The European Central Bank has launched a market consultation on the user requirement for the development of a settlement service for real-time instant payments in central bank money, billing 2017 as a "decisive year" for the success of innovative retail payments services in Europe.
In a speech delivered at a conference hosted by the Banque de France, Yves Mersch, member of the Executive Board of the ECB, laid out a roadmap for a full-scale revolution in the delivery of new payments services to European consumers.
Building on the foundations laid by the European Payments Council in its framework for a pan-European instant payments solution, the year ahead will be marked by a series of overlapping deadlines to which banks and service providers must adhere.
"First, payment service providers will have to deliver instant payment solutions to the end users," states Mersch. "Second, most ACHs will be ready to launch their instant payment clearing systems. And last but not least, the Eurosystem will decide on whether or not to provide a pan-European instant payment settlement service in central bank money to payment service providers."
On this latter issue, Mersch notes that instant payments require gross, real-time processing. The proposed settlement service, which is called Tips (Target Instant Payment Settlement), would leverage the pan-European nature of Target2 to offer settlement of instant payments directly and without credit risk.
He says Tips would help participants to comply with the Sepa Instant Credit Transfer (SCT Inst) scheme by providing pan-European reachability. Common functionalities across jurisdictions would ensure harmonisation of practices and market integration in the settlement of instant payments.
Those who do not have access to central bank money (or those who may not wish to open a Tips account) may establish contractual agreements with a Tips participant to use the participant’s Tips account for the settlement of instant payments. They may also be authorised by the participant to instruct directly on this account.
Market participants will be able to connect to the service via a network service provider approved by the ECB.
On the issue of costs recovery, Mersch says: "It is anticipated that the price per transaction would not exceed 1 euro cent, with the aim of ultimately reaching a level of around 0.5 euro cent."
He says the ECB is committed to taking a decision in June 2017 on whether to develop the service, with live operation commencing sometime in 2018.
In summary: "The main deliverables at the consumer end of the payments chain are pan-European instant payment solutions and a service for (person-to-person) mobile payments using the mobile phone number as a proxy for the Iban. In the payment service provider domain, a common set of technical, operational and business requirements for the development of an integrated market for payment initiation services is to be developed. In the market infrastructure domain, the Eurosystem is committed to taking a timely decision on whether to build a settlement service for instant payments in euro in central bank money, leveraging the pan-European nature of Target2.