Bank instant payment shift to help business and consumers, says EU

Delays in transfers tie up €200bn in transit daily, says European Commissioner Mairead McGuinness

European Commissioner Mairead McGuinness said 'moving from next-day transfers to 10-seconds transfers is seismic'. Picture: RollingNews.ie

European Commissioner Mairead McGuinness hails EU plan for mandatory instant payments to help firms and consumers.

Ms McGuinness proposed a draft EU law that will require banks across the 27-country union to offer and receive "instant payment" (IP) services for a fee that is the same or lower than they charge for traditional credit transfers.

Currently, some banks charge far more for an IP transfer, up to €30 in some cases, compared with traditional transfers.

"Moving from next-day transfers to 10-seconds transfers is seismic and comparable to the move from mail to email," McGuinness said in a statement, adding that delays in transfers tie up €200bn in transit daily.

Instant payments have been rolled out in many parts of the world, including the EU, but voluntary take-up in the bloc has flatlined, with only two-thirds of banks offering IP which accounts for only about 13% of all credit transactions.

US duo Visa and Mastercard dominate cross-border card payments, and Brussels hopes that IP, combined with reforms such as open banking, or fintechs using a customer's bank data to offer a range of services, will boost competition.

IP is part of helping wider reforms, such as the anticipated digital euro.

"We want to extend euro instant payments internationally at a later stage," European Commission executive vice president Valdis Dombrovskis told reporters.

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IP allows people to receive and make instant payments 24/7, critical if payday falls on a weekend, and for businesses to manage their cashflows by receiving funds instantly after a sale.

"By mandating instant payments, the biggest blockers to open banking payments becoming mainstream are instantly solved," said Tom Greenwood, CEO of instant payments gateway Volt.

Once in force, the proposed law, which needs approval from EU states and the European Parliament, would require euro area banks to receive euro IPs within six months, and ability to send euro IPs within a year, with banks elsewhere in the EU given 24 months to offer euro IP services.

Payments Europe, which represents card firms, said markets should decide on pricing IP transactions, and the six-month compliance deadline is "too narrow and could endanger the safety and security of transactions".

- Reuters