EU Considering New Payment Rules for its Instant Payment System Adoption to Challenge PayPal & Visa


In order to challenge the tech giants and card companies like PayPal and Visa, the European Commission is considering new rules to speed up the adoption of an instant payment system introduced by the European Central Bank last year.

TIPS, TARGET Instant Payment Settlements is the system that will let companies and people in Europe transfer euros among each other within seconds. This is a direct challenge to the US companies like Google, Amazon, Facebook, and PayPal along with China’s Tencent and Alibaba that currently dominate such services in Europe.

However, European banks have not been moving fast to join the system so the ECB and the European Commission are now studying ways to facilitate its use.

“We are reflecting on whether a stronger regulatory push would be needed to speed up this process,”

told Valdis Dombrovskis, the Vice-President in charge of financial services in the EU Commission to a financial-technology conference in Brussels.

Disrupt Existing Payment Solutions

At the same conference, the similar remarks were echoed by Yves Mersch, an ECB board member who said Frankfurt was, in fact, determined to push this instant payment system forward.

“We will do it either through our collaborative, cooperative efforts together with the industry or we will do it through our regulatory capacity,” said Mersch.

He also added, “We are determined to support those who want to take this opportunity.” It has also been said that if needed the ECB could issue recommendations to improve technological standards.

Moreover, as part of a planned review of the Payments Account Directive, the opportunity to give the payments rules an overhaul could come this year. The Commission, that posses the exclusive power to propose the legislation at the EU level would be in charge of planning new rules.

According to an EU official, this review is actually expected to start in the coming weeks. But the actual legislative proposal is unlikely to come during the mandate of this commission that expires in autumn.

The ECB system Dombrovskis says had the potential “to disrupt existing payment solutions, including cards, at least for euro-denominated payments.”

Currently, Mastercard and Visa dominate the card payments market in Europe and EU politicians have repeatedly said that the EU needs it very own payment systems. Now, the Commission is pushing for TIPS’ adoption and to strengthen the role of its currency euro as well in the energy and commodities trade against the currently dominant dollar.

By comparing the instant payment system to the successful EU cross-border projects that include free bank transactions and cheap roaming telephone calls under the SEPA system, Dombrovskis said, “In a few years, we want Europe to set new global standards for payments technology.”

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