A boost to the digitization of Switzerland
PostFinance and the other banks are harmonizing their credit transfer schemes to streamline complex formats, procedures, and payment slips that have evolved over time. Processes will be automated end to end and aligned on the basis of the international ISO 20022 standard.
Financial services industry initiative
With more than a billion credit transfers a year, payment traffic’s vitally important to Switzerland. The financial services industry initiative supports the digital transformation of the economy and society, assures automated compliance throughout the process, and boosts Swiss business attractiveness.
Harmonization will facilitate global trade of goods and services. Switzerland is acting in harmony with its European partners and the trend to globally recognized technology standards. This guarantees straightforward transfer chains and assures security of investment in the long term.
Standardized message types make communication between financial institutions and their clients quicker and more precise. Financial institutions are supporting their corporate clients and working hand in hand with software providers on implementation, which is in full swing.
Why change if everything works fine? People are very satisfied with the payment transfer system, but no industry is immune to technological change. They have to adapt. The changeover is under way. For it to be a success, the necessary steps have to be taken in good time.
Digitally readable QR codes will significantly reduce the manual work involved and reduce error rates in credit transfers. This will save private individuals and SMEs time and money, and enable companies to optimize their cash management and costs of capital.
The QR code, part of the digital routine in many industries, is also finding its way into the payment transfer system. It is regulated by international standards, secure, easy to use, and with the appropriate app can be scanned by any smartphone. The underlying systems are reliable and secure.
After the changeover all the data necessary to assess risks will flow to the recipient’s bank. This will enable full, automated compliance with the anti-money laundering legislation. The international ISO 20022 standard will facilitate efficient adaptation to future requirements.
Harmonization of the payment transfer system will boost the digitization of Switzerland and facilitate the transformation taking place in many areas of business and society. The change is being made responsibly, taking account of all sections of the population and businesses.
Facts & figures
Effort Involved in Switching Depends on Degree of Automation
To find out how far the changeover to ISO 20022 has progressed, in summer 2017 the research institute gfs.bern conducted an online survey of 1,500 companies, public agencies, and associations all over Switzerland. On the basis of their degree of automation, these organizations were categorized as “seriously affected” or “moderately affected.” Companies that bill manually and make payments, for example, via online bank, are not affected by the move to ISO 20022 to the extent that they do not yet have to take proactive steps.
Clear Majority Already Initiated Project
At the time the survey was conducted in July 2017, around 60% of seriously and moderately affected organizations had already launched a project to switch to ISO 20022. 40% of the organizations affected by ISO 20022 expected to have completed the changeover by 30 June 2018. By mid-2018 the idea is that practically all organizations will have changed over to ISO 20022. This way they will have automated processes end to end for making entries and executing incoming and outgoing payments, and will be ready for the QR bill in 2019.
Different Industries at Different Stages
There are differences between industries. Organizations producing relatively large volumes of bills tend to be further along the path. But ISO 20022 affects all companies with accounting software. Companies still working with DTA will increasingly have to reckon with delays and manual work when initiating payments and reconciling incoming payments in their accounts receivables accounting. These problems will be accentuated by the introduction of the QR bill.
90% of the organizations surveyed are satisfied or very satisfied with the domestic payment transfer system; rates of satisfaction with foreign payments were only slightly lower, and the survey shows that most people recognize the benefits. 60% of those polled believe that the standardization will only bring benefits or primarily bring benefits; this figure rises to 70% for moderately to seriously affected companies. The most frequently cited benefits included less susceptibility to error thanks to the use of IBAN, the digitization of business processes, and more straightforward cross-border payments.
Backbone of the economy
A highly available payments infrastructure is the foundation of economic coexistence and the backbone of the Swiss economy.
Although payment traffic is just as important to Switzerland as the water and electricity supply, it’s provided by the private sector.
1 In terms of gross value added (2014) and number of employees (2015). 2 In terms of importance to the economic cycle and the provision of basic supplies, and in terms of substitutability. 3 Excluding payment traffic
Source: Deloitte (2016): Study into the impact of payment system harmonization in Switzerland
Trend to digital
The trend to digital payments will accelerate in the next few years with the advent of ISO 20022 and the new QR code.
Responsible structural change
The Swiss financial industry is taking a very responsible approach to digital transformation. Even after the introduction of the QR code it will be possible to make paper-based payments by post, at a bank or post office, or enter payments manually via e-banking.
The new QR bill will replace all payment slips
The seven different types of payment slip will give way to a digitally readable QR code containing all payment-related data. The new solution, called the QR-bill, will make it easier for businesses and consumers to handle invoices and credit transfers. Companies will be able to print out QR-bills themselves, and recipients of bills will be able to initiate payments with only a few clicks using a smartphone or other reader. It will be possible to read all the information necessary for the payment without technical equipment. People will still be able to make payments at the post office counter or by mail, or enter them manually via e-banking.
Ready for ISO 20022
Key milestone: June 2018
The harmonization of payment traffic is well under way. An important milestone is changing accounting software over to ISO 20022 by the end of June 2018. Among other things, organizations that manage the switch by then will meet the technical requirements to replace existing payment slips with the QR-bill in 2019. Companies of all sizes have already moved their payment processes over to ISO 20022. Four of them talk about their experience with the changeover and the benefits they’re set to gain from the new digital processes.
Get started now and change over by 30 June 2018
Corporate users that make payments via file transfers, automatically reconcile account transactions, or enter them in their financial accounting must move over to the relevant bookkeeping software by 30 June 2018. Among other things, organizations that manage the switch by then will meet the technical requirements to replace existing payment slips with the QR-bill in 2019.
Prepared for new payment procedures
The QR-bill will replace all payment slips. Organizations that want to be able to process QR-bills electronically must move their accounting software over to ISO 20022 prior to this. Not all information on the QR-bill can be processed using the Swiss DTA standard, and there is even a risk that payments might be rejected.
The latest developments in the harmonization and standardization of payment traffic in Switzerland.
Patrick Beer__financial accountant, Wander AG
Why standards are so important for everything from Ovaltine to payment traffic
Alfred Meyenberg__Harmonization of Payment Transactions at PostFinance Programme Leader
The final countdown has begun at PostFinance
Boris Brunner__Head of Business Development & Operations, SIX Interbank Clearing AG
Cleaning the Augean stables: a herculean task for Switzerland?
Markus Beck__Head of Product Management, Corporate Client Payment Solutions, Raiffeisen Switzerland, Member of the Board of Directors of SIX Interbank Clearing AG
Bulletproof Glass Gives Way to Touchscreens: Banks Go Digital
Nicole Walker__Head of Product Management Payment Solutions, PostFinance Ltd, Member of the Swiss Payments Council
Capital works better without paper
David Wiesner__Member of the Board of Directors of SIX Interbank Clearing Ltd, Member of the Executive Committee of RBA Holding Ltd and Entris Banking Ltd
Good reason for clients to be happy: greater competition
Jean-Marc Hensch__CEO of Swico
Pixels versus media breaks
Urs Bieri__co-director of gfs.bern
People don’t like giving up old habits
Payment traffic harmonization is key in terms of helping drive the process of digital transformation sweeping all sections of society and the economy. The video summarizes the most important new developments and shows what will change for corporate and private clients.
The harmonization of payment traffic basically affects all organizations that make payment transfers. Here you’ll see what’s changing and how you can take advantage of harmonization.
© PostFinance Ltd
The first real-time payment system revolutionized interbank payment transactions across the world, and sets new standards. Now all transactions in Swiss francs run via the SIC system.
Driving digital Switzerland together
Activating Digital Switzerland is an information campaign run by PaymentStandards.CH, the Swiss financial industry’s official communications platform for the standardization and harmonization of payment traffic. The changeover to the international ISO 20022 standard will enable more highly automated payment transactions. To implement the infrastructure project the financial industry is working closely with business and the ICT industry. Together they are driving digital transformation and helping give the whole of Switzerland a boost.