ECB launches consultation on instant payments settlement service

The European Central Bank (ECB) has launched a market consultation on the user requirement for the development of a settlement service for real-time instant payments in central bank money, billing 2017 as a "decisive year" for the success of innovative retail payments services in Europe.

The year ahead will be marked by a series of overlapping deadlines to which banks and service providers must adhere: first, payment service providers will have to deliver instant payment solutions to the end users; second, most ACHs will be ready to launch their instant payment clearing systems; and third, the Eurosystem will decide on whether or not to provide a pan-European instant payment settlement service in central bank money to payment service providers.

Instant payments require gross, real-time processing. The proposed settlement service, which is called Tips (Target Instant Payment Settlement), would leverage the pan-European nature of Target2 to offer settlement of instant payments directly and without credit risk.

Tips would help participants to comply with the Sepa Instant Credit Transfer (SCT Inst) scheme by providing pan-European reachability. Common functionalities across jurisdictions would ensure harmonization of practices and market integration in the settlement of instant payments.

Those who do not have access to central bank money (or those who may not wish to open a Tips account) may establish contractual agreements with a Tips participant to use the participant’s Tips account for the settlement of instant payments. They may also be authorized by the participant to instruct directly on this account.

Market participants will be able to connect to the service via a network service provider approved by the ECB.

It is anticipated that the price per transaction would not exceed EUR 0.01, with the aim of ultimately reaching a level of around 0.005.

The ECB is committed to taking a decision in June 2017 on whether to develop the service, with live operation commencing sometime in 2018.

Moreover, Eurosystem expects the launch of a standardized look-up service that allows person to person mobile payments using the mobile phone number as a proxy for the IBAN (Bank Account Number) by the end of 2017.