XMLdation pitches simulator for instant payments testing

Banks and payment service providers face a growing test burden as instant payments shift into regulated infrastructure, with about 80 countries now operating domestic real-time payment systems, according to Volt data cited by XMLdation. The payments technology firm says self-service simulators could reduce delays and cost in end-to-end testing, a recurring operational task as schemes, message standards and internal bank systems change.

XMLdation executives Tricia Balfe, Fabien Girard and Ville Valén said banks are joining multiple real-time payment rails to meet regulatory and client requirements. They cited links such as India’s Unified Payments Interface with Singapore’s PayNow, as well as Europe’s SEPA Instant Credit Transfer, known as SCT Inst, as examples of instant payment systems becoming more interconnected.

In Europe, XMLdation said the EU Instant Payments Regulation was fully implemented in October 2025 and requires banks and PSPs in the SEPA area to be able to send and receive instant payments through SCT Inst. Firms must therefore connect to a rail that supports the service, such as EBA Clearing’s RT1 or the Eurosystem’s TIPS, according to the company.

The firm also pointed to the One-Leg-Out Instant Credit Transfer scheme, or OCT Inst, which uses SCT Inst for the euro leg of euro to non-euro payments. XMLdation said adoption remains optional, but banks and PSPs are being encouraged to build the infrastructure in 2026 in support of the G20 Roadmap’s 2027 targets on cross-border payment cost, speed, access and transparency.

Why testing has become a standing requirement

Connecting to a payment rail requires banks to certify mandatory use cases before going live, XMLdation said. After launch, they must test again when regulations change, when internal systems are upgraded or when rails update their specifications. The company said schemes including Swift CBPR+ and STEP2 have annual updates, creating a continuing requirement for regression testing.

XMLdation identified three common approaches: building internal test suites, using readiness tools supplied by market infrastructures or schemes, and arranging tests with partner banks during agreed windows. The firm said each option has limits. Scheme tools focus on certification requirements, internal suites can be expensive to build and maintain, and partner-bank testing depends on another institution’s availability and the scenarios it is willing or able to run.

The company said those constraints became more visible during the global migration to ISO 20022 messaging, which it described as complex and underestimated by some institutions. XMLdation said readiness gaps contributed to delayed rollouts and increased the pressure to validate systems before launch.

How a virtual test bank works

XMLdation said a self-service simulator acts as a virtual partner bank connected to a real-time payments scheme through a standard interface. A bank that already connects to the scheme can send and receive test payments against the simulator, allowing it to run compulsory tests and its own scenarios without waiting for another bank.

The firm said these tools can be configured to test cases such as delayed payments, duplicate messages, late payments and volume scenarios. It also said automated regression testing can be connected to a bank’s existing test environment, helping institutions check whether later system or rule changes affect live rail usage.

XMLdation said its Virtual Buddy Bank has EBA Clearing approval to connect directly to RT1 and is aligned with pre-configured EBA Clearing RT1 test cases. The company said the tool can support direct and indirect participants, with indirect participants able to use it where their direct participant partner has access.

Because RT1 and TIPS are interconnected, XMLdation said banks connected to TIPS can also reach the RT1 Virtual Buddy Bank for end-to-end testing. The firm said it is adding support for Swift CBPR+, STEP2, OCT Inst and request-to-pay, and plans to extend capabilities to other instant payment rails based on client demand.

This story draws on original reporting from Finextra Research.