EU By Stocksak: A’seismic shift in bank payments to help consumers and businesses,

© Stocksak. FILEPHOTO: 20-euro notes in packs can be seen at the Bank of Portugal fortified compound in Carregado Alenquer, Portugal on May 17, 2022. REUTERS/Pedro Nunes

By Huw J. Jones

LONDON (Stocksak), Wednesday, March 31, 2012 – The bloc’s chief financial services officer said that forcing banks in the European Union to accept instant payments in euros was a “seismic” move to improve efficiency and reap savings for customers and businesses.

Mairead McGuinness proposed an EU law that will require 27-country banks to offer and receive “instant payments” (IP) services at a fee that is equal or lower than traditional credit transfers.

Some banks charge more for IP transfers than traditional transfers, sometimes up to 30 Euros ($30).

McGuinness stated that moving from ‘next-day’ transfers to 10 seconds transfers is seismic.

Instant payments have been introduced in many parts, including the EU. However voluntary participation has fallen with only two-thirds offering IP. This accounts for only 13% of all credit transactions.

U.S. duo Visa & Mastercard (NYSE 🙂 dominate cross border card payments. Brussels hopes IP, together with reforms such “open banking”, (fintechs that use customer data to offer a range services) will increase competition.

IP is part helping to expand reforms like the anticipated digital euro.

“By mandating instant payment, the biggest obstacles to open bank payments becoming mainstream are immediately solved,” said Tom Greenwood CEO of instant payments gateway Volt.

IP allows people to instantly receive and make payments, which is crucial if payday falls on the weekend. It also allows businesses to manage their cash flow by receiving funds as soon as they close a sale.

Once in force, the law would require that euro area banks receive euro IPs within six month and have the ability to send them within one year. Other EU banks would be allowed to offer euro IP services for 24 months.

“This will increase competition and provide consumers and merchants with an additional, efficient, and lower-cost option in paying for goods or services both in-store and online,” said Christel Deberghe, director general at EuroCommerce, which represents the wholesale and retail sectors.

Banks will be required to monitor their IP customers every day against the most current EU sanctions list. It has grown since Russia’s invasion and invasion of Ukraine.

Non-bank payment companies are currently excluded because they don’t have access to payment systems. However, a source within the EU said that Brussels is revising its rules to allow them to compete with banks in IP payments.

($1 = 0.9983 euros)

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