Eurosystem eyes up alternative payment solutions in latest retail payments strategy update
The Eurosystem has updated its retail payments strategy for the coming year, citing digital euro development, instant payments and cross-border payments as three of its main priorities.
First developed back in 2019, the aim of the retail payments strategy is to “develop pan-European solutions for payments at the point of interaction (POI), governed at the European level, and to further strengthen the Single Euro Payments Area (SEPA), primarily through the full deployment of instant payments”.
In light of the numerous developments that have affected the European payments ecosystem since 2020, namely the Covid-19 pandemic and the Russia-Ukraine war, the legislation seeks to meet the rising challenges to European sovereignty in the payments market.
Its core objectives include the creation of a European solution for POI payments, effectively ending the “strong reliance” on international card schemes and global big tech providers, as well as the introduction of a digital euro to complement existing digital payment capabilities and the full deployment of instant payments.
Furthermore, the legislation also seeks to promote technological advancements and digital innovation in the betterment of cross-border payments in the context of both retail and wholesale payments, an element that is actively being instigated through the advent of the European Instant Credit Transfer scheme.
The bulk of the recent updates to the legislation concern a new goal to make alternative payment solutions available as a contingency plan, as part of a wider effort to strengthen the resilience of retail payments in Europe.
This move will enable offline capabilities in the event of network disruptions and ensure the availability of “fallback options” for payment service providers (PSPs).
The Eurosystem is also discussing how it can enable direct access to payment systems for non-bank PSPs through the revised Settlement Finality Directive (SFD), as well as how it can harmonise pan-European electronic identity (eID) and electronic signature (eSignature) services for the private sector through the updated eIDAS regulation “to enable cross-border acceptance of eID/eSignature solutions”.
Europe is seemingly well on its way to achieving its retail payments strategy, most notably through its SEPA Instant Payments mandate, its increased dialogue with the fintech sector and by entering the preparation phase of its digital euro project.