25/04/2024 11:05 AM


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Are European really ready for Instant Payments?

Another day, another headline telling us account-to-account and “faster” or instant payments are taking over across Europe.

European Payments Initiative (EPI)

  Are European really ready for Instant Payments?

In March this year, Swedish account-to-account specialist Trustly said its payments volumes were up 43 percent to 190.1 billion SEK (around 19 billion Euros) compared to Q1 2020, while the UK’s Faster Payments Council said it processed 763 million payments in Q1 2021, up 15 percent on the amount processed in Q1 2020, with value up to £597 billion, an increase of 15 percent on Q1 2020.

If faster payments are beginning to take off in the Nordics and in the UK, what of the Eurozone? Europe’s largest economy and one of its most populous countries, Germany, provides an intriguing case study in this regard.

At a domestic level, Germany’s banking and payment systems have long been leaders in interoperability and connectivity, having established the basics of a domestic “Open Banking” system as long ago as 1998 with the creation of the HBCI standard for inter-bank communication.  

Such advances have enabled German consumers to have access to instant payment services such as Kwitt (a mobile peer-to-peer service), giropay (Germany’s IBAN-based SEPA credit transfer payment service for online purchases directly from current accounts) and paydirekt (an IBAN-based mobile payment app service linked to a current account for mobile P2P money transfer).

While moves are afoot to simplify and promote these services, including the May 2021 rebrand of Kwitt and Paydirekt as giropay and giropay Geld Senden, the fact is that consumer adoption of these services is low: at present, only 4 million Germans use the payment initiation services giropay or Paydirekt, executing around 5,000 transactions per day. 

Similarly, although iDEAL direct-from-account payments are popular in the Netherlands, being used for 57 percent of all domestic online shopping and with transaction values growing by some 35 percent year on year, translating this domestic success into cross-border e-commerce usage has been much more complicated, with low merchant adoption and consumer usage.

Things are better in Italy, where 90 percent of banking customers say they would use instant payments – although volumes are presently just 20 percent of the low levels seen in Germany.

Meanwhile France began its move to instant payments relatively recently, with the first instant payment processed in May 2019.

Adoption may be low, but banks have a real opportunity to enhance customer loyalty and grow revenues through instant payments.

Although the adoption of instant payments may as yet be in its infancy, consumer demand is certainly there. According to the Aite Group only 20 percent of Europe’s banks offer A2A payments – but as many as 9 in 10 consumers would switch banks if a rival bank were to offer A2A services.

This finding suggests that Europe’s banks have a real opportunity to enhance customer loyalty and grow revenues by offering instant payments.

One problem many A2A and instant payment schemes is cross-border merchant acceptance – something the European Payments Initiative (EPI) is designed to address.


Any discussion of instant payments in Europe must include the European Payments Initiative (EPI), launched in July last year by 16 (now 31) banks and two acquirers.

A privately-driven initative endorsed by the European Central Bank, the EPI aims to complement existing European peer-to-peer(P2P)/instant payment systems by building a pan-continental network for both eCommerce, P2P and in-store payments.

The EPI’s digital wallet proposition will offer card rails as a European alternative to Mastercard and Visa and unify domestic schemes such as girocard and Cartes Bancaires.

Let us hope the EPI fulfils its promise to deliver working pan-European instant payments, and does not fall into the trap of low adoption by consumers and merchants to which some other pan-European initiatives have fallen prey. 

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