Payment hub

Many banks still organize payments by channel, with a separate back office for each payment type, which Alacriti describes as isolated back-office functions and fragmented customer data. A hub brings the rails onto one platform and connects it to the bank's fraud and risk systems, its digital banking and its core banking system.

For a European bank the rails are the SEPA credit transfer and direct debit, the instant transfer through TIPS or RT1, large-value payments in T2 and cross-border payments over Swift. All of them now use ISO 20022 messages, so a hub that maps one data model to every rail replaces several format converters. Finance Loop covers the message change in ISO 20022 migration.

A corporate payment hub sits between the banks a company uses and its ERP or treasury systems, according to Nomentia. A corporate payment hub collects payment files from accounts payable, payroll and treasury, runs approval workflows, screens payments against sanctions lists before they reach a bank and keeps an audit trail of every payment. The payment hub sends batches in each bank's format and receives the bank feedback for reconciliation.

The connection to the banks runs host-to-host, over the Swift network or, in Germany, France, Austria and Switzerland, through EBICS. The files themselves are SEPA XML going out and camt.053 statements coming back. Nomentia uses the term payment factory for the platform together with the staff who run the payment processes.

An instant transfer settles in about ten seconds on any day of the year. A hub built for batch cut-offs has to run around the clock, call the verification of payee before release and keep enough liquidity on the instant settlement accounts outside business hours. Finance Loop covers the rules in instant payments in Europe.

A payment gateway connects a merchant's checkout to card schemes and other payment methods, so the merchant can accept payments from customers. A payment hub processes the payments a bank or a company sends and receives itself, across all its rails and banks.

No. An in-house bank provides banking services inside a corporate group, such as internal accounts and netting between subsidiaries. A payment hub handles the payments. Groups often introduce a hub as part of an in-house bank project.

A payment factory is the central unit of a corporate group that makes payments on behalf of its subsidiaries. A payment factory consists of the payment platform and the staff who run the payment processes.