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Introduction of instant payments across the euro area

Published: 31 March 2021

ECB gebouw van zijkant met zon en water

Instant payments are already in widespread use in the Netherlands. But the instant execution of a euro payment to a customer of a foreign bank is not yet possible in many cases. The European Commission would like to introduce this form of payment and has asked the ECB to take steps to facilitate it.

At the beginning of 2020, the ECB asked the banks and automated clearing houses (ACHs) what would be needed to make cross-border instant payments possible. Based in part on the market input, the ECB then announced two measures on 24 July 2020, making instant payments within the euro area possible starting from the end of 2021. After having implemented both measures, banks will also meet the requirement which stipulates that they must be able to receive instant payments from any other European bank offering instant payments to its customers.

The first measure is that any bank which participates in TARGET2 and offers instant payments to its customers must also participate in TIPS (TARGET Instant Payment Settlement). TIPS was launched in November 2018 as an extension of TARGET2. With TIPS, the central banks can process instant payments in real time and around the clock, every day of the year.

The second measure is that, in light of the first measure, ACHs are now required to open a technical account in TIPS.

By November 2021, banks which support instant payments must have opened this TIPS account. Since ACHs will open their TIPS technical accounts in phases, it will take several months before cross-border instant payment becomes available. Cross-border instant payment to all other SEPA countries is expected to become available in February 2022.

The Netherlands is well on track with the implementation of these measures. The first measure applies to eleven Dutch banks, four of which have already opened a TIPS account. Two other banks are running tests and will open their accounts soon, with the remaining five banks expected to follow suit later this year. The second measure applies to one Dutch ACH, which is currently making the necessary preparations to open a technical account in TIPS.

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