The European Commission has proposed a new draft law. Banks would be required to offer instant payments, in euros, at no additional cost. The plan will allow consumers to transfer money within 10 seconds, regardless of the time or day of the week, according to Euronews.
At a time when prices are increasing for everyday basics, if this proposal goes through, it gives consumers more flexibility.
Mairead McGuinness, Financial Services Chief at The European Union, described the move as “seismic and comparable to the move from mail to e-mail.”
Before this proposal, the financial system holds as much as €200 billion in transit. With this proposed draft law, these funds can be released and inserted into the economy, per Euronews.
Not only will it improve cashflow for businesses, but it will also bring significant savings for small- and medium-sized businesses. Overall, instant payments are faster, more secure, and more affordable.
We have covered the benefits for businesses to adopt instant payments in Europe. However, banks will need to be address some interoperability challenges first. Open banking has addressed these issues so that merchants can take advantage of real-time payment rails.
What’s driving this move towards instant payments is the opportunity to create competition. Currently, Visa and Mastercard are monopolizing cross-border payments.