Open banking has the potential to accelerate the adoption of instant payments as according to TrueLayer, the payments network, only 14.2 per cent of euro credit transfers are made using SEPA Instant, the Pan-European real-time system.
The primary way TrueLayer has suggested this in its latest report, Payments in the EU — Building better user experience through open banking & SEPA Instant, is by combining open banking and instant payments. This comes as a result of the evolving Payments Services Regulation (PSR) and Instant Payments Regulation (IPR). But it is also a result of the majority of consumers choosing to use manual bank transfers instead.
So how can open banking technology help? According to TrueLayer, the tech can help SEPA Instant enable merchants to accept instant payments for goods or services. Specifically, TrueLayer identifies the importance of creating better user experiences by removing obstacles in a consumer’s open banking payment journey. Furthermore, the report also recommends that the cost of fees for instant payments should be kept low.
Additionally, it suggests that fintechs should be granted access to payment systems on a proportionate and non-discriminatory basis. Consequently, this will improve competition.
The final major recommendation from the report is to eliminate IBAN discrimination. In turn, this will create a true single European payments market.
Creating the payment method Europe has been searching for
Commenting on the report, Joe Morley, EU CEO, TrueLayer said:
“European policymakers have laid important foundations and infrastructure, in PSD2 and SEPA Instant, for faster, secure, and more cost-effective payments experiences for customers and businesses. But more work is needed.
“The rest of the world is moving fast. In Brazil, Pix payments are now used more than both credit and debit card payments combined. That is the model that the EU should follow in order to keep up: a modern, open, and dynamic system that promotes competition and works for both consumers and merchants.
“It’s important that the Instant Payments Regulation is finalised soon so that work can begin on improving consumer access to SEPA Instant across Europe. Furthermore, the open banking changes in the Payments Services Regulation must focus on creating better user experiences. Together, these two elements will create exactly the type of domestic payment method that the EU has been looking for. An alternative to the card duopoly.
“Our report and recommendations put forward a blueprint for making this happen. We look forward to working closely with EU policymakers over the coming months in realising this vision.”