ECB launches instant payment system

The ECB’s TARGET Instant Payment Settlement (TIPS) system aims to let people and Europe-based companies alike transfer euros to each other within seconds, regardless of the opening hours of their local bank. On the other hand, US-based companies PayPal, Google, Facebook and Amazon, and China’s Alibaba and Tencent currently dominate such services in Europe.

However, up until now, just eight medium- or small-sized banks from Spain, Germany and France have signed up. ECB’s platform for settling financial transactions has not reached the expected volumes, forcing the central bank to raise fees by a half. The first payment via TIPS took place between a customer of Spain’s CaixaBank and one of French bank Natixis. The other participants are Spain’s Abanca Corporación Bancaria, Banco de Crédito Social Cooperativo and Caja Laboral Popular Cooperativa de Crédito, and Germany’s Berlin Hyp and Teambank.

Moreover, TIPS is open only to providers that have an account at a central bank connected to the euro zone’s TARGET 2 network, which means that it is effectively restricted to European Union banks. At the beginning, it will only settle transactions in euros, but the ECB mentioned that it can support other currencies as well if there is any demand.