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SCT Inst for cards
Last updated: 9 January 2024

Background
The European banking industry has implemented the SCT Inst scheme to support a pan-European instant payment. Within this scheme, funds are made available to the creditor within seconds. The financial risks for these transactions in the interbank sphere are managed by the settlement system between the related debtor and creditor banks.

 

In a White Paper approach, Berlin Group had analysed how to use SCT Inst for the reconciliation and settlement of card transactions by extending the processes and formats used for SCT Inst to the requirements of settling single card transactions directly through the infrastructure by changing the today's pull mechanism between the acquirers of card transactions and the issuers of cards. The White Paper aimed to progress further thinking in the Berlin Group work on meeting the vision of European regulators regarding the usage of SCT Inst as the new normal for mass payments in a transparent way towards the European payments industry.

 

The White Paper analysis described the use of SCT Inst for the reconciliation and settlement of card transactions within different technical scenarios. This document then offered to banks and processors technical models detailed enough to be used for studies on potential implementation efforts and potential synergies with related standardisation and implementation projects. The White Paper was not delivering a technical standard or a detailed implementation feasibility analysis on its own.

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The first version of the White Paper from 2021 was reviewed in 2023 taking into account the far reaching specification of premium Berlin Group openFinance payment APIs and the arrival of the ECB digital euro project. The paper shows how openFinance APIs interconnect card and SCT inst rails seamlessly, by offering already now all major card related payment functions as well as indicating how to support customer authentication methods provided by cards. At the same time, the ECB is planning to support also cards as form factor for the digital euro. Assuming that the digital euro processing will result in an instant payment system similar to SCT inst, the API based architecture proposed by the White Paper would perfectly fit with the planned ECB architecture as well. Thus, architectures with premium payment APIs are expected to become a reality also for cards as form factors. For this reason, a new section on harmonised payment API platforms has been added to the White Paper to make the market aware of the importance of scheme independent standardisation of such premium payment API functions, in future applicable to Open Finance, CBDCs and cards. The resulting version 1.1 can be downloaded below.

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