This blog describes the latest European Payments Council () poll and explores the reasons behind the results, as well as giving a brief overview of the hot topics to be aware of for the rest of 2015. The latest EPC poll posed the question: “In your view, which of the following factors is most likely to trigger the next wave of innovation in the European payments market?”
The results were as follows:
- Instant payments (45 percent)
- Mobile payments (28 percent)
- Cyber security (11 percent)
- Virtual currencies (9 percent)
- Regulation (7 percent)
The poll suggests a significant shift in thinking away from a focus on regulation towards more innovative factors such as instant payments and mobile payments. The uptake of new technologies (e.g. smartphones and cloud computing) has led to changes in customer habits and expectations, including the rise of e-commerce, m-commerce and instant payments. Customers make increasing use of these online and mobile channels to buy goods and services at any time and in any place. These developments contribute to the expectation of a faster, potentially real-time, finality and/or confirmation of payment. It is, therefore, inescapable that both instant and mobile payments will become an increasingly important part of the payment landscape in Europe.
However, there is work that still needs to be done to fully understand the issues related to the uptake and regulation of these payment methods. As Pierre-Antoine Vacheron stated in the July edition of the EPC newsletter: “The Euro Retail Payments Board (), European Central Bank (ECB), European Payments Council (EPC) and several national organisations have recently made announcements addressing the implications and regulation of this new payment option (instant payments), as well as the impact of its rise on the operations of banks, businesses, merchants and consumers. However, though popular among businesses, there remain major hurdles which must be overcome for instant payments to gain market share at point of sale.”
EPC Report to the Euro Retail Payments Board on Instant Payments
On 30 June 2015, the EPC published the ‘EPC Report to the Euro Retail Payments Board (ERPB) on Instant Payments’ (see ‘related files’ below) in response to an invitation by the ERPB to the supply side of the industry to make an assessment of the issues related to pan-European instant payment solutions in euro. The report outlined the opportunities that instant payments may bring but also drew attention to specific issues.
In its presentation to the 29 June ERPB meeting, which was clearly introduced as a contribution from one stakeholder among many represented at the ERPB, the EPC outlined its recommendations as well as three conditions which must be met before any further steps can be taken on instant payments:
- The full involvement of all stakeholders, starting with the creation of an ERPB working group, to discuss the issues raised by the EPC report (e.g. the ‘go to market’ scenarios).
- The clear understanding that a ‘ Credit Transfer instant scheme’ (inst) would be only one payment instrument of several possible instruments which support instant payment solutions.
- Clarity from the Eurosystem about the evolution of its settlement infrastructure and processes in terms of whether, how and when it could support an end-to-end instant payment environment.
The report also stressed that the expectation of both payers and payees must be the starting point to build the future landscape for instant payments and thus should drive the debate within the ERPB.
Next steps for instant payments
The multi-stakeholder ERPB High Level Group on instant payments held its first meeting on 17 July 2015 to discuss next steps in relation to the EPC Scheme for instant payments. During this meeting, the EPC presented its preliminary thoughts on the position and scope of the SCTinst.
The meeting also identified and debated about some potential issues relating to the SCTinst, including implementation, timespan, availability, value dating outside of business hours, erroneous and fraudulent instant payments and regulatory aspects. The EPC report to be submitted for the ERPB meeting of November 2015 will show how these issues may be resolved. The EPC has committed to providing a proposal for an SCTinst design for the November 2015 ERPB meeting and also outlined a proposed timeline from inception to delivery of an SCTinst Rulebook. Updates regarding meetings and with regard to delivery of further feedback and recommendations can be expected in due course.
Hot topics for the remainder of 2015
After instant payments, mobile payments and cyber security were cited as the next most likely factors to trigger a wave of innovation. This is further demonstrated by the recent, and ongoing, ERPB work on mobile payments and the focus of the industry and public authorities on cyber security. The EPC stands ready to continue its active contribution to the creation of a unified, efficient and secure payments landscape across Europe.
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