One of the benefits of not being first, or even second or third, is you get to learn from those who cleared the path before you. The U.S. has been widely admonished for not having taken a more aggressive approach towards real-time payments and developing solutions earlier. But the advantage of not being first is, of course, having the benefit to witness the struggles and successes experienced by the early pathfinders. In the case of faster payments, is always good to understand issues and unintended consequences experienced by those already in market. A blog in Finextra has some valuable points to make regarding interoperability and avoiding fragmentation as the Pan-EU solution for faster payments rolls out:
“Since the launch of the SCT Inst rulebook in November 2017, many more banks are live and offering real-time payments to their customers, with most of the rest committed to 2018. The buzzword at the recent ECB #TIPSapp Event in Frankfurt was ‘Interoperability,’…”
“With the European Central Bank’s new challenger service, Target Instant Payments Scheme (TIPS), going live in November 2018, it is looking like the drive for interoperability is fast becoming a reality rather than an expectation. However, the industry is keen to understand more about how TIPS can help alleviate the risk of fragmentation within the Pan-EU Instant Payment region.”
“The fear is that with so many local and Pan-European schemes live, there could be a risk of them not talking to each other, exacerbated by the fact that most of the individual schemes require a local settlement account. From a treasury perspective, fragmentation of the liquidity – and that liquidity being regulated by different standards – culminates in a nightmarish difficulty in keeping the bank’s liquidity position.”
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
Read the quoted story here
