IPFA 2.0 – How the International Payments Framework Association is Res...

IPFA 2.0 – How the International Payments Framework Association is Responding to Industry Developments

Cross-border payments are being redefined by industry forces. The IPFA is evolving to help the industry bring together the need for instant payments and flexibility.

28 October 15

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Interoperability. Instant. ISO 20022. Standards. More than catchy buzz words, these are powerful forces shaping the payments industry today, leaving no part of the business immune. Responding to the challenges presented by these forces, the International Payments Framework Association (IPFA) is enhancing its framework and offering new membership options.

The IPFA was founded in 2010 as an industry collaboration to promote the acceptance and use of a global operating framework for cross-border payments. This framework focused on making the exchange of non-urgent cross-border payments more efficient through the use of a proprietary ISO 20022 format and a shared Rulebook that governs members rights and obligations. The format, in effect, created a ‘bridge’ between disparate local country formats, and allowed IPFA participants to scale cross-border payments exchange. The Europe-U.S. gateway between Equens and the U.S. Federal Reserve Bank demonstrated the viability and effectiveness of the IPFA model.

Since 2010, however, the global financial services industry has experienced profound change characterised by consolidation and greater focus on compliance and regulatory imperatives. More recently, the industry is being reshaped by domestic implementations of instant or real-time payment systems. An additional trend underway is the regionalisation of payments exchange as more regional payments systems are forming in response to evolving trade and migration patterns.

Real-time payments across borders

The IPFA’s response to these industry imperatives has two key components. First, instant payments are being added to its framework and Rulebook. This initiative has important implications for how the IPFA organises payments exchange between members. Rather than exclusively focusing on non-urgent or bulk payments, members will have the option to exchange instant payments with each other. This expands the applicability of the IPFA framework to a growing set of potential users as well as to the current membership.

There are also more fundamental implications of adding real-time payments. Five years ago when the IPFA adopted ISO 20022 as the enabler of cross-border payments exchange, ISO 20022 was not the industry standard it is today. It was not used by a large number of banks. Now that more payment systems are adopting ISO 20022, we have witnessed a proliferation of market practice in ISO 20022 messages. The IPFA’s ISO 20022 format was a proprietary usage that contained some unique elements to facilitate transactions. However, the proliferation of ISO 20022 messages among payment systems has highlighted the need for the industry and for the IPFA to harmonise market practice.

As a result, the IPFA will adopt the new harmonised version of ISO 20022 developed by the Real Time Payments Group, an industry collaboration to standardise market practice of the core elements of ISO 20022. By some accounts there are at least forty domestic instant payment implementations in place or in development around the world today – a clear substantiation of the growing importance of instant payments. However, in adopting the harmonised ISO 20022 message developed for instant payments, the IPFA is focusing as much on the harmonisation of the message as on the real-time or instant payments aspects. In fact, the IPFA has chosen to take the harmonisation and interoperability imperative to the next level by adopting the harmonised ISO 20022 message for both instant and non-urgent payments.

This choice will allow members to use the same format for bulk payments as well as instant payments – allowing these two different payment options to be distinguished by an indicator in the payment record that will determine the speed of settlement between the IPFA participants. Certainly the settlement and other key treatments will be substantiated in the bilateral agreements between the participants, but now the choice of format will not be a limiting factor. This choice also means that the IPFA will no longer have a proprietary format and that the IPFA process will focus on the Rulebook that governs how participants treat each payment option.

When do we expect that IPFA participants will begin cross-border instant payments exchange? We cannot predict exactly when banks will enable this option. Nevertheless, it is clear that the industry must respond to market pressure created by FinTech disruptors and the demand for cross-border instant payments by corporates and consumers alike. It is also evident that the inherent risks in any cross-border or real-time payments service will be minimised by a strong governance framework and a shared set of rules that provide certainty among the participants. The IPFA process provides this framework and Rulebook. 

Enhancing membership options

The second dimension of the IPFA’s response to the forces shaping the industry entails the creation of new and reformulated membership categories. Previously, the IPFA only had two membership categories. Primary members were banks, clearing and settlement mechanisms and payments institutions that have regulatory authorisation to clear and settle payments. The other membership category (Affiliates) was something of a catch all group consisting of other types of non-licensed payment service providers / vendors, standards setting bodies, industry associations and users of payments services.

Going forward, the Affiliates category will include only vendors and standards setting bodies that directly enable cross-border payments providers to deliver payments. A new category of At-Large membership will comprise industry associations and users of payments services. This new category will have a lower membership fee as it is designed to be attainable by a larger group of interested parties that will provide valuable input to the IPFA process as it continues to evolve. Additionally, the IPFA has formally adopted an Observer category for members of the regulatory community that want to follow and contribute to IPFA discussions more closely.

Finally, the IPFA has also created two entirely new membership categories – Payments Groups and Payments Group Participants – to facilitate usage of the IPFA process by the increasing number of regional payments exchanges and closed user groups. Inspired by the success of the Single Euro Payments Area ( ) as a mechanism to facilitate payments exchange between geographically united and politically aligned countries, several groups around the world are working to align multi-country payments exchange and that needs a common format and rule set to achieve these goals. Several of these groupings are already underway in Africa, Asia and the Americas. One such grouping is the effort by the Southern African Development Community (SADC) to standardise high and low value payments among the 15 member countries. The SADC Banking Association is a long-time member of the IPFA.

The Payments Group provides the organising scheme for the Payments Group Participants. The organising scheme includes the set of members, allowable currencies and foreign exchange options, and settlement specifics that the Payments Group Members can utilise. These elements organise the competitive space, while the IPFA Rulebook governs the cooperative space among the Payments Group Participants.

IPFA Membership Category


Primary Members

Clearing and settlement mechanisms and payments institutions that have regulatory authorisation to transact


Vendors and standards setting bodies that directly enable cross-border payments providers to transact


Industry associations and users of payments services


Members of the regulatory community that want to follow and contribute to IPFA discussions

Payments Group

Determines the internal organising scheme for Payments Group Participants - set of members, allowable currencies, foreign exchange options, settlement specifics

Payments Group Participants

Members of a Payments Group exchanging transactions governed by the IPFA Rulebook


Maintaining the core

Together, the addition of instant payments and the creation of new membership categories, has been dubbed IPFA 2.0 to signify that the International Payments Framework Association is evolving to respond to industry needs. The foundation of the IPFA value proposition, however, remains constant with the shared Rulebook governing payments exchange among members and industry collaboration guiding the group’s evolution.

Elizabeth McQuerry is CEO of the International Payments Framework Association.

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