BRUSSELS (Reuters) - The European Commission is considering new rules to speed up adaptation of an instant-payment system the European Central Bank introduced last year, challenging card companies and tech giants such as Visa and PayPal, officials said.
The ECB’s TARGET Instant Payment Settlement (TIPS) system will let people and companies in Europe transfer euros to each other within seconds, regardless of the opening hours of their local banks.
That is a challenge to U.S. companies such as PayPal, Google, Facebook and Amazon, and China’s Alibaba and Tencent, which currently dominate such services in Europe.
European banks have been slow to join the system, though, so the EU Commission and the ECB are studying ways to facilitate its use.
“We are reflecting on whether a stronger regulatory push would be needed to speed up this process,” the EU Commission’s Vice-President in charge of financial services, Valdis Dombrovskis, told a financial-technology conference in Brussels.
His remarks were echoed at the same conference by ECB board member Yves Mersch, who said Frankfurt was determined to push the instant payment system forward.
“We will do it either through our collaborative, cooperative efforts together with the industry or we will do it through our regulatory capacity,” Mersch said.
Bit added: “We are determined to support those who want to take this opportunity.” He said the ECB could issue recommendations to improve technological standards if needed.
The commission, who has the exclusive power to propose legislation at EU level, would be in charge of devising new rules.
Dombrovskis said the opportunity to consider an overhaul of payments rules could come up this year as part of a planned review of the Payments Account Directive.
This review is expected to begin in coming weeks, an EU official said. Actual legislative proposals, though, are unlikely to come during this commission’s mandate, which expires in autumn.
Dombrovskis said the ECB system had the potential “to disrupt existing payment solutions, including cards, at least for euro-denominated payments.”
Visa and Mastercard currently dominate the European market for card payments.
EU politicians have repeatedly said the EU needs its own payment system and the Commission is now pushing to strengthen the role of the euro in commodities and energy trade against the dominant dollar.
“In a few years, we want Europe to set new global standards for payments technology,” Dombrovskis said, comparing the instant-payment system to successful EU cross-border projects, such as cheap roaming telephone calls and free bank transactions under the SEPA system.
Reporting by Francesco Guarascio; editing by Keith Weir, Larry King