The European Central Bank is now offering instant payments.
Competing with behemoths like PayPal just got a little easier for small to midsize European banks. The European Central Bank has launched a new system, Target Instant Payment Settlement (TIPS), aimed at letting banks settle payments instantly across Europe. TIPS allows people and companies to transfer euros to each other, regardless of the open hours of their local institution.
US firms PayPal, Google, Facebook, Amazon and China’s Alibaba and Tencent currently dominate instant settlement in Europe. The first payment via TIPS took place at the end of November between customers of Spain’s CaixaBank and French bank Natixis. Spain’s BBVA is the only banking giant to have joined so far; other participants are all small or medium-size banks headquartered in Spain, Germany and France.
TIPS payments take 10 seconds or less to process and cost the payment provider a fifth of a euro cent, or 0.002 euro. The service is restricted to EU banks. “We need to address the reasons for the scarcity of major European players in the payments market,” ECB director Yves Mersch said, in unveiling TIPS. The platform was developed by Banca d’Italia in cooperation with the central banks of Germany, France and Spain, which now also co-manage it.