On 24 July, the European Central Bank (“ECB“) announced that it has taken significant steps to support the full deployment of instant payments across the euro area which, it says, can be ensured by the end of 2021.
In summary, the ECB says that all Payment Service Providers (“PSPs“) which have adhered to the SCT Inst scheme and are reachable in TARGET2 should also become reachable in a TIPS central bank money liquidity account, either as a participant or as reachable party.
At the same time, all Automated Clearing Houses (“ACHs“) offering instant payment services should migrate their technical accounts from TARGET2 to TIPS. The ECB says the Eurosystem will discuss with ACHs and PSPs whether a migration window is needed for this purpose.
The ECB says this will enable the following:
- The possibility of instant payments across the currency area.
- PSPs to comply with the SEPA regulation.
- Make reachability a commodity, reflecting the fact that it is a legal requirement.
- Remove liquidity traps.
- A competitive marketplace.
ECB’s ultimate goal is to enable European citizens to make electronic payments in euro from and to any country in real time, both in shops and online.