The Value Behind the One-Leg Out Instant Credit Transfer Scheme’s Rulebook

In June 2023, the European Payments Council (EPC) released the updated rulebook for the One-Leg Out (OLO) Instant Credit Transfer (OCT/SCT Inst) scheme. This extensive document contains the guidelines, practices, and standards necessary to ensure interoperability in offering and managing the Euro Leg of international instant credit transfers within SEPA.

Besides, it also unlocks avenues to develop innovative value propositions for retail and corporate clients in the realm of international transactions. In this article, we list the key opportunities that the knowledge of the OLO SCT Inst rulebook presents to payment service providers and explain why it’s crucial not to miss out on them!

One-Leg Out Transactions: What Are They?

Before we delve into the rulebook overview, let’s take a moment to recap what OLO transactions are. Simply put, this is a category of financial operations in which at least one of the legs involves the Euro currency.

Key Differences Between the OCT Inst Vs. SCT Inst Schemes

Another key piece of information you need to keep in mind when it comes to OLO transactions is the differentiation between OCT Inst and SCT Inst schemes.

While both of them are part of the SEPA (Single Euro Payments Area) initiative aimed at harmonizing electronic payments in euros across Europe, there are two key differences between them, namely:

Geographical Coverage

The SCT Inst scheme covers the entire SEPA zone, which includes 36 countries, including all 27 EU member states, as well as Iceland, Liechtenstein, Norway, Switzerland, Monaco, and San Marino. The OCT Inst scheme, on the other hand, mainly focuses on transactions within the Eurozone.

Transaction Limits

SCT Inst typically has a maximum transaction limit of €100,000 per transfer. However, individual banks may set lower limits for their customers. In comparison, the OCT Inst scheme is more focused on smaller-value instant payments, often targeting retail transactions and peer-to-peer transfers.

How Can Rulebook Insights Boost PSP Operations?

Now that we have reviewed all the fundamentals linked to OLO transactions, let’s take a closer look at the benefits of having insights into the OCT/SCT Inst rulebook.

This document offers several significant advantages for PSPs looking to expand their services and boost their competitiveness in the market, including:

1. Clear Standards

First and foremost, the rulebook provides a defined set of standards for managing operational risks related to cross-border instant payments. By following the rules and practices outlined in it, PSPs can mitigate risks and foster trust among their customers while staying on good terms with regulatory authorities.

2. Enhanced UX & Market Reach

By participating in the OLO SCT/OCT Inst schemes, PSPs can expand their market reach beyond domestic boundaries. What’s more, round-the-clock processing and instant execution of transactions enable them to promote customer satisfaction and boost their loyalty.

3. Competitive Advantage

By leveraging the capabilities described in the rulebook, PSPs can develop new products and services tailored to the needs of their target market segments. This, in turn, allows them to gain a significant competitive edge in the rapidly evolving payments landscape.

4. Revenue Growth

Ultimately, the knowledge of the OLO SCT/OCT Inst schemes rulebook opens up opportunities for PSPs to generate additional revenue through value-added services. Besides, the facilitation of cross-border instant payments is a surefire way to capture a larger share of the market and drive growth in transaction volumes.

Summing Up: Why Rulebook Knowledge Is Key

Overall, while participation in the OLO SCT/OCT schemes is not mandatory for PSPs, it offers noteworthy benefits in terms of interoperability, efficiency, and customer service, incentivizing an increasing number of service providers to join voluntarily.

As a result, by embracing the guidelines and standards laid out in the rulebook, PSPs can effectively position themselves for success in the dynamic and competitive cross-border instant payment landscape within the SEPA zone.