The Euro Retail Payments Board: „instant payments are the next frontier of development in the payments industry”

In its second meeting, on 1 December 2014, the Euro Retail Payments Board (ERPB), a multi-stakeholder group chaired by the European Central Bank (ECB), decided to step up work on the topics of instant payments in euro, and person-to-person mobile payments and contactless payments.

According to the press release, „Instant payments … are the next frontier of development in the payments industry. The ERPB is concerned that the emergence of new solutions might end up creating a fragmented market in Europe for instant payments, similar to what existed in regular payments in the past.”

The members of the ERPB agreed that “instant payments” are defined as electronic retail payment solutions available 24/7/365 and resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation). This is irrespective of the underlying payment instrument used (credit transfer, direct debit or payment card) and of the underlying arrangements for clearing (whether bilateral interbank clearing or clearing via infrastructures) and settlement (e.g. with guarantees or in real time) that make this possible.

In a competitive market, providers should not adopt a “silo” approach offering closed-loop non-interoperable instant payment solutions. Instead a “layered” approach should be taken by developing solutions for end-users to make payments with increased speed, leveraging on the current payment instruments (first layer) and the underlying clearing and settlement infrastructures (second and third layers).

“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,” said Yves Mersch, member of the ECB’s Executive Board and chair of the ERPB. The development of person-to-person mobile payments in euro may depend significantly on the availability of instant clearing services, he noted.

Such solutions should take advantage where possible of the harmonisation and integration already achieved with the SEPA project, preventing the emergence of a fragmented European market for instant payments in euro.

The members of the ERPB understand that offerings of e.g. person-to-person mobile payments in euro may depend significantly on the availability of instant clearing services. Therefore, taking into account emerging national solutions and in order to prevent market fragmentation, the members of the ERPB agreed on:
. the need for at least one pan-European instant payment solution for euro open to any payment service provider (PSP) in the EU;
. inviting the supply side of the industry (in close cooperation with the demand side and with the active involvement of the European Payments Council as a potential scheme developer) to make an assessment of the issues related to pan-European instant payment solutions in euro to be presented at the ERPB meeting in June 2015.

For more details read the complete  ERPB statement