Europe’s Top Open Banking Executives Expect Huge Things
It is ludicrous to believe that European banks would continue to charge significant fees for people and companies to move money abroad, and that these transfers will then take days to complete.
The European Union Commission presented legislation earlier this week that may alter all of that by requiring banks to implement “instant payments” that are handled in less than 10 seconds.
Providers of open banking applauded the law since it may result in a significant improvement for fast open banking payment initiation across Europe.
“Coupling open banking with rapid settlement enables open banking payments to be utilised across significantly more eCommerce use cases, where products or services need to be transported instantaneously on confirmation of payment,” said Tink head of payments and platforms Tom Pope.
Joe Morley, VP and GM for Europe at TrueLayer welcomed the proposal that he said would: “address the coverage and high-cost problems that European instant payments currently face and will allow open banking to truly take off – something that has been a long time coming and which will ensure that Europe doesn’t fall behind the curve.”
Despite without lowering their cost, the law also forbids banks from adding additional fees for these quicker transactions.
“Moving from “next day” transfers to “ten seconds” transfers is seismic and comparable to the move from mail to e-mail. Yet today, nearly nine out of ten credit transfers in euro are still processed as traditional ‘slow’ transfers,” said Mairead McGuinness, European Commissioner for financial services, financial stability and Capital Markets Union.
McGuinness noted that because of sluggish transfers, almost €200 billion in transactions are held up each day.
“There is no reason why many citizens and businesses in the EU are not able to send and receive money immediately, the technology to provide for instant payments has been in place since 2017.”
With the introduction, cross-border payments would become more in line with what many of us anticipate from domestic payments, where speed is becoming more common.
The proposed law, which must still be approved and only then provides a schedule for implementation of up to 12 months, means that “immediate payments” won’t be available until at least the end of 2023. Unfortunately, this is not all good news.
Pope said that while Tink welcomed the legislation: “many financial institutions already have the necessary infrastructure in place – so we would love to see adoption move even faster.”
