Etienne Goosse, director general of the European Payments Council (EPC), has told Reuters that Facebook’s new cryptographic payments program, Libra, is forcing banks in the Eurozone to rapidly develop an instant payments network for banks in the zone.
The EPCs goal is to help harmonize payments in across Europe, a goal which ultimately supports European competitiveness and innovation. The EPC is a non-profit with mainly bank members.
“The clock is ticking,” said Goosse, whose organization covers large European banks, including Santander in Spain, Deutsche Bank and Societe Generale in France.
Ultimately, banks, operating as they do in a siloed manner, can no longer ignore big tech, said Goosse regarding Libra.
“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.”
Goosse said that his organization’s standard for instant payments has been implemented at 60% of the banks in the Eurozone, and that the EPC hopes to the standard is spread across all banks by the end of 2020.
In the absence of full coverage, another EPC official said, the system would experience gaps and delays, which would erode customer trust.
Currently, cross-border payments take a minimum of one day. Once the system is up and running, settlements could occur instantly.
For the system to work, however, clearing and settlement (arbiter services assuring proper distribution; participants stake collateral) will have to be coordinated across the whole zone. And that’s another matter.
According to Reuters:
“Several private clearinghouses use the EPC standard for instant payments like EBA Clearing, which brings together Europe’s largest banks, or national counterparties like Spain’s Iberpay or Italy’s Nexi…But each of these different systems cover only a few dozen banks, making instant payments often impossible among lenders that are not members of the same clearinghouses.”
The same is true for the TIPS (Target Instant Payment Settlement) launched last November by the European Central Bank.
All banks in the Netherlands have reportedly been coordinated onto an instant payments network there.
But even if banks succeed in all linking cooperatively to host instant payments across the EU, they will still face the challenge 0f making sure the system is as easy to use and friendly-seeming as one tied to a social media app, Reuters writes.
This could imply needing to add additional features to payment cards or mobile apps.
Participation might also be incentivized if the banks offer tracking or financial health/education features, automatic savings or services that Facebook cannot offer without a banking license.