The European Central Bank has warned that the charges levied by banks for instant payments are proving a barrier to uptake and "must change".
Speaking at a payments forum hosted by Finland's central bank, ECB board member Fabio Panetta notes that on the operational side, the Eurosystem has taken steps to ensure the pan-European reach of instant payments by the end of 2021 through the Target instant payments settlement service (TIPS).
"But we know that the private sector, by contrast, has made far less progress on this front," he contends. "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, Panetta says, pointing out that the cost for service providers of using TIPS is 0.20 eurocent (€0.002) per instant payment transaction.
However, instant payments are sometimes offered to consumers for €1 per transaction.
"This must change," says Panetta. "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."
Panetta welcomed the work by the European Payments Initiative, a collective of banks which is working to develop a pan-European payment solution for the point of interaction.
"We are increasingly paying online and with cards. The pandemic has further accelerated this trend," he says. "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 the cross-border front, Panetta notes the work undertaken by the ECB and Sveriges Riksbank to use the Tips platform for insant exchange of euros and Swedish krona, and on the ongoing exploration of a central bank backed digital euro.
"To promote innovation and digitalisation, we are also investigating the opportunities of pan-European electronic identities and electronic signatures for retail payments," Panetta concludes. "Finally, the strategy encompasses work on the environmental sustainability of payments and on access to payments for all citizens."