European bank chief says instant payments are ‘next frontier in industry reform’

Out-Law News | 12 Dec 2014 | 11:19 am | 1 min. read

Ensuring that instant payments result in the immediate availability of those funds is the "next frontier" in banking reform, according to the European Central Bank (ECB).

The ECB said that the Euro Retail Payments Board (ERPB), the body set up last year to develop an integrated and competitive market for retail payments in euros, has decided to “step up work on the topics of instant payments in euros, person-to-person mobile payments and contactless payments”.

The ERPB, which the ECB chairs, has also issued a set of recommendations (8-page / 128 KB PDF) designed to tackle some “remaining issues” following the introduction of the Single Euro Payments Area (SEPA) “in order to improve the efficiency benefits for payment service users”.

The ERPB said there is “a need for at least one pan-European instant payment solution for euros open to any payment service provider in the EU.

At a meeting earlier this month, the ERPB also agreed to invite the supply side of the industry “to make an assessment of the issues related to pan-European instant payment solutions in euros to be presented at the ERPB meeting in June 2015”. The assessment should include the “active involvement of the European Payments Council as a potential scheme developer”, the ERPB said.

ERPB chairman and ECB executive board member Yves Mersch said: “Solutions for instant payments should avoid the ‘silo’ mentality of closed systems that don’t communicate with each other, and take advantage of the harmonisation and integration already achieved with the SEPA project.”

Mersch said: “The development of person-to-person mobile payments in euros may depend significantly on the availability of instant clearing services.”

The European Commission announced last August that common standards for euro currency credit transfers and direct debits had been implemented in eurozone countries. The Commission said the complete migration in the eurozone to common SEPA standards, from a myriad of national standards that governed credit transfer and direct debit transactions previously, were a "real success".

All eurozone countries had been given a deadline of 1 February this year to implement the SEPA standards but that deadline was extended to 1 August as part of a transitional arrangement after the Commission raised concerns about the number of businesses unprepared to comply with the new payment processing standards ahead of the 1 February deadline.