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The European Central Bank (ECB) has finalised its approach to the opening of access to Eurosystem-operated payment systems, including TARGET, to non-bank payment service providers (PSPs), such as payment institutions and electronic money institutions.
This move, which takes effect on April 9, 2025, is designed to improve competition and innovation in the eurozone’s payments sector, although the ECB maintains strict regulatory oversight.
The Instant Payments Regulation (IPR), which was passed last year, made way for direct access for payment firms, as it updated the 1998 Settlement Finality Directive.
This brings the eurozone up to speed with jurisdictions like the UK, which opened up access in 2017, and Singapore, which did so in 2021.
The bigger picture
The ECB’s process for access to central bank payment systems in the eurozone is scrupulous, and an array of requirements are set out in areas such as IT security standards, compliance certifications and regular reporting obligations.
Firms will also need to submit annual statements confirming adherence to cybersecurity and regulatory conditions.
Another significant area is holding limits. The ECB has introduced holding limits on central bank accounts to prevent excessive liquidity accumulation and to maintain financial stability.
Under Article 4 of the policy, firms face restrictions on end-of-day balances in central bank-operated payment systems, including TARGET accounts such as the Main Cash Account (MCA), RTGS Dedicated Cash Account (RTGS DCA) and TIPS Dedicated Cash Account (TIPS DCA).
Holding limits are based on transaction volumes in the ECB policy, and firms with at least 12 months of history have a cap set at twice their highest daily outgoing cash transfer value in the past year, excluding liquidity transfers.
Newer firms' limits will be determined by projected peak daily transfers, with limits being re-calculated monthly for the first three months, then quarterly for the first year, and annually thereafter. Adjustments can be made if transaction volumes change significantly.
Firms exceeding their limits must reduce balances immediately, with breaches due to late payments to be corrected by the next business day, and the ECB has warned that repeated violations may result in financial penalties or account closure.
Participants in ancillary systems, such as securities settlement or retail payment networks, must submit monthly reports detailing peak and average overnight holdings and settlement obligations.
The ECB will review these provisions regularly. Eligible accounts and the calculation method for holding limits will be reassessed one year after implementation and every three years thereafter to ensure alignment with market conditions.
However, despite granting access to central bank systems, the ECB has ruled out the provision of safeguarding accounts, meaning firms need to continue relying on commercial banks to hold customer funds separately from their own.
This has sparked irritation among both lobbyists and the European Commission.
In November 2025, Eric Ducolombier, one of the key civil servants overseeing the bloc’s payments policy, remarked that “one option could have been — I’m not judging — could have been a more case-by-case approach looking at the merits”.
In October, EU payments and fintech lobbyists, including the Electronic Money Association (EMA) and European Fintech Association (EFA), had urged the ECB to reconsider its Eurosystem access policy for non-bank payment firms, and warned in a letter to the central bank’s president, Christine Lagarde, and other ECB officials that the policy could stifle competition and increase costs.
This change will also have an impact on the modus operandi in some EU member states. For example, the Bank of Lithuania has historically provided non-bank PSPs access to payment systems CENTROlink.
This allowed them to hold client funds in central bank accounts for settlement purposes, but now these institutions will need to transition to holding client funds in commercial bank accounts.
This shift will necessitate changes in liquidity management and compliance processes for non-bank payment service providers operating through CENTROlink in the Baltic state.
Why should you care?
The payments industry has wanted direct access for some time, and its eventual blessing through the IPR was a surprise victory for fintech lobbyists, who had won the hearts and minds of the European Parliament but seemingly not the European Council.
On paper, it should spur growth, innovation and a more level playing field with financial services incumbents.
For example, ECB-operated payment systems allow payments and e-money institutions to bypass traditional banking intermediaries, reducing reliance on commercial banks and lowering transaction costs.
This can improve settlement efficiency, enhance liquidity management and provide greater control over payment flows.
By integrating into the Eurosystem’s infrastructure, firms gain access to real-time settlement through TARGET services, enabling faster and more secure transactions.
Preparing for the ECB’s direct access policy will not be without its challenges, however.
There are complex regulatory and operational requirements at stake, and firms must invest in IT security measures, compliance frameworks and reporting systems to meet strict oversight conditions if they wish to get direct access.
The need for annual statements confirming adherence to cybersecurity and regulatory standards adds another layer of administrative burden.
Managing holding limits will also be difficult, particularly for firms with fluctuating transaction volumes. As limits are based on past or projected transaction activity, newer firms may struggle with accurate forecasting. In addition, unexpected surges in transactions could cause breaches, leading to penalties or even account closure if firms do not report correctly.
Implementing real-time monitoring and automated alerts will be crucial, but may require significant investment in technology and compliance infrastructure.
Meanwhile, the ECB’s decision to exclude safeguarding accounts from its framework means firms must still rely on commercial banks to hold customer funds separately. This has not been popular with the industry, or in Brussels, where the European Commission had proposed safeguarding account options in its Payment Services Regulation (PSR).
This weakens the benefits of direct access, as firms remain dependent on traditional banks for key functions.
Without safeguarding at central banks, firms could face liquidity and settlement risks, particularly if their banking partners impose restrictions, delays or higher costs — something fintech firms have warned about since the implementation of the revised Payment Services Directive (PSD2).
This dependency could also limit the ability of smaller fintechs to compete effectively, as larger institutions with established banking relationships may have an operational advantage.
Overall, although direct access offers efficiency and cost benefits, the safeguarding exclusion creates an operational challenge that could complicate liquidity management and increase reliance on commercial banks, making full independence from traditional banking systems difficult.
However, this may have been the intention of the ECB. One of the fears of the central bank and some in the market had been the impact of small, perhaps inexperienced, fintechs gaining access and then causing greater market issues if they collapsed.
Ultimately, the direct access policy possesses benefits for established market players — think Wise or Worldline, perhaps. However, the compliance burden and expectations may outweigh the benefits for smaller payments and e-money firms.
