This article has been updated and republished following the launch of a public consultation on 31 March 2021.

On 11 March 2021, the European Commission (Commission) published for consultation a Draft Roadmap on the development of an EU-wide instant payments scheme.

The Objectives of a pan European Instant Payment Scheme

According to the Impact Statement accompanying the Draft Roadmap, instant payments have the potential to become a vehicle for EU payment service providers (PSPs) to offer successful, pan-European payment services. The European Commission’s intention is to offer consumers an alternative to incumbent payments market participants, with a focus on facilitating competition. The European Commission considers that such services, if offered and accepted globally, could contribute to the strengthening of the international role of the euro.

The Draft Roadmap allows industry to input their ideas and recommendations to the Commission as it advances towards the  development of a pan European Instant Payments scheme. The Commission notes that a pan-EU instant payment scheme would reduce costs for merchants in terms of lowering price compared to alternative payment methods, such as cards. It would also provide savings to corporates in terms of managing their cash flows.

Consumers, as users of payment services, would also benefit by having access to a safe, convenient and modern payment system. The Commission states in the Impact Statement that a pan European Instant Payment scheme may also lower prices of goods and services if the savings generated for merchants were to be passed through to consumers. Instant payments, coupled with new and existing FinTech solutions such as mobile apps and wearables, leveraging an adapted payment acceptance infrastructure, will contribute to further digitalisation of payments in the EU.

Timing and next steps

The consultation closed on 7 April 2021.

The responses received will feed into how the Commission will develop and fine tune the EU-wide faster payments initiative. The Commission plans to adopt a proposal in quarter 1 of 2021. 

Objectives

The Draft Roadmap identifies the Commission’s key Objectives and Policy Options.

The goal is to foster pan-European market initiatives based on instant payments to ensure anyone holding a payment account in the EU can receive and send an instant credit transfer from and to any other payment account.

This pan-European faster payments initiative is consistent with the Single Euro Payments Area (SEPA) project, and also complements the Commission's consultation on a retail payment strategy.

The Commission will carry out an Impact Assessment on various policy options (or a combination of them) as set out below:

  1. The baseline option which involves monitoring the market evolution and assessing the effects of voluntary efforts to foster the full take up of instant payments in the EU;
  2. A non-legislative option which would involve actively promoting voluntary participation of payment service providers (PSPs) in  standardisation processes/schemes, awareness raising campaigns for payments services users, coordinating national plans for promoting the uptake of instant payments across the EU etc; and
  3. Legislative options which could cover a mixture of possible “enabling measures”. These could include:
  • effective incentives for PSPs to offer instant credit transfers in Euro;
  • initiatives similar to that of the SEPA Regulation (e.g. exploring issues regarding fee structures for SEPA Instant Credit Transfer-based payment solutions, supporting interoperability of SEPA Instant Credit Transfer-based payment solutions and schemes etc.);
  • developing targeted consumer protection measures and tailored fraud prevention measures;
  • addressing issues of charges levied on consumers for instant credit transfers; reconciling instant payments with regulatory compliance obligations;
  • ensuring sound mitigation measures on liquidity risk;
  • exploring management framework for financial institutions;
  • ensuring transparency and choice of payment options; and
  • supporting technical standardisation led by industry.

Public Consultation on Instant Payments

Following on from the targeted consultation on the Draft Roadmap, the next stage of the EU’s Retail Payments Strategy is a wider public consultation on remaining obstacles to pan-European instant payments. This consultation will alert the Commission to general steps it could take to increase the availability and use of instant payments across Europe. It will also give some insight as to whether specific policy measures are needed to ensure that a sufficient number of EU PSPs start offering instant credit transfers.

The main aim of the consultation is to identify market concerns around instant credit transfers, ultimately with a view to alleviating such concerns and incentivising EU payments market players to offer innovative, convenient, safe and cost efficient pan-European payment solutions based on this technology. In addition, the consultation will help the Commission to establish what features and safeguards should be put in place to maximise the benefits of instant payments for service users.

Topics for consultation include:

  • The preferences of consumers, merchants and corporate users relating to instant credit transfers.

  • The views of payment service providers (PSPs) on instant credit transfers.

  • Technical standardisation, such as the introduction of a single European QR code standard for instant credit transfers.

The deadline for responses is 23 June 2021.

DLA Piper Payments Team

The DLA Piper payments team is a market leading cross-jurisdictional group of specialist payments lawyers. The team has a broad range of clients, from dynamic FinTech offerings to established banks and merchant acquirers. The team advises clients on the full range of payments matters including payment scheme participation, sourcing tech solutions, the regulatory framework, commercial contracts, mobile and online payments, digital currencies and disputes. For more information, please contact the authors.

 

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