Facebook Libra triggers catfish effect: EU banks deploy instant payment system

Eu Banks are likely to introduce an instant payment system by 2020, according to a Reuters report on the 26 June.

It took just over a year to develop the ECB’s target instant payment settlement (TIPS) system, which will help European individuals and businesses transfer euros to each other in seconds, regardless of the opening hours of local banks.

The instant payment service, known as TIPS, will be rolled out across the euro zone, allowing consumers and businesses in eu member states to complete mobile payments in just a few seconds, without the usual delays in payment through online transfers.

According to the report, real-time payments have been made in the euro since 2017, but only about half of Eurozone Banks are sticking with the move, However, with the launch of Facebook’s “Libra” project, Facebook’s Libra stable coin is becoming a rival to local banks and a huge threat to EU banks. The pace at which EU banks roll out such payment systems is likely to accelerate.

Etienne Gus, director-general of the European Payments Commission (EPC), said that regardless of the success of Facebook’s Libra project, competition from technology companies already existed and banks needed to grow faster.

Gus also pointed out that while the EPC instant payment standard has been adopted by about 60 per cent of banks and payment service providers in the euro area, it will not be available to all banks in the euro zone until the end of 2020. Senior banking officials see 2020 as a credible target, but say the entire eurozone needs to be covered for the system to cross borders.

In addition, instant payment systems may not be enough to prevent banking users from being taken away by fintech companies, which only need users to install an easy-to-use mobile app. Facebook can also take advantage of its social and chat platforms.

PayPal, Google, Facebook, Amazon and Alibaba are now leading the way in Europe.

Faced with Facebook’s libra plan, the head of Germany’s bafin urged regulators to set standards, while the Swiss bank for international settlements commented on the potential threat to the banking sector from the entry of large technology companies into the financial services industry.

Article source: Reuters and other comprehensive