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The Bank of Greece has announced it will be the first central bank in the Eurosystem to join the TARGET Instant Payment Scheme (TIPS) as the beneficiary's bank for domestic and cross-border government payments.
The Bank of Greece has begun providing citizens with the possibility to make instant payments to the public sector domestically and cross-border.
For the execution of these payments, the central bank is using the Eurosystem’s TIPS, as well as observing the specifications of the SEPA Credit Transfer Instant scheme (SCTInst) of the European Payments Council (EPC).
TIPS was launched by the European Central Bank in 2018. It enables payment service providers to offer fund transfers to their customers in real time and around the clock, every day of the year.
The move by the Bank of Greece is being touted as part of the retail payments strategies that are in the process of being implemented by the European Central Bank and the European Commission, contributing to the spread of direct payments in the domestic community and promoting digital innovation and efficiency in the field of retail payments.
It is also in keeping with the EU-backed GRNET project. The government digital initiative aims to develop an ecosystem of digital transformation in the Greek public sector and promote innovation.
Although many central banks around the world typically play a key role in supervising, building, managing and even running payments infrastructures, it is relatively unusual for a central bank to offer banking services as the authorised bank of the state, which was described by one payments sector source as “the old way”.
In other markets this role is typically carried out by a private or state-owned commercial bank. In the UK, for example, the government works with a range of commercial banks, including Barclays, Citibank and NatWest, to facilitate payments to and from the public sector.
The main benefits of this new service, according to the Bank of Greece, include simplifying and minimising the processing time of transactions with the government, saving resources and administrative burden for those involved, and encouraging the use of innovative and secure means of payment in everyday transactions.
The central bank also claims its switch provides the ability to combine instant payments with further value-added services like Request-to-Pay.
The Bank of Greece also noted a positive environmental impact, claiming that the environmental footprint of TIPS is just 0.0004 grams of carbon dioxide per transaction.
