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European Central Bank: Cost of Instant Payments too expensive

The ECB has taken aim at major EU banks for the prices they are setting for Instant Payments.


European Central Bank: Cost of Instant Payments too expensive

In a speech given by Fabio Panetta, Member of the Executive Board of the ECB, at the 14th Payment Forum of Suomen Pankki − Finlands Bank, Helsinki, Mr Panetta said “I would like to discuss how we can promote digital, European, instant retail payment solutions that can be used by everyone, everywhere.”

Panetta took a swipe at the seeming failures of the EU to work harder at gaining a competitive advantage against the US providers. “Simply put, digitalisation is changing the way we pay. We are increasingly paying online and with cards. The pandemic has further accelerated this trend.

In facing these developments, Europe is not optimally positioned, not least because of the “wait-and-see” attitude that has in some cases prevailed in the past. This has made Europe overly dependent on a few foreign providers for card and online payments, resulting in a high degree of market concentration.”

On Europe

“To increase choice, resilience and competitiveness, the European payments ecosystem must proactively stimulate competition, including by developing innovative, Europe-grown payment solutions and technologies.

For this reason, a key priority of our retail payments strategy is the development of a European payment solution for the point of interaction. The ECB welcomed the launch of the European Payments Initiative as its objectives meet our public interest criteria: pan-European reach and customer experience, convenience and cost efficiency, safety and efficiency, European brand and governance, and global acceptance as a longer-term goal. We remain open to other market initiatives, provided they meet these requirements.”

On Instant payments

“Another key priority of our retail payments strategy is the full deployment of Instant Payments. Here, too, the industry has a decisive role to play, facilitated or guided by the authorities.

On the operational side, the Eurosystem has taken steps to ensure the pan-European reach of instant payments by the end of 2021 through our TARGET instant payments settlement service (TIPS). But we know that the private sector, by contrast, has made far less progress on this front.

The next step is for payment service providers to offer instant payments at attractive and transparent conditions. This means that prices should be neither excessive nor hidden to consumers.

While the cost for service providers of using TIPS is 0.20 eurocent (€0.002) per instant payment transaction, instant payments are sometimes offered to consumers for €1 per transaction. This must change.

For instant payments to become the new normal, they must be cheap and easy to use. We would also like to see providers make instant payments available on all commonly used electronic channels and offer much-desired functionalities such as Request-to-Pay.”

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