On 26 October, the European Commission published its new legislative proposal on instant payments, seeking to expand the available means of payments within the bloc from traditional money transfers to now also include instant transfers. This will enable citizens and businesses, holding a bank account in an EU and/or EEA country, to send and receive euro in real-time within only 10 seconds at any given day and time. With this proposal, the Commission thereby aims to provide a stark and competitive alternative to the traditional means of credit transfer, which are only operated by payment services providers within normal business hours, and which may take several days before arriving at the receiving part.
According to the EU’s executive body, some of the main objectives of the instant payments proposal are for the Union to remove the barriers that currently prevent instant payments, such as costly transfer fees, risks of fraud etc., and to promote the benefits that the more widespread use of instant payments can bring about. As such, the instant payments initiative will also, once it will enter into force, contribute to ensuring greater conditions and opportunities for actors operating in the EU’s (digital) single market.
The benefits of instant payments solutions are manifold and include, for instance, that instant payments will allow consumers and businesses a wider selection of payments choices, as well as making it possible for these to instantly receive money that they are due. Seen from the perspective of the e-commerce sector, the rollout of instant payments solutions will also allow for faster dispatch of goods purchased online, as well as improved cash-flow for businesses and SMEs, including retailers.
The Commission’s objective, through this proposal, is also to ensure greater cost savings for businesses, as these will no longer be required to provide payment guarantees when making use of instant payments. For payment providers, the proposal will also create new opportunities for innovation by enhancing the incentives for developing e.g., new mobile payment apps.
More generally, the Commission seeks to make instant payments accessible to everyone across the EU, for which reason the proposal obliges payment services providers to not charge more for instant payments than they do for traditional money transfers. Furthermore, in order to ensure the efficient uptake of instant payments solutions, it is of key importance to the Commission to generally enhance trust in euro instant payments. To do so, the proposal lays out provisions obliging payment providers to check the alignment between IBAN numbers and the name of the beneficiary in order to alert the payer of possible mistakes or attempts of fraud.
Ecommerce Europe recognizes the opportunity that instant payment creates. For merchants, new solutions leveraging instant payment can represent a crucial opportunity to make the European market more competitive and allow for the development of new cost-efficient and innovative solutions. In the spirit of technology neutrality, new instant payment-based solutions would complement merchants’ payment offerings, and therefore allow businesses to cater to local and cross-border. Ecommerce Europe believes that the successful uptake of instant payments will be dependent on transparent, sustainable, and fair business models, relying on the involvement of the whole demand and supply side of the payment market.
Ecommerce Europe welcomes the Commission’s legislative proposal on instant payments, as a first step towards a better functioning market for these solutions.
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