InstaPay Interview with the Chairman of the European Payments Council – Javier Santamaria
Javier Santamaria, Chair of the European Payments Council (EPC) recently spoke with InstaPay about the introduction of instant payments across Europe. Here are some of the things we discussed.
Q: Please can you briefly describe the planned European instant payments scheme?
A: The SEPA Instant Credit Transfer (SCT Inst) scheme will allow the transfer of initially up to 15,000 euros per single transaction in less than ten seconds, any time and any day, and in an international area that will progressively span over 34 European countries. It will become effective in November 2017, and payment service providers (PSPs) can already adhere to the scheme, either only as receivers of transactions, or as both receivers and senders.
Q: Why did the EPC decide that this was required in Europe? What makes this so important?
A: Payments are no exception to an increasingly digital and immediate society. Consumers expect ever easier and faster services, and suppliers want access to the funds when they sell their goods and services the sooner the better, immediately if possible. Several European countries were planning to launch national schemes without interoperability between them, which would have hindered the European payments’ harmonisation, for which the European payment community had worked hard since the introduction of the euro. The Euro Retail Payments Board looked into this topic, and just one year after its recommendation (in November 2015), the EPC managed to create the SCT Inst scheme.
Q: Which countries are included in the SCT Inst scheme and which currencies will be supported?
A: All the countries which already use the other SEPA schemes will be able to make SCT Inst transactions, that is to say, 34 European countries (the current 28 European Union countries, plus Iceland, Norway, Liechtenstein, Switzerland, Monaco and San Marino). When the scheme will officially start in November 2017, not all these countries will be ready to process SCT Inst transactions. In all likelihood, the scheme will progressively be operational in these 34 European countries. It will only support euro transactions — regardless of the currency in which the payer and payee accounts held in SEPA countries are denominated.
Q: What are the roles and responsibilities of the EPC, EBA Clearing, SIA and other stakeholders in the SCT Inst scheme?
A: The EPC has created and will develop the SCT Inst scheme. The Clearing and Settlement Mechanisms process payment messages, that is to say they provide the interbank ‘infrastructure’ for payments. This is outside the scope of the scheme. Payment service providers will propose solutions to their customers based on the SCT Inst scheme.
Q: Is there any need for European countries to develop their own national instant payment schemes now that a regional scheme will be available? Why are some still planning to do so?
A: It depends whether we refer to euro or non-euro countries.
It will be mandatory for a euro country wishing to propose euro instant credit transfers to use the EPC’s SCT Inst scheme, as a consequence of the SEPA Regulation. The non-euro countries have no obligation of that kind.
Q: How did you pick €15,000 as the initial maximum transaction limit? When would you expect this figure to be raised? Will this restrict usage?
A: This parameter is the result of a compromise and risk management considerations in an international context. It was set after discussions with payment stakeholders from across Europe when we built the scheme. It will be used for both national and cross-border transactions. It is in line with the initial maximum amounts set by other non-euro instant payment schemes when they were launched. A pragmatic and progressive approach is key to ensure SCT Inst’s smooth take-up. As from November 2018, this maximum possible amount will be reviewed annually.
The SCT Inst scheme is meant to be used by all kinds of payers, individuals and businesses alike. The initial maximum amount might however focus the use of SCT Inst to individuals at the very beginning of its launch.
In any cases, PSPs are free to agree bilaterally or multilaterally (within a country for example) on a higher maximum amount and a shorter execution time.
Q: Who has responsibility for driving adoption and usage? Why should a Payment Services Provider join the SCT Inst scheme? Will it always be a voluntary decision for them to do so?
A: The SCT Inst scheme is for the moment optional. We encourage all PSPs to adhere to it as soon as possible, at least as receivers of transactions, in order to give the scheme real momentum. It is in the end the PSPs’ responsibility to choose to offer to their customers services based on the SCT Inst scheme, and to answer their customers’ needs, at the risk of being left behind if they don’t adopt this innovation rapidly enough.
Q: Which use cases and channels do you expect to be the most popular and why?
A: The SCT Inst scheme is not focused on specific use cases. It certainly has a potential of developments in the Person-to-Person mobile payment area, and when the maximum transaction amount will be increased, in the future, it will also be especially attractive to businesses.
Q: Which aspects are proving to be the trickiest or most time consuming for PSPs in joining and going live on the SCT Inst scheme?
A: It is a bit early to say, as the starting date of the SCT Inst scheme is in November, but we can imagine that the toughest point will be to go from a batch to a real-time environment.
Q: How do you expect SCT Inst to evolve?
A: The SCT Inst scheme will progressively have a broader geographical reach, as more and more SEPA countries will implement it. We also expect the maximum amount (15,000 euros) to be increased over time, and the maximum duration an SCT Inst transaction can take to be considered as successful to be reduced. The SCT Inst scheme will definitely change payments as we know them!
Thank you Javier for sharing this information with the InstaPay Community. It is great to hear your answers and perspectives. We are all looking forward to the launch of the SCT Inst scheme in November. This will be a major milestone in the global adoption of instant payments. Good luck for the launch.