payment was made.
Typically, immediate payments involve several parties:
  • Debtor, also known as originator, person, or organization, who wants to transfer funds immediately to a beneficiary.
  • Creditor, also known as beneficiary, person, or organization, that receives funds immediately.
  • Debtor financial institution (debtor FI), or originator bank.
  • Creditor financial institution (creditor FI), or beneficiary bank.
  • Clearing and settlement mechanism (CSM).
  • Optional additional service providers.

Each system operates according to a set of rules, or a scheme, that defines the business rules and technical rules under which the scheme operates. Business rules might dictate, for example, maximum execution time, maximum amount for a payment, minimum information to be provided for a payment, or how settlement is done between participants. Technical rules might dictate, for example, the format and content of messages exchanged between parties, interaction patterns between parties, and timings for those interactions. Some schemes are defined by the initiatives from The Clearing House (TCH Real-Time Payments (RTP) system in the US, and the pan-European scheme, as defined by the European Payments Council (EPC) rulebook for SEPA Instant Credit Transfer (SCTInst).

Financial Transaction Manager for Immediate Payments overview

IBM® Financial Transaction Manager for Immediate Payments adds the capability to process immediate payments to the IBM Financial Transaction Manager suite. It supports the message types and business flows that a debtor financial institution (originator bank) or creditor financial institution (beneficiary bank) must support to interact with other parties. It also provides integration points to other systems within a bank that are used when the Financial Transaction Manager for Immediate Payments business flows need to call services that are provided by those systems.

The diagram shows the transaction processing engine, which runs on IBM App Connect Enterprise, providing the runtime processing of the immediate payments. It connects to a database for configuration and operational data. The configuration and administration user interface runs on WebSphere Application Server and has a view to the database and a connection to the transaction processing engine. Also shown are the interfaces between the transaction processing engine and the customer and the channel. One side of the transaction processing engine interfaces with systems such as an RTPS (or CSM) system. Its other side interfaces with bank systems such as fraud detection, sanction screening, and accounting. Finally, the IBM App Connect Toolkit and Rational Software Architect development tools are shown in their role of creating the solution and deploying it to IBM App Connect Enterprise and the database.
Financial Transaction Manager for Immediate Payments (Immediate Payments) provides the following benefits:
  • Adds the ability to process outbound and inbound immediate payments to the Financial Transaction Manager suite.
  • Delivers a payments solution that complies with The Clearing House (TCH) Real-Time Payments (RTP) system and the European Payments Council (EPC) rulebook for SEPA Instant Credit Transfer (SCTInst).
  • Supports the business flows and ISO 20022 messages that are defined for the schemes. ISO is the International Organization for Standardization. ISO 20022 is the standard that is used by the financial industry to create message standards.
  • Provides the capability to be extended to support specific CSM implementations of pan-European instant payments, Zelle, and other country-specific or regional immediate payment schemes.
Immediate Payments runs as a Financial Transaction Manager application. It consists of reference applications for each scheme, complete with artifacts such as the process model, configuration data, functional flows, message maps, and scripts, that make up the application. The reference applications implement a typical business process for a debtor financial institution (originator bank) to process outgoing payments. The processing for the originator includes the following functions.
  • Receiving the payment from the debtor (from the channel system).
  • Interacting with the fraud detection, sanction screening, and accounting systems in the bank.
  • Delivering ISO 20022 messages to the CSM.
  • Processing ISO 20022 confirmations from the CSM.
Similarly, the reference applications implement a typical process for a creditor financial institution (beneficiary bank) to process incoming payments, and other non-payment messages.

Full details of the provided business process flows are described in Functional Flows. Details of the ISO 20022 messages that are supported, and the transformation maps to and from the Financial Transaction Manager canonical form (ISF), are described in Mappers.

Installation and configuration overview

To get started, the Planning and Installation sections provide guidance and instructions on the steps to prepare for and install Financial Transaction Manager for Immediate Payments.

After the reference applications are installed, they can be deployed. By default, the reference applications are configured to interact with a set of simulators that are included with the reference applications. These simulators are for the CSM and for each of the external bank systems that the application must interact with. You can use the simulators to set up a running deployment of the reference application for test, education, and demonstration purposes. These simulators are described in Simulators.

To prepare to process real payments for a bank, several steps are required:
  • Immediate Payments must be set up for options and configuration to suit the bank. For more information about customization, see Setup and Customization.
  • Immediate Payments must be integrated with a number of external systems that provide services that are called by the Immediate Payments business flows. The reference applications are configured to interact with simulators for these systems. These simulators must be replaced with real systems, which would normally involve an integration project. The interfaces to the simulator services use asynchronous IBM MQ request and reply messages. Financial Transaction Manager and IBM App Connect Enterprise provide a rich set of capabilities that accelerate this integration. For example, allowing alternative transports such as HTTP or APIs, and transformation capability to match the required formats of the external systems. For more information about integration, see Integration Overview.
  • Immediate Payments must be connected to the CSM. For The Clearing House (TCH), a connector component is provided. This connector manages the connectivity to one or more TCH hosts, provides message signing and signature checking, and manages the administration messages and protocol for echo, sign-on, and sign-off. For more information, see TCH Connectivity.

    For SEPA Instant Credit Transfer (SCTInst), Immediate Payments provides an IBM MQ interface for the exchange of ISO 20022 messages with the CSM. Any additional infrastructure that is required depends on the CSM.

  • An organization might want to customize the business process flows to meet their specific requirements. Most of the steps within the Immediate Payments process can be controlled by configuration. This configuration provides flexibility and the ability for a bank to tailor and extend the process to suit their needs. Different sets of configuration, which arrange the services differently to support alternative accounting models, are provided. Also, an organization might require integration with more systems that use further services that must be called as part of the business flows. For more information, see Setup and Customization.

Latency

Most immediate payments schemes define strict latency limits for various stages in the end-to-end process. To meet these limits, each party in the chain must complete its part in the payment process without delay. Financial Transaction Manager for Immediate Payments was designed so that such latency targets can be achieved in a manner that can be scaled. When processing payments, Immediate Payments must call services that are provided by other systems within the bank. For example, fraud screening and accounting. These systems must also contribute to meeting the latency targets.