IPSL Kenya modernises real-time payments with XMLdation’s Bridge

IPSL (Integrated Payment Services Limited), is the Kenya Bankers Association’s (KBA) real-time payment services company. As part of the company’s real-time payment modernisation strategy, IPSL launched a modernised real-time payment system based on ISO 20022 in October 2021.

Globally, payments and clearing systems operators are at various stages of designing and implementing, or considering building new platforms with modern technology, and based on ISO 20022 message formats. Kenya is thus a trail blazer – IPSL is one of the first African payments system operators (PSO) to implement an ISO 20022-based instant payments system with modern micro-services technology.

How to Enable ISO 20022 Real-Time Payments for Legacy 8583 Banks

In looking to modernise, system operators like IPSL recognize the need to ensure message compatibility among various participants using a legacy message protocol and the new ISO 20022 message standard. This involves taking two giant steps:

• Selecting the right technology to meet systemic, business, regulatory and security requirements, while modernising the infrastructure, and
• Encouraging participant banks to embrace the new platform on an ongoing basis, even though those banks don’t yet support new messaging formats like ISO 20022.

For banks, the move to ISO 20022 messaging also creates the double challenge of making major investments in both technology and process changes. Importantly, the transition to ISO 20022 is not uniform across a diverse group of participant banks – each is different and can only change at its own pace.

IPSL realised early on that to ensure success, they needed to plan the building of the new real-time payment platform with consideration of the legacy systems, together, as one project. But how to handle the migration of participant banks onto the new system? The popular film phrase, “if you build it, they will come” only applies if all banks are able to move at the same speed, at the same time – an unrealistic expectation.

Early in the process, IPSL engaged with XMLdation, known for our expertise in messaging formats and payments architecture. We worked together to implement a bridge to enable Kenyan banks to join IPSL’s new ISO20022-based Instant Payments System, while allowing them to continue to operate using the legacy messaging protocol based on ISO 8583 format.

In our experience, analysing and understanding non-card implementations of 8583 can be quite challenging. When used for payments, the 8583 standard must be “tweaked” or adapted. Different banks have used 8583 in different ways, which means that older 8583 implementations for payments become highly customised. To add to the challenge, customisation means that over time 8583 implementations for payments effectively become proprietary to each bank – and because they have evolved organically, updated documentation or accurate specifications are usually unavailable.

So, how to connect banks that have been working on the ISO 8583 to the new ISO 20022 real-time payment platform??

XMLdation was selected by IPSL to:

• Develop an ISO 8583 to ISO 20022 bridge, and
• Provide additional expertise with both 8583 and ISO 20022 message implementation (and payments messaging generally)

Based on our understanding of both the legacy and the new messaging standard, XMLdation built customised mappings on our core validation and simulation platforms – in order to construct a “bridge” to join up the legacy ways of working with IPSL’s new approach. This approach creates an access layer on top of the new IPSL real-time payment system, enabling banks to connect before they are able to fully support the new ISO 20022 format.

XMLdation started by understanding IPSL use cases, and ultimately contributed to the design of the architecture of the message converter. XMLdation’s architecture approach has ensured that the whole solution to bridge the two message protocols will be sustainable from a technical perspective, and will allow seamless migration for banks who remain on 8583. With XMLdation’s Bridge solution, banks can transition from ISO 8583 to ISO 20022 message formats seamlessly.

Despite COVID, XMLdation fully deployed and executed the Bridge project by working remotely. And IPSL has shown that it is possible to modernise real-time payment systems, while allowing the banking system to transition to a new platform using a prudent and realistic approach. The XMLdation “Bridge Solution” has helped make it possible!

Seun Owoeye, Chief Operating Officer at IPSL said:

“The team at IPSL worked closely with XMLdation in the design and implementation of the bridge solution to enable banks migrate seamlessly to the new instant payment switch on ISO 20022 which was developed by TietoEVRY.

"We expect the new instant payments system delivered by TietoEVRY and XMLdation to enable banks and other stakeholders (FinTechs, PISPs, PSPs and MNOs) to accelerate the uptake of real-time payments across the banking industry, launch new products and services, improve operational efficiencies and ensure best practices for KYC and AML using data enriched ISO 20022 messaging protocol”.