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SIA, part of Nexi Group, G42 and Accenture have been selected by the Central Bank of the United Arab Emirates (UAE) to build and operate their instant payments platform (IPP) over the next five years.
Italian-based payments company SIA, was chosen by the UAE central bank, in partnership with technology consultancy Accenture and Abu Dhabi-headquartered computer software company G24, to deliver a new instant payment system for the country.
IPP is the first significant milestone of the UAE’s National Payments Systems Strategy and will enable 24/7 real-time payments and fund transfers.
According to a press release issued by Accenture, the IPP will deliver the flexibility needed to respond to the rapidly changing payment market while complying with best practices and international standards, including ISO 20022.
“We are pleased to have been chosen by the UAE to develop its new instant payment infrastructure,” said Mario De Lorenzo, credit institutions director at Nexi. “This important achievement, accomplished with Accenture, inspires us to take on challenging digital transformation programs for payment institutions in the UAE and region that improve their competitiveness and to seize opportunities arising from the new frontiers of digital payments.”
The scope of the consortium’s work includes migrating existing payment systems, operating the target financial market infrastructure and providing the data centre infrastructure.
They will also be responsible for delivering many overlay services. This includes overhauling current platforms, systems and two active cloud-data centres and related infrastructure, as well as delivering new capabilities such as e-checks to digitalise cheque-based payments and a payments application to accelerate adoption.
“This innovative project will help ease trade and transactions, enhance customer experience, and accelerate technological advancements for financial institutions, large businesses, and small and medium-sized enterprises in the UAE and the region,” said Michael Abbott, banking lead at Accenture.
The UAE first outlined its National Payments Strategy in 2018, with the aim of creating a more efficient and innovative payments culture in the Middle Eastern state.
It has so far been able to drive innovation through public-private initiatives such as the Dubai International Finance Centre’s Fintech Hive, which offers mentorship and accelerator programmes to start-ups in the country.
European consolidation
Payment consolidation has been a major trend of recent years, and the emergence of the expanded Nexi Group is a great example of this.
The Italian-based payments company merged with fellow Italian payments provider SIA in 2020, and then shortly afterwards it acquired Nordic card payments business Nets.
In so doing it created one of the largest payment processors in Europe. The combined company includes domestic card networks in Italy, Denmark and Norway, card acquiring services, an open banking platform, as well as operating important account-to-account payments infrastructure and overlays.
For example, SIA provides and manages the platform for EBA Clearing’s pan-European instant payments service RT1, as well as its standard ACH clearing service Step 2. In addition, through SIA’s Perago subsidiary, it is a global leader in selling real-time gross settlement systems to central banks.
“The combination of Nexi and Nets is an important next step on the journey to realise the vision of forming a leading European player in the digital payments landscape. The scale, technology, capabilities and product portfolio will serve as a “one-stop shop” to a wide range of customers,” the Nexi group has said in a statement.
The significance of this latest move is that, aside from its Perago subsidiary, this contract win puts Nexi on a global scale. In effectively venturing out of Europe for the first time, Nexi is signalling its intent and is likely to find itself on the competitive radar of key players in this space.
A new multi-rail competitor emerges
The EU has long called for a European alternative to the trading bloc’s heavy reliance on US payment companies, such as Visa and Mastercard.
But what policymakers did not perhaps envisage is that a European payments company would emerge that would potentially compete with the large US card giants outside Europe.
The contract win to build an instant payments system in the UAE will be a blow to companies, such as Mastercard, which will also likely have been a bidder in this process. In recent years, Mastercard has emerged as the leading, and to some extent only, multi-rails company operating on a global scale.
In fact, the term multi-rail is primarily used by Mastercard to describe its payments strategy, meaning that its aim is to give users choice in how they wish to make a payment, whether it is across the card rails or using account-to-account payments infrastructure.
Mastercard’s strategy emerged following its acquisition of UK payments company Vocalink in 2017. Through the acquisition, it also acquired a fledgling international instant payments infrastructure business, which had already delivered contracts in Singapore, Thailand and the United Sates.
Following the acquisition, Mastercard has gone on to launch and win contracts to supply, and in some cases run, instant payments infrastructures in the Philippines, Peru, Saudi Arabia, Canada and the Nordics. Through its acquisition of Nets account-to-account business in 2021, the firm also acquired instant payments infrastructure contracts in several other European markets, including to provide an instant payments managed service for Nexi in Italy.
Through its managed service for EBA Clearing, Nexi already effectively manages account-to-account payments in more countries than Mastercard, and with its successful bid in the UAE, the company will enhance its credentials and experience to compete with Mastercard for other key emerging payments infrastructure contracts.
The burning question is whether Nexi represents a vessel for the EU’s ambition for a genuine rival to Visa and Mastercard? It certainly has a number of important capabilities and assets, including domestic card schemes in multiple markets, as well as pan-European reach.
However, any such development is likely to come through market collaboration. Nexi’s recently acquired Nets, for example, was a founding member of the EU’s European Payment Initiative.
