The European Central Bank has devised a payments 'road map', designed to help banks comply with political pressures for reducing charges and improving procedures for cross-border retail credit transfers.
Its publication comes a week after the European Parliament apporoved Commission proposals mandating that banks bring charges for low value cross-border payments into line with those for domestic credit transfers.
The ECB report, "Towards an integrated infrastructure for credit transfers in euro", provides an overview of the current market and suggests ways for banks to bring costs down and improve funds transfer systems.
The report suggests that the most significant source of costs can be found within the back offices of banks. The ECB believes that forthcoming cuts in fee income on cross-border payments will push banks to adjust their procedures, including their IT software and their relations with their customers, within the next two years.
"In the view of the Eurosystem, significant improvements in banks' costs can be achieved within a reasonable time frame," says the report.
At the infrastructural level, the ECB leans towards solutions involving either the creation of a new automated clearing house or the linkage of existing domestic clearing systems through the Target payment system.
A single agency should also be established to oversee the development of standards for retail payments, mimicking the role of the interbank Swift co-operative in the wholesale markets.
Time is off the essence says the ECB. "Banks should take decisions setting the framework for an efficient infrastructure very soon, i.e. during the course of 2002," the report concludes.