EU’s TIPS makes first payment

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  • The European Central Bank’s TARGET Instant Payment Settlement (TIPS) performed its very first transaction last week
  • The ECB said that it is high time that Europe has a PayPal-like service
  • The central bank noted to reporters that it will ‘not shy away’ from digital investments


The European Central Bank (ECB) just launched a PayPal-like service and it’s called TIPS or TARGET Instant Payment Settlement. Launched last Friday, the cross-border payments platform performed its first transfer between France and Spain.

The launch was successful, according to reports, as the transaction went smoothly. While Europeans cannot transfer money internationally using TIPS, the service offers cheap cross-border transfers which can be done bank to bank. This will make it easier for holders of European bank accounts to pay for various goods and services, analysts say.

Like PayPal, TIPS makes it possible for users to send money in under 10 seconds and it only charges a fifth of a euro per transaction for individuals with European bank accounts. Observers note that the service is limited to customers with such bank accounts as there is no information regarding its expansion plans. TIPS does not do money exchange transactions either which means, observers add, that TIPS only deals in euros.

Although it is limited in scope, ECB director Yves Mersch said that there is a “need to address the reasons for the scarcity of major European players in the payments market”. Mersch adds that “if there is a lack of investment capacity, we should not shy away from pooling resources and volumes and creating bigger players”. This is a welcome development for Europe’s tech savvy millennials, but only eight banks in Europe have signed up to use TIPS. The good news is, the numbers will likely grow in the coming months as the ECB is reportedly concerned that payments services in Europe are dominated by American and Chinese companies. The Banca d’Italia app is set to tip the balance though, reports say.

For a certain time, fintechs were seen as a huge threat to traditional banking methods but with evolution in mind and the integration of online and offline services in the industry, banks have started supporting fintechs to reach the former’s goals.

Back in the latter part of 2017, Europe was getting ready for a fintech revolution. Analysts have noted before that nothing is going to stop fintechs from providing financial services. This proved to be true in 2018 as Advanon, a Zurich-based fintech launched a cash flow management system for small businesses. Revolut, on the other hand, has started working with major banks to provide faster money transfer services and affordable overseas transfer rates while others like Capital.com from Limassol, Cyprus launched an app that makes it possible for tech savvy investors to trade right on their smartphones.

Peer-to-peer payments platforms the likes of Circle also launched their services to get a piece of this growing fintech market. According to Circle representatives, their app can send cash to any American bank at no cost. Currency exchange apps were also launched in 2018. Blockchain-based apps such as Coinify, a fintech from Copenhagen, partnered with Bitcoins Ahoy to reach nearly 10 million Bitcoin wallet users.  


For more information about cross-border payments in Europe, follow our magazine.


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