In the global real-time payments market, TIPs is a solution rolling out in the EU. Here’s a definition of this platform from the European Central Bank website:
TARGET Instant Payment Settlement (TIPS) is a new market infrastructure service launched by the ECB in November 2018. It enables payment service providers to offer fund transfers to their customers in real time and around the clock, every day of the year. This means that thanks to TIPS, individuals and firms can transfer money between each other within seconds, irrespective of the opening hours of their local bank.
TIPS was developed as an extension of TARGET2 and settles payments in central bank money. TIPS currently only settles payment transfers in euro.
Finextra reports that the European Commission is now contemplating applying regulatory pressure to generate more TIPs activity. (As if demand needs to be manufactured.) The impetus seems to be two-fold; one is to offer EU based digital payments that will compete with foreign payment products from Fintechs and the U.S. based card networks and also to make the European market more digital mirroring the payment environment in Asia:
Launched last year, TIPS (Target Instant Payments Settlement), is available to both consumers and businesses across the 19 states in the eurozone, offering near real-time payments via smartphones, PCs and in-store payment points.
The initiative was designed to help banks take on the growing popularity of digital, contactless payment services offered by big tech firms such as Apple, Google, Amazon and Alibaba in China.
However, with adoption yet to take off, the EU Commission’s vice president in charge of financial services, Valdis Dombrovskis, has told a fintech conference that “we are reflecting on whether a stronger regulatory push would be needed to speed up” the process.
He touts the programmes as examples of the value of the single market, explaining: “In a few years, we want Europe to set new global standards for payments technology. Other parts of the world like China are building their payment systems directly on a digital basis. So we should seize our current opportunity and accelerate our efforts to digitalise our payments.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group