The European Central Bank said it would build an instant-payment system spanning the entire eurozone that allows firms and citizens to transfer money in seconds, in an effort to boost financial integration across the 19-nation currency bloc.
The system, scheduled to start operating in November next year, will reduce the time needed for payments between bank accounts from up to one day to mere seconds, the ECB said Thursday. It will be available around the clock, 365 days a year.
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As such, it could pose a serious challenge to existing payment systems such as debit cards.
The move by the ECB aims to address the absence of a rapid-payments system that spans the entire region, from tiny Baltic countries such as Estonia to Greece and Spain. It will ensure "that the demand for instant payments is met at European level and further facilitate the integration of the euro area," the ECB said.
Instant payments are already available within several eurozone countries but banks haven't yet sought to join up the whole bloc.
The ECB has already done part of the work, by building a pan-eurozone system, known as TARGET2, that quickly processes large transactions between banks and central banks.
The new system, known as TARGET instant payment settlement or TIPS, would allow citizens to pay a restaurant bill directly from their bank account, for instance--or to split the bill by transferring money immediately to a friend's bank account.
It will be developed in close cooperation with European banks, which will pay a maximum price of EUR0.002 for each payment for at least the first two years of operation, the ECB said. Banks will then decide how much to charge clients for the service.
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(END) Dow Jones Newswires
June 22, 2017 08:19 ET (12:19 GMT)