Card payment growth will see banks move to new message transfer format

The MX messaging format will make banks more competitive

The volume of transactions done by card continues to rise

The number of card-based payment transactions continued to grow globally in 2009, despite a reduction in spending caused by the financial crisis, according to findings from the World Payments Report 2010.

The report, which was produced by RBS, outsourcer Capgemini and The European Financial Management and Marketing Association (EFMA), said that this increased number of card transactions means that IT departments need to step up to the mark to support growth of cards as a payment device.

One way they can do this, according to Capgemini, is by moving to the most recent standard message format MX – thereby ensuring they are able to optimise the speed and amount of information carried between an ATM or retailer and a clearing bank, and back again.

Traditionally the messages associated with payments have been in the message transfer (MT) format, but now The Society for Worldwide Interbank Financial Telecommunication (Swift) has introduced a new type of message format know as MX, which is an XML-based messaging format.

“The XML format means that you can include a lot more information around the payment, which will enable corporate ERP systems to forecast incoming and outgoing payments which they have not been able to do before,” explained Margaret Howard, head of payments at Capgemini Global Financial Services.

She added that the top-tier banks are leading the way for widespread adoption of the XML message format.

“The more progressive banks are working to educate their corporate customers to be able to use this message format. The issue for the IT department where the banks do not have the funds to do this is that to benefit from using this new format the organisation must have a well-defined strategy around dealing with payment instructions.”

As Swift has not issued an end date for banks to switch to this new format, many are opting not to make message standardisation a priority.

“The more forward-looking banks are looking to start their migration next year, whereas slower banks will take their time over this migration. For those forward-looking banks, standardising messages will give them a competitive edge,” said Howard.