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Efficient and safe retail payments systems are a precondition for the functioning of any modern economy. They allow for everyday transactions to take place, thus providing the foundation for commerce and trade.
Central banks through cash and banks have traditionally offered these services. And they were successful in creating a secure and trusted payment ecosystem for consumers.
However over time the banking ecosystem has developed inefficiencies. It has lost some ability to innovate and adapt to the changing needs of the end-user.
In Europe technological disruptions, competition from non-banks and regulatory pressure has forced banks to re-examine how they provide retail payment services.
The ability to provide real-time services will be essential if banks want to retain and gain customers. The strategic importance of instant payments cannot be overstated.
The move towards a real-time world with the provision of real-time services cannot happen without pan-European instant payments. They will provide a new framework for innovative and efficient retail payments in Europe.
To conclude, the benefits of digital transformation and innovation for citizens can only be achieved by means of full stakeholder cooperation and an appropriate regulatory framework that fosters innovation.
Banks need to implement instant payments as soon as possible and provide an alternate narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes.
Instant payments in conjunction with the building blocks provided by the PSD2 can offer new business opportunities for banks and third party providers and provide citizens with a real-time safe payment experience.