The ECB has taken an important move towards the full reach of instant payments across the euro area. Its ultimate objective is to enable European citizens to make real-time electronic payments in euro from and to any country, including in physical shops and online.
We interviewed Ulrich
Bindseil, Director General Market Infrastructure and Payments at the ECB to
know more about this decision, its benefits and development.
Q. The ECB’s Governing Council last July
took significant steps in the infrastructure domain to support the full
deployment of instant payments across the euro area. Can you tell us more about
these various measures, their timeline and the underlying rationale of this
has always aimed at pan-European reach of instant payments. This way we
can ensure that citizens and businesses across the European Union can equally
benefit from the Single Market and the Single Euro Payments Area ( ).
This was our motivation behind launching TARGET Instant Payment Settlement
(TIPS) as well as adapting TARGET2 to allow ancillary systems to handle instant
payments. Despite these solutions being available, today no viable
interoperability framework is in place between the different automated
clearing houses (ACHs) that process instant payments in the EU.
consequence, payment service providers (PSPs) can hardly find a way to support
instant payment transactions between each other at pan-European level.
Hence, they are in breach of the Regulation and the Instant Credit Transfer S Scheme.
In this context, the European Commission had raised the point that the right
market conditions were not in place to comply with such regulation.
discussed with the market how to resolve this issue and consensus was reached
that the Eurosystem was best positioned to provide solutions. As a
result, the ECB’s Governing Council has taken significant steps to ensure the
pan-European reach of instant payments across the euro area, in line with the
objectives shared with the European Commission.
measures require that by the end of 2021:
(i) all PSPs that adhere to the scheme and are reachable in
TARGET2 become reachable in a TIPS central bank money liquidity account, either
as a TIPS participant or a reachable party;
(ii) all ACHs offering instant payment services migrate
their technical accounts from TARGET2 to TIPS.
Q. What are the main benefits of these
measures for PSPs and CSMs? How will the ECB ensure that PSPs and CSMs will
package supporting the pan-European reach of instant payments brings benefits
to both PSPs and ACHs that would like to settle instant payments across the
entire euro area by:
Enabling compliant to meet their legal obligations as stipulated in the Regulation
without depending on the actions of other PSPs or ACHs.
reachability a commodity, reflecting the fact that it is a legal
requirement. Not only would TIPS benefit from 100% pan-European
reachability, but all ACHs competing in the provision of instant payment
services would automatically include this feature as part of their service
offer. In this regard, ACHs would no longer depend on bilateral agreements to
establish links, and there would be no potential credit exposure for cross-ACH
liquidity traps. With the implementation of the aforementioned measures,
ACH technical accounts can be funded and defunded from central bank money
accounts in TIPS at any time, not being limited any longer by the opening hours
of TARGET2. This also facilitates moving liquidity from one ACH to another
around the clock, which can be particularly valuable during long weekends.
the creation of a competitive marketplace where each PSP may decide
independently about two important factors: (i) where to instruct (in an ACH or
in TIPS) and (ii) where to hold its liquidity and settle (in an ACH or in
the timely implementation of the measures, the entire Eurosystem including all
national central banks will assist the market in its preparations.
Q. What other steps does the ECB believe may
be needed to achieve its objective of pan-European instant payments by the end
believe that the adopted measures are powerful, and we now need to make
sure that they are adopted in a timely manner. The fact that the market
embraces this change is critical for each and every individual market
participant. Furthermore, it is indispensable to ensure that the overall instant
payments landscape will improve and will reach a more mature state
both in terms of uniformity and usability of the new payment
now undergo the necessary changes to accommodate the decision of the ECB’s
Governing Council to keep providing state-of-the-art technology and services to
the euro area as a whole and beyond.
Q. How will the future euro-area-wide
reachability of instant payments ultimately impact on European consumers’ and
businesses’ payment behaviours?
ultimate goal is to provide certainty that European citizens and businesses can
instantly transfer funds in euro, both in physical shops and online across the EU.
be certain to reach their counterparty and confident that their instant
payments will be settled, and not rejected just because different PSPs and ACHs
pan-European reachability between all actors in the chain is necessary to
foster innovation for front-end solutions which will benefit businesses and
and the entire Eurosystem believe that instant payments should become the “new
normal”. The key element missing to fulfil this vision is pan-European
reachability and the recent decision of the ECB’s Governing Council will ensure
© European Payments Council
Hover over the blue highlighted
text to view the acronym meaning
over these icons for more information
No Comments for this Article