Euro Zone Banks To Have Instant Payments System To Counter Competition From Libra

Banks in the eurozone are set to deploy instant payment system before the end of 2020 to counter any competition from recently launched Facebook’s Libra, Cointelegraph reports.

Since 2017, real time payments have been possible in the EU. however, only half of the banks in the zone have adopted the system and even those which have adopted the system use it mostly for domestic transactions.

Adoption of the instant payment system is now set to accelerate after Facebook launched the Libra stablecoin that is being perceived as a major future competitor to euro zone banks.

The Clock is Fast Ticking

Etienne Goosse, director general of the European Payments Council (EPC) said that the clock was ticking for those who are yet to adopt the new instant payment system. Goose was categorical that whether Libra succeeds or not intense competition from tech-based companies is imminent and banks need to change their mode of operation. Goose stressed that various tech companies have an upper hand compared to the fragmented banking system. He added:

“They come with a global solution, under a global brand offering many things that the consumers seem to find wonderful. […] So we have no time.”

Goose explained that only 60 percent of banks and payment services providers in the eurozone have adopted the EPC standard for instant payment. He was however optimistic that before the end of 2020 all the banks in the zone will have adopted the system.

Cointelegraph also reports that various industry heads have lauded the 2020 target saying it is credible. However, they noted that the system needs to be adopted by all banks in the region for it to work cross borders.

Already several private clearing companies are using EPC standard for instant payments such as EBA clearing which brings together Europe’s major banks like Spain’s Iberpay and Italy’s Nexi.

Whether the banks will adopt the instant payment system enmasse or not remains unknown. However, even if an instant payments system is spread across Europe is adopted, it may never be enough to keep customers away from fintech providers that have easy to use apps.

For instance, Facebook can easily use its established social media and chat platforms to lure customers to use their payment system, but banks and other financial institutions will have to agree on apps like mobile payment or use the customers’ existing payment cards to lure them to use banks’ instant payment services.

The launching of Libra has turned the heat on different financial institutions and authorities across the world. Just the other day, the Germany financial supervisory body was calling on regulators to come up with new standards in the wake of Libra’s launching. Similarly, Bank of International Settlements (BIS), based in Zurich, has also indicated that the entry of renowned tech companies in the financial sector is a major threat to the banking industry.

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