.svg)
The pan-European TARGET Instant Payment Settlement (TIPS) platform has announced 45 payment service providers (PSPs) have joined the platform as part of plans to ensure instant payments are fully reachable across the EU.
Based across 12 euro area countries, the 45 PSPs have become new participants in the platform, which will support the European Central Bank’s (ECB) ambition “to ensure that citizens and firms can make instant payments anywhere in Europe”.
The addition of the 45 PSPs means that TIPS now counts a total of 123 direct participants and 9,133 reachable parties. The latter is likely to cover the vast majority of banks across the region.
TIPS is an instant payment settlement system of the ECB that allows participants to settle payments in central bank money around the clock. Participation allows payment service providers to offer fund transfers to their customers in real time and on a 24/7 basis.
In 2020, the ECB announced two measures to ensure instant payments were fully available across the EU. Firstly it required all PSPs in TARGET2 that adhere to the SEPA Credit Transfer Instant Scheme (SCT Inst) should be fully reachable in TIPS.
The other requirements were that automated clearing houses (ACHs) move their technical accounts from TARGET2 to TIPS. As previously reported in VIXIO, the first wave of ACHs migrated their technical accounts on December 10, 2021.
Original Story: First ACHs Move Technical Accounts To TIPS
In a major milestone for instant payments across the EU, the European Central Bank (ECB) has announced the first wave of automated clearing houses (ACH) to move their technical accounts to its low-value instant settlement system.
Following the announcement on Monday that EBA Clearing’s pan-European instant payment services, RT1, had successfully moved their technical accounts from TARGET2 to the
TARGET Instant Payment Settlement (TIPS) system, the European Central Bank (ECB) has confirmed five other ACHs have also moved.
The latest batch of ACHs to migrate their technical accounts to TIPS are Iberpay (Spain), STET (France), DIAS (Greece), EKS (Latvia) and CENTRO (Lithuania).
The move creates interoperability between TIPS and different ACHs, meaning customers can send a transaction from EBA Clearing’s RT1 to an account that may only be connected to the TIPS service.
For banks, this could mean significant savings. For example, a large bank may be connected to STET, to EBA Clearing and TIPS and be required to manage participation fees and liquidity pools in three separate systems.
This new arrangement is designed to create greater efficiencies by reducing the need to participate directly in multiple systems and ease the liquidity burden.
The ECB had mandated that all PSPs in TARGET2 that had adhered to the SCT Inst scheme should become reachable in TIPS, either as a participant or as a reachable party.
“These measures will ultimately enable European citizens and businesses to send and receive electronic instant payments from and to any country in the EU, both at the point-of-sale and online,” the ECB said.
The central bank has committed to ensuring the full reach of instant payments services at the EU level.
The SEPA Inst scheme went live in November 2017 and was initially supported by clearing and settlement mechanisms (CSM) of a number of ACHs, including STET, EBA Clearing and Iberpay. A year later, TIPS was launched.
At the time of launch, the scheme was criticised for its perceived status as a public authority effectively competing, at a cheaper price, with several commercial services, such as EBA Clearing’s pan-European instant payment service, RT1.
Speaking at Money20/20 in 2018, Helmut Wacket, head of division at the ECB, defended TIPS.
“This is not a competitive proposal and we do not intend to dominate,” he said, noting that the bank had decided to launch TIPS as it had doubts that pan-European reach would be fully achieved otherwise.
Despite this ambition, usage of instant payments has been uneven across the EU.
Based on using average quarterly data published by the European Payments Council (EPC), instant payments account for only 9 percent of all SEPA credit transfers in the 12 months to September 2021, or about 2.1bn instant payment transactions. The UK's Faster Payments system alone processed 2.9bn transactions in 2020.
In addition, many of these SEPA Inst transactions are concentrated in a number of key markets. For example, the Netherlands, which represents around 13 percent of all SEPA credit transfers according to the European Payments Council (EPC), accounts for more than 20 percent of SEPA Instant payments, according to VIXIO estimates.
The next ACH migration waves are expected to take place on January 21 and February 25, 2022.
