ECB enhances instant payments with cross-currency initiative

The European Central Bank is the central bank for the euro and administers monetary policy of the eurozone. The headquarter is in Frankfurt, Germany,March 2018.
Editorial credit: Yavuz Meyveci / Shutterstock.com

The European Central Bank (ECB) has launched an initiative to improve instant payments between different currencies, starting with euros, Swedish kronor and Danish kroner. 

The Target Instant Payments Settlement (TIPS) platform now enables cross-currency payments to be settled in central bank money, allowing payments made in one currency to be completed in another. This advancement aims to make cross-border payments faster, more affordable and more secure.

Cross-currency payments will be processed on the Target Instant Payments Settlement (TIPS) platform. The Riksbank’s RIX-INST payment system, which handles instant payments in Swedish kronor, is already integrated with TIPS.

This integration allows companies and organisations using RIX-INST to take advantage of the cross-currency service. For instance, all Swish payments, a mobile payments system in Sweden, are currently settled through RIX-INST. 

TIPS has been in testing for more than five years. In 2019, the financial telecommunications organisation SWIFT announced that a group of European banks would begin trials for gpi cross-border payments on the platform.

Erik Thedéen, Governor of the Riksbank, commented: “It is very positive that we have now come so far that we will actually be able to provide a functional infrastructure for cross-currency payments. 

“The decision supports the global goals within the G20 to make cross-border payments cheaper, faster, and more secure. It is now up to the market to create the services that the general public demands.”

After launching this initiative, the ECB decided to investigate the potential for facilitating payments between currencies outside the EU. This involves exploring the feasibility of linking TIPS with comparable systems in non-EU countries.

The ECB noted that this global strategy supports the Eurosystem’s retail payments initiative, which seeks to enable European consumers and businesses to make and receive payments with partners outside the eurozone.

As mentioned above by Thedéen, the G20 established 2027 targets for transaction speed, cost, transparency and service access. This target has led to a big push to improve cross-border transactions.

Earlier this week, Temenos unveiled a SaaS solution for cross-border payments, allowing payment service providers to facilitate transactions across multiple countries. The announcement highlighted the G20’s objectives as part of this launch.

Elsewhere in the world, instant payments are also evolving rapidly. The Bank for International Settlements (BIS) and its partners have announced their progression to phase four of Project Nexus, which aims to standardise the connections between domestic instant payment systems. 

In this upcoming phase, India, Malaysia, the Philippines, Singapore and Thailand will link their domestic instant payment schemes, enhancing the efficiency and interoperability of cross-border transactions in the region.