Immediate payments, faster payments, instant payments, real time payments – however you refer to them, they are a hot topic and now a pan European solution is being sought. On 1st December 2014 the ERPB (Euro Retail Payments Board) held its second meeting chaired by the European Central Bank (ECB). Before we get into the details of the meeting its useful to know that the ERPB was set up in 2013, replacing the SEPA Council. The ERPB’s objective is to facilitate an integrated, innovative and competitive market for retail payments in the Single Euro Payments Area (SEPA). The ERPB is a multi-stakeholder group consisting of retailers, corporates, consumers, banks and payment institutions.
The ECB Press Release from 9 December 2014 can be accessed at ERPB to address instant payments in euro and remaining SEPA issues. From the ECB Press Release you can also review the full ERPB Statement. Given the global financial industry focus on Immediate Payments or Faster Payments most of the subsequent media headlines focused on the ECB statement that instant payments are the industry’s next frontier. Rightly so, Immediate Payments are disrupting the traditional and conventional way of doing business and increasingly being seen by consumers as the most attractive way of making a payment. This post will provide an overview of the meeting discussion.
Update from the last ERPB meeting in May 2014:
- The working group on P2P (Person to Person) mobile payments will report their findings to the ERPB by the end of June 2015
- The working group on card and mobile based contactless payments will report their findings by the end of November 2015
SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Post Migration Recommendations:
- Further harmonisation of the XML formats – i.e. removing the various in-country or payment service provider / bank XML ‘flavours’
- Various IBAN recommendations, including educating stakeholders that they can use/process ‘foreign’ or non-domestic IBAN’s within the SEPA and the promotion of IBAN only
- Removing the current restrictions on Remittance Information to enable corporates to use this extended remittance information for reconciliation and reporting purposes
- Various recommendations impacting the issuing and use of electronic mandates for SEPA Direct Debits across Europe
Immediate Payments – The Main Event:
The ERPB agreed a instant payments definition:
“..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 the payment initiation)…”
The ERPB stated that Immediate Payment providers should not be fragmented / non-interoperable instant payment solutions, or “silos’. Instead Immediate Payment solutions should leverage the harmonisation and integration achieved as part of the SEPA implementation. Approaching Immediate Payments with a ‘SEPA philosophy’ would in turn encourage the development of a single European market for immediate payments in euro.
The ERPB go on to describe that an integrated immediate payments solution was dependent on the availability of instant clearing services. Different in-country clearing system capabilities could result in the emergence of fragmentation so the ERPB agreed:
- For the need of at least 1 pan-European instance payment solution for euro
- Invited key stakeholders to assess, review and share, during the ERPB June 2015 meeting, all of the issues related to a pan-European immediate payment scheme in euros
Immediate Payments – Timing, timing, timing…
I don’t think anybody would argue with the ERPB recommendations and the underlying sentiment. The concern is timing. The level of innovation and implementation is already moving fast and seems to be getting faster. In order to avoid individual SEPA zone countries proceeding with their own immediate payment scheme and thereby resulting in fragmentation, the European stakeholders need to collaborate more effectively to make objectives such as pan-European mobile payments and immediate payments a near future reality.