• News
  • People
  • Long Read
  • Opinion
  • Weekend Wrap


Buying something abroad? Thank XMLdation

XMLdation reduces time and financial burden, by ensuring that money flows seamlessly between banks and businesses in Europe.Adobe

This Finnish company acts as a bridge between startup fintechs and established banks, making sure our modern payment system works as advertised.

It all seems so easy that we rarely give it a second thought. We can buy something from an Italian online store or sell something to Germany as easily as doing business with the shop down the street.

In reality, it has taken a great deal of effort to build the modern financial payment system so that money flows seamlessly between banks and businesses in Europe. One Finnish company, XMLdation, is busy in the background, making sure our money safely and quickly gets to where it is supposed to go.

“XMLdation was founded in 2009,” says CEO Jarkko Leppälahti. “The founders had in-depth experience with corporate cash management and payments, and they realised that there was going to be a change in the way corporates send and receive payments because of the Single Euro Payments Area (SEPA).”

“XML”, in case you were wondering, stands for Extensible Markup Language, which defines rules to encode documents which are readable for both humans and machines. The “d” stands for “document” and “-ation” comes from “validation”. SEPA, meanwhile, is a payment-integration scheme for the simplification of bank transfers in the euro area. It has grown in scope over time, as has XMLdation.

Building the modern payment system

The company initially offered a tool for developers working with back office systems to test payment files corporations send to banks. Later they created a bank simulation capability so developers could test received payments.

“Currently, we’re the leading specialist in the field of Open Banking Test Sandboxes,” Leppälahti continues. “We provide Software-as-a-Service for banks and other financial institutions who need to onboard and offer test portals for developers looking to connect to bank APIs.”

Leppälahti explains this is important because of the Payments Services Directive 2, which forces banks to open up their data and services to other companies, such as fintechs. The idea is to encourage new players in the market and support the development of innovative payment services.

With CEO Jarkko Leppälahti at the helm, the company’s expertise in helping payment service providers in Europe with SEPA payments is set to become relevant in North America. Image: XMLDATION

“This will boost competition and, of course, hopefully increase the need for our kind of product as well,” he says. “In addition, what’s exciting for us specifically is that North America is finally also reengineering their payment infrastructure. Canada, for example, has already decided to introduce real-time payments. The United States is going to follow a similar path in the future.”

The company’s expertise in helping payment service providers in Europe with SEPA payments will now become relevant in North America. Thanks to the increasing interest in their products they are in the process of expanding their presence in that area.

Strong international demand

XMLdation has 15 people in Finland and Ireland and is currently hiring staff in the UK and Germany. They are particularly strong in the Nordic market and already count most of the large banks in the region as customers, such as Nordea, DN, Danske and OP. They also have clients in the UK, Ireland, France, Italy and German-speaking Europe. In addition to banks, they have helped payment service providers, clearing houses and banking vendors.

Their solutions fall into four main categories: corporate support and onboarding, fintech developer support, supporting payment test scenarios and payment ecosystem content. To the average consumer, it is invisible as they just know they can quickly and safely make international payments, but XMLdation works hard in the background with banks and businesses to make sure our modern financial system works as promised.

“We are unique as we sit between the startup fintech space and the established banks, and our product makes their integration easier,” Leppälahti says.

By: David J. Cord