Cross-border payments

A key goal of the Eurosystem’s retail payments strategy is to make it easier for businesses and consumers in Europe to send and receive payments to and from other countries. More efficient cross-border payments would also help to enhance the international role of the euro.

The Eurosystem is therefore actively supporting the G20 roadmap to improve cross-border payments making those cheaper, faster, more transparent and more accessible by looking at initiatives where TIPS can support its targets.

Improving cross-border payments

The Eurosystem is exploring initiatives to help improve cross-border payments within the EU and beyond. This can be supported by implementing a baseline cross-currency settlement service in TIPS on the European Payments Council’s One-Leg Out Instant Credit Transfer scheme.

The work ahead includes:

• implementing cross-currency payments in TIPS;
• interlinking TIPS with fast payment systems globally.

Cross-currency payments in TIPS

Transfers to non-euro area countries in the EU are slow, complex and expensive when currency conversion is needed. To address these issues, the ECB Governing Council has decided to implement a cross-country settlement service in TIPS , building on the exploratory technical work started in 2020. The initiative is a collaboration with Sveriges Riksbank and Danmarks Nationalbank.

The cross-currency settlement service in TIPS will enable Swedish and Danish consumers to transfer funds in their domestic currency to a retailer or consumer in any euro area country, with payment received in euro in a matter of seconds. In the same way, retailers and consumers in the euro area will be able to use euro to pay for goods bought in Sweden or Denmark. The service will also allow transfers to be made between Swedish and Danish accounts. Other countries that join TIPS at a later date will similarly benefit from cross-currency instant payments.

Interlinking TIPS with fast payment systems globally

At a global level, the Eurosystem is looking at linking TIPS with other fast payment systems. This would improve their interoperability, reduce costs and increase the speed and transparency of cross-border payments, including remittances.

The exploratory work includes:

• connecting TIPS and other fast payment systems outside the euro area that have compatible schemes, without any need for a direct technical link to be established between the systems;
• joining the multilateral network of instant payment systems, Project Nexus, led by the Bank for International Settlements;
• establishing a bilateral link with India’s Unified Payments Interface, an instant payments system developed by the National Payments Corporation of India and regulated by the Reserve Bank of India.