2017 – a decisive year for innovative retail payment services

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The proposed settlement service, which is called TIPS (TARGET Instant Payment Settlement), would leverage the pan-European nature of TARGET2 to offer settlement of instant payments directly and without credit risk. Three days from now, on 9 January 2017, the Eurosystem will launch a market consultation on the user requirements for the centralised settlement service. I would like to take this opportunity to unveil some of the features the new service could have. First, TIPS would help participants to comply with the SEPA Instant Credit Transfer (SCT Inst) scheme by providing pan-European reachability. Common functionalities across jurisdictions would ensure harmonisation of practices and market integration in the settlement of instant payments. Second, participation in TIPS would follow the same criteria as participation in TARGET2. It is not intended to change the criteria for access to central bank money. Those who do not have access to central bank money (or those who may not wish to open a TIPS account) may establish contractual agreements with a TIPS participant to use the participant’s TIPS account for the settlement of instant payments. They may also be authorised by the participant to instruct directly on this account. Third, it goes without saying that TIPS would respect the principle of full cost recovery. It is anticipated that the price per transaction would not exceed 1 euro cent, with the aim of ultimately reaching a level of around 0.5 euro cent. Fourth, market participants would be able to connect to the service via a network service provider of their choice, as long as this network vendor meets the criteria that the Eurosystem will establish.

From 2017 – a decisive year for innovative retail payment services

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