Instant payments are probably a disruptive technology that will siphon off volumes from other payment methods. These include the mass payments currently running, for example, via EBICS, but also card payments - debit and credit card payments at the POS. Moreover, payments on the internet are expected to be increasingly made via instant payments. An attack on PayPal and Co?
Something that initially looks harmless can revolutionise the world of payments. Instant payments were referred to as “the new normal” at Sibos even though they haven’t really taken off yet, not even in Europe. However, this clearly shows the potential that is seen in instant payments. The “new” players of yesterday, such as PayPal and Co., could be tomorrow’s losers.
Up to now, instant payments solutions have been purely national solutions. Of course, the main volume of transactions with instant payments will be conducted within a local radius. But things will not necessarily stay that way. Instant payments that work throughout Europe could quickly result in the creation of new services. Banks will play a more significant role here than in the case of payments via credit cards or PayPal. In the process, they would defend their claim to be the leaders in the payments business and perhaps even manage to make up ground.
The limit of € 15,000 per instant payments transaction will be quickly increased. There is talk of amounts around the half-million mark. European banking groups are in the starting blocks waiting to lift this limit within their group from the word go. This could also be of interest to corporate customers. Industrial goods, services and other products are still being paid for in a fairly old-fashioned way that is expensive and long-winded. Instant payments could change all that. Of course, a transaction with instant payments may be expected to take a few seconds longer or even a number of minutes, say in the case of an amount in the millions or if embargo checks, AML and settlement are running synchronously. Fundamental, disruptive changes could also take place here.
Incidentally, instant payments are not initiated by PSD II. What a missed opportunity. The ECB took the lead here and did not venture the first step towards European instant payments. As yet, the interoperability with national instant payments solutions is not clear. Perhaps PSD III, which has already been announced in PSD II, will provide the required legal framework. At present, everything is voluntary and the effects – including those on mass payments with EBICS – are as yet uncertain. What is certain is that the Europeanisation of instant payments provides opportunities. And we should take them.
Michael Lembcke
