A few days ago, the European Central Bank announced how instant payments will become possible throughout all of Europe by November 2017. To make this idea become a reality, the Euro Retail Payments Board will partner with the European Payments Council to create a scheme enabling instant payments denominated in EUR. This announcement could be good news for Bitcoin exchanges in the European market as well.
Enabling Instant SEPA Transfers Across Europe
The task at hand for the Euro Retail Payments Board and European Payments Council will not be an easy one, although the foundations for instant SEPA transfers are already in place for the most part. As most people will be aware of by now, the SEPA zone allows eligible countries to execute wire transfers faster compared to regular bank transfers.
Making these transfer instantaneous will be quite a challenge as it would be a completely opposite model compared to the current banking system as we know it. While some people might argue how money should flow freely at all times, that is hardly ever the case in the real world. Transferring funds from bank A to bank B will always take at least one full business day, which is hardly “flowing freely.”
It comes as a bit of a shock to read the European Central Bank acknowledges that something has to change. Not only will instant SEPA transfers be beneficial for consumers – as they can transfer money to friends and family a lot quicker – but it opens up opportunities for retailers as well.
Yves Mersch, member of the ECB’s Executive Board and chair of the ERPB commented:
“I welcome this joint effort by the industry to make instant payments a reality, bringing benefits to consumers and businesses alike. It is crucial that we adopt a pan-European approach.”
As far as the European e-commerce market is concerned, there are plenty of retailers accepting wire transfer payments. However, it takes at least one full business day for these transfers to complete, which can delay the shipment of products by a few days if a weekend is around the corner. With instant SEPA payments across Europe, retailers will get their goods faster, and consumers can be certain – depending on the courier – items will arrive on time.
What makes this proposed idea so interesting is how transfers between banks will still be settled instantaneously, even after office hours or during the weekend. This creates a completely different financial ecosystem for both consumers and retailers. Paying bills over the weekend would still result in instant payments, regardless of whether the banks are open or not.
Coming up with a scheme that will cover all bases for this project to succeed will take some time. The Euro Retail Payments Board and European Payments Council have until November 2016 to create a viable plan of action, and the goal is to implement the solution by November 2017.
Even though this proposal is quite innovative in a way, it will only be the groundwork for future innovative payment methods. The European Central Bank is well aware of how mobile payment solutions are becoming more popular. Additionally, this scheme would allow for future person-to-person transfers of value as well.
Note from the Author: The press release issued by the European Central Bank notes how this scheme will be voluntary. However, all payment providers offering instant payments in EUR based on SEPA credit transfers will have to adhere to the guidelines with no exceptions being made.
Instant Withdrawals & Deposits Across European Bitcoin Exchanges?
Assuming this proposal comes to fruition by November 2017, there will be an impact on Bitcoin exchanges dealing with European customers as well. Both buying and selling Bitcoin in exchange for Euro will become a lot faster, as transfers will clear instantly. This would make buying and selling Bitcoin a fair bit easier – and faster – than it is right now.
That being said, it will remain up to the banks in the SEPA zone to enable instant payments or not. Even if the consumer’s bank can process transfers immediately, this does not mean the exchanges’ banking partner can as well. This entire concept is voluntary for all banks in the SEPA region, and it is impossible to tell how many of them will enable instant payments in the near future.
One of the most often heard complaints is how it can take a few days until consumers can buy digital currency in the European Union. Credit cards are almost never used as a payment method, due to high fraud and chargeback rates. Bank transfers are relatively fast in the SEPA zone, but even one full business day is a long waiting period for most people.
What are your thoughts on this proposal by the European Central Bank? Will we see instant payments in the SEPA zone by November 2017? Let us know in the comments below!
Source: European Central Bank
Images courtesy of Shutterstock, European Central Bank