A future-proof retail payments ecosystem for Europe – the Eurosystem’s retail payments strategy and the role of instant payments therein

Abstract

Electronic retail payments are a vital part of the financial infrastructure, as recent experiences during the coronavirus disease 2019 (COVID-19) have underscored. Already existing upward trends in popularity of e-commerce and contactless payments at the point of sale have increased, possibly with a structural impact. Although significant efforts have been made since the inception of the euro to integrate the European retail payments market, some shortcomings still remain. In particular, the landscape of payment solutions for the point-of-sale and e-commerce remains fragmented. National solutions are not interoperable, resulting in a reliance on global solutions based outside Europe for cross-border transactions. To overcome this fragmentation and strengthen the autonomy of the European retail payments market, the Eurosystem supports market initiatives for retail payments that they fulfil five key objectives: pan-European reach, customer friendliness, cost efficiency, safety and security, European identity and governance, and, in the long-run, global reach. Instant payments are well-suited to form the basis for new European solutions. It is therefore essential for instant payment services to become available to all citizens and businesses across Europe. The Eurosystem therefore promotes the further implementation of instant payments, including in its role as payment system operator, through its TARGET Instant Payment Settlement service.