A few weeks ago, the Commission adopted a legislative proposal on instant payments. This proposal aims to make instant euro payments universal, affordable and secure across the EU. Instant payments arrive within seconds – 24 hours a day, 7 days a week, 365 days a year.
The European Payment Institutions Federation has been around for just over a decade.
Its foundation was sparked by the Payment Services Directive.
That all seems a very long time ago.
Because the payments landscape in Europe has transformed in those eleven short years.
New types of payments have exploded: contactless, biometric, QR
codes, virtual cards, mobile wallets, peer-to-peer – all now common and
easy to use – while older developments like cheques or even chip-and-pin
are falling away.
And the payment landscape continues to evolve, becoming more diverse and competitive all the time.
New players are entering the payments space and the market is changing.
Consumer expectations are changing, too.
In this time of change, we want the European payments sector to drive the digital revolution.
We want to make the benefits of innovation available to European consumers and businesses, while guarding against the risks.
And we have taken very recently a big step in rolling out the benefits of innovation to all European consumers and businesses.
A few weeks ago, the Commission adopted a legislative proposal on instant payments.
This proposal aims to make instant euro payments universal, affordable and secure across the EU.
Instant payments arrive within seconds – 24 hours a day, 7 days a week, 365 days a year.
It's a simple idea, with a powerful impact.
Instant payments help improve cashflow for businesses, which is particularly important for SMEs.
NGOs and charities can receive contributions more quickly, especially when funds are urgently needed in times of crisis.
Banks and other payment service providers can use instant payments as a springboard to develop innovative services and products.
Retailers and merchants get new payment options, and can offer a
better service to their customers, for example by offering instant
refunds.
And instant payments increase speed and convenience for consumers –
for example, paying a bill last-minute or getting funds in an emergency.
At a broader level, instant payments would free up money currently
locked in transit in the financial system – the ‘payment float' – around
€200 billion on any given day.
Today, nearly nine out of ten credit transfers in euro are still
processed as 'slow' transfers – even though the technology to allow for
instant payments has been in place since 2017.
And at the current rate of change from slow to fast payments, it could take a decade for instant payments to become the norm.
So doing nothing is not an option, and we need to speed up the process.
Our proposal updates the 2012 SEPA Regulation, with four requirements for instant euro payments.
First, instant euro payments must be universally available.
EU banks that offer transfers in euro must also offer an instant option.
Second, instant payments will be standard and accessible, not a premium feature.
Part of what's holding instant payments back is that they are expensive.
At the moment, we've seen some examples of instant payments costing as much as €30 per payment.
So we are making instant payments affordable.
If fees are charged at all, they will not be allowed to exceed fees for non-instant transfers.
Third, we are beefing up consumer protection.
In 2020, around €320 million of EU consumers and businesses'
hard-earned money ended up in the hands of fraudsters through money
transfers, both instant and traditional payments.
Under our new proposal, providers must offer their customers the option of checking that the recipient's name matches the IBAN, the bank account number.
That provides an extra layer of protection against mistakes or fraud, before a payment is made.
Fourth, we are making sanctions screening more efficient.
At the moment the vast majority – well over 99 per cent – of
cross-border payments that are flagged during screening are false
positives.
Under this new legislation, providers will be responsible for screening their clients against the latest EU sanctions list.
That applies when someone first opens a payment account, and then via at least daily updates of customer records.
And providers will be able to prevent accounts held by those under
sanctions from carrying out transactions and to freeze their funds.
This streamlining will save money, while still ensuring maximum vigilance.
So this proposal supports European consumers and businesses who will
be able to see the difference this proposal makes in their daily lives.
But we are also supporting European competitiveness by keeping up with global developments on payments.
And we are supporting European innovation by enabling the roll-out of the latest technology.
As it stands today, public and private money play a role in our
financial system – they respond to different needs and complement each
other very well.
So we also want to ensure that the euro remains fit for the digital age.
In a digitalised economy, a digital euro would provide a public money
alternative to private means of payment, while people would still
maintain their right to access physical cash.
The Commission is working at a technical level with the European
Central Bank, exploring the possible introduction of a digital euro.
And just last week we hosted a conference to explore some of the questions around the possible introduction of a digital euro.
The discussion was very broad and very deep, and some questions remain unanswered – as we expected.
We spoke about how a digital euro has to address Europe's strategic
economic needs, but also provide real value added for citizens.
We covered the need for privacy, but also how we tackle that this
digital euro doesn't add to problems on money laundering and terrorist
financing.
And we also discussed the role of a digital euro in an international
payment system, and how it might work alongside other central bank
digital currencies – or with private means of payment and private
providers.
We will continue our outreach with smaller roundtables coming as we dig further into the detail.
And it will also be up to the European Parliament and the Council to amend the Commission's proposal, which is due in the second quarter of next year.
Our agenda for payments ties in closely with the Commission's digital finance package, which we adopted in September 2020.
We need to make sure that our rules are ready for the change brought by digitalisation and innovation.
And that's the aim of our ongoing review of the Payment Services Directive.
We know that this Directive has enabled fintechs to access payment account data held by banks in a secure and regulated way.
And it provides a solid foundation for open banking and new types of payment services.
This review is structured around four main themes: scope and
coverage, consumer protection, Open Banking and the level playing field
between banks and non-banks.
The consultations have now closed, we have received advice from the
European Banking Authority, and we are working intensively on the impact
assessment and evaluation report.
In particular, the evaluation of Open Banking will feed into our work on Open Finance.
Facilitating data-sharing, beyond payment accounts and across
financial market participants, has the potential to foster innovation
and the creation of new services for EU citizens.
Consumer protection will be a major consideration, and it starts with
strong data protection and measures to protect consumers against fraud
and financial crime.
In an open finance framework, consumers also need to take back
control of their data: they need to know what data they have consented
to give access to, to whom and for what purposes.
We also need to put in place the necessary safeguards to ensure that
data-sharing does not give rise to financial exclusion for the most
vulnerable groups.
These conditions are crucial to build the trust that open finance needs to be a success.
And that's why we have been taking our time to listen to all sides in an open, inclusive, bottom-up way.
It's on this basis that the Commission will set out the way forward for Open Finance next year.
At the same time as we want to embrace innovation, we want to guard against dangers old and new.
And as the financial system evolves, so do the challenges we face from criminals trying to undermine it.
Last year, we proposed a package of measures on Anti-Money Laundering and Combating the Financing of Terrorism.
This represents a tectonic shift in our approach.
We are bringing in a new single AML Rulebook, accompanied by a new EU AML Authority.
Drawing up this single anti-money laundering rulebook was a balancing act.
On the one hand, we want consistency in the requirements for businesses across the EU.
While n the other hand, we want to respect the risk-based approach at the heart of anti-money laundering rules.
We listened closely to the industry's feedback in doing this.
And let me mention a few specific examples.
For requirements relating to internal procedures, we have clarified
the role of compliance functions and explained the compliance roles
required for large entities.
In the area of customer due diligence, our proposals provide the clarity that was requested on all key aspects of the process.
We are eliminating regulatory differences between Member States, which up until now has made compliance more difficult.
The rules around beneficial ownership transparency are interpreted
differently across the EU, and this undermines their effectiveness – so
we are rectifying this.
Reporting obligations will be helped by clearer criteria of what constitutes suspicion and harmonised reporting templates.
Anonymous and bearer instruments will be banned, and we are proposing
an EU-wide ten thousand euro cash limit: together, these measures
address some of the major weaknesses in high-risk areas.
And these are just some examples of the changes that will make compliance by industry more effective and more efficient.
And compliance by the industry – including payment service providers –
is crucial as we develop our framework and close the gaps.
The new EU AMLA Authority will sit at the heart of a truly European supervisory system.
This Authority will be able to directly supervise some of the biggest
financial sector entities that operate in several Member States.
In these specific cases, EU-level supervision would be more effective than supervision by multiple national authorities.
But most supervision can and should be still done effectively by national authorities.
And here the AMLA Authority will help, because it will ensure that supervision is more consistent across the EU.
It will support regulatory convergence among national supervisors, and help them through indirect supervision.
The AMLA Authority will also play an important role in supporting Financial Intelligence Units.
It will host their communications network – FIU.net.
And it will carry out joint analyses of suspicious cross-border transactions.
Similarly to its role for national supervisors, AMLA will also help practices converge across Financial Intelligence Units.
The European Parliament and Member States have made good progress on this AML package.
They have reached agreement on the revised Transfer of Funds
Regulation – which provides much-needed transparency for crypto-asset
transfers.
The Council finalised its negotiating position on the Regulation for
the AMLA Authority earlier this year. Their discussions on the single
AML rulebook are continuing.
And the European Parliament is expected to finalise its reports on
the single rulebook and the AML Authority in the coming months.
We are hoping for speedy and constructive discussions in the trilogue
negotiations, which would let us keep our ambitious timeline for
implementation.
So we hope that the AML Authority would start its work in 2024, including completing the details of the single rulebook.
And this rulebook would start to apply in 2026.
The payments sector is going through huge change.
By embracing innovation, the sector is able to help the economy as a whole innovate and develop.
And we want to support the momentum for innovation – but we also want
to protect the sector from being undermined by financial crime.
I want to take this opportunity to thank you for your cooperation and valuable input into our work as regulators.
And I look forward to continuing this cooperation as we develop the
innovative, competitive payments sector we want to see for Europe.
Commission
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