European Commission considers regulatory push for TIPS instant payments
The European Commission is pondering a 'regulatory push' to encourage adoption of the new TIPS instant payments service and make it a genuine rival to the card schemes and tech giant-built digital wallets. Launched last year, TIPS (Target Instant Payments Settlement), is available to both consumers and businesses across the 19 states in the eurozone, offering near real-time payments via smartphones, PCs and in-store payment points.
The initiative was designed to help banks take on the growing popularity of digital, contactless payment services offered by big tech firms such as Apple, Google, Amazon and Alibaba in China. However, with adoption yet to take off, the EU Commission’s vice president in charge of financial services, Valdis Dombrovskis, has told a fintech conference that "we are reflecting on whether a stronger regulatory push would be needed to speed up" the process.
The EC is determined to make TIPS work as a pan-European, fast bank-to-bank payment network that "could have the capacity to disrupt existing payment solutions - including cards - at least for euro denominated payments". Dombrovskis frames TIPs and another massive EC payments initiative, PSD2, as vital to Europe's competitiveness in the face of technological competition from the US, China and elsewhere.
He touts the programmes as examples of the value of the single market, explaining: "In a few years, we want Europe to set new global standards for payments technology. Other parts of the world like China are building their payment systems directly on a digital basis. So we should seize our current opportunity and accelerate our efforts to digitalise our payments."
On PSD2, Dombrovskis flags the September milestone when banks will have to make available an interface of communication with third party providers, arguing that the creation of high-quality APIs is vital to the development of new EU-wide payment tools. Elsewhere, the vice president provided an update on the EC's Fintech Action Plan, noting the creation of fintech labs and confirming that a report on regulatory sandboxes and innovation hubs is ready for publication.
The next step will see the creation of a European Network of Innovation Facilitators, allowing supervisors to learn from each other through information sharing, as well as helping companies reach EU scale more easily by creating referral mechanisms for going beyond their national markets.
Concludes Dombrovskis: "With Instant Payments and the PSD2, Europe has launched two ambitious initiatives. Now we need to work together to create a fully digital European payments system that is open and fair for existing and new operators. "This way, Europe can move together towards the new era of payments, rather than starting again from fragmented national schemes that will require years to overcome. I hope Europe’s banks and fintechs will seize these opportunities."