December 11, 2014
The European Central Bank (ECB) is looking at ‘instant payments’ and ‘immediate availability of funds’ as a great value add-on to the single euro payments area. ECB heads a multi stakeholder group called Euro Retail Payments Board (ERPB). ERPB is taking new initiatives to drive instant payments including peer-to-peer mobile payments and contactless payments as well.
As per an official ERPB statement, instant payments are defined as electronic retail payment solutions available 24/7/365 and should result in the immediate or close-to-immediate interbank clearing of the transaction. The crediting of the payee’s account with confirmation to the payer should be completed within seconds of payment initiation. The entire process should take place irrespective of the following underlying aspects:
In Europe, some nations have already started establishing their own systems in the area of instant payments. In UK, there is the Faster Payments scheme while in Denmark, there is the recently inaugurated RealTime24/7 system. The ERPB is of the view that the emergence of such domestic platforms might create a fragmented market for instant payments in Europe. ERPB seeks harmonization and cross-border collaboration.
Yves Mersch, member of the ECB's Executive Board and chairperson of the ERPB, said in an official press release: Solutions for instant payments should avoid the ‘silo’ mentality of closed systems that don’t communicate with each other, and take advantage of the harmonization and integration already achieved with the SEPA project. The development of person-to-person mobile payments in euro may depend significantly on the availability of instant clearing services.
In order to prevent market fragmentation, the ERPB is looking forward to:
The ERPB has already announced plans to set up working groups to focus on P2P mobile payments and card & mobile based contactless payments across the euro zone. It appears that the entire European Union is all set to disrupt the current payments scenario and bring in radical transformation.