24 October 2018
SIBOS day 3 - How Instant Payments can make Europe a leader in innovation
Exciting times are approaching for the ECB now that the pan-European infrastructure TARGET Instant Payment Settlement (TIPS) is going live next month. This platform enables banks to initiate immediate payments 24 hours a day, 365 days per year. The session The Eurosystem's response to an evolving payments landscape revolved around the launch which will take place on 30 November. 20 banks and 3 clearing houses will be connected from the start. Many more banks are expected to follow in 2019.
As mentioned in one of my earlier blogs, at Worldline we are happy to see ECB’s Instant Payments platform becoming a reality in Europe. Evidently, we support TIPS and will provide our clients with a gateway to this platform.
The importance of user-friendly pan-European payment solutions
One of the things I find interesting about TIPS, is that it contributes to the ECB’s bigger vision to make Europe a strong competitor in the battle for global payment solutions. This is necessary, because Europe is currently playing a marginal role in the creation of global payment solutions, was the conclusion of Yves Mersch, member of the Executive Board of the ECB, earlier this year.
Mersch recognizes the importance of user-friendly pan-European payment solutions because he believes that way we can protect the integrity of European payment services. Mersch said: “What we want to prevent is an integration of payment solutions with non-European countries that goes against European standards.” He points to card payments, in which the eurozone is largely dependent on non-European systems such as PayPal.
According to the member of the Executive Board of the ECB, it would be good for the European economy if European market players could once again play a significant global role in field of financial services. In order to achieve this Mersch believes that Instant Payments can play a key role. “Thanks to Instant Payments, European market players can now become leaders in innovation, based on European standards”, said Mersch this month during a lecture at the Latvijas Banka conference in Riga.
Collaboration is required
The shift to Instant Payments is therefore not only good news for end users, but also for the European payment industry. But there is competition, now that bigtechs are also making their way into the payments industry and want to conquer the global Instant Payment market. Mersch says in Riga: “We are now at a critical stage for implementing Instant Payments. The number of banks offering Instant Payment services to their clients is steadily increasing, as is the use of such services by European people and businesses.”
Mersch indicated that collaboration is required. A European payment solution is only possible if everyone in Europe can pay instantly and the service is not restricted to the customers of certain banks or residents of particular countries. Mersch: “Payment service providers should not erect any barriers to the uptake of Instant Payments, for example by only offering them through a limited number of channels or by charging prohibitively high fees. Such strategies will only drive end users to other players. No one owns the customer. Web and technology giants are already knocking at the door, eager to leverage their existing customer base to quickly gain market share in payment services.” The ECB is trying to create the right conditions for European players, for example with the introduction of SEPA, PSD2 and the development of TIPS.
Suppliers should aim for pan-European designs
It would be a great pity if fragmentation were to be re-introduced at the end user level, Mersch explained in Riga. “Suppliers should aim for pan-European designs, using common standards and cooperate with stakeholders.” In my point of view the future will show whether TIPS is laying the right foundations for a pan-European payment solution. But at Worldline, we can only support Mersch's story about European cooperation. We are, like him, vouching for Europe to become an innovation leader in the field of payments.
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