Payments innovation

In recent years, the euro retail payments market is developing and offers innovative payment solutions.

This is expected to further accelerate in the coming years, due to the technological, social and economic changes associated with digitalisation , and due to the fact that the EU regulatory framework allows non-standard service providers to enter the retail payment market.  

Furthermore, retail payments innovation and financial technology (FinTech) also have an impact on the operation of payment systems. Committed to promoting the smooth and efficient operation of payment systems, the European Central Bank (ECB) and national central banks (NCBs) constantly study and analyse developments in payments, in order to help create and maintain a harmonised regulatory framework that prevents market fragmentation and ensures a level playing field across Europe for both end users and service providers. 

Against this background, innovative payment solutions are key to delivering a single and competitive market for retail payments in euro. In order for these solutions not to act as barriers to market entry or give rise to fragmentation in payment services offered across Europe, or even threaten the safety and integrity of payment systems, the Bank of Greece, as one of the Eurosystem NCBs, carries out research and analysis with a primary focus on the following areas:

 

Instant payments

Instant payments are defined as electronic retail payment solutions available 24/7/365 that allow for the immediate or close-to-immediate interbank clearing of a transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation), irrespective of the underlying payment instrument used and of the underlying arrangements for clearing and settlement.

Instant payments are defined as electronic retail payment solutions available 24/7/365 that allow for the immediate or close-to-immediate interbank clearing of a transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation), irrespective of the underlying payment instrument used and of the underlying arrangements for clearing and settlement.

The Eurosystem, aiming to avoid fragmentation and achieve a single and competitive market for retail payments in euro, acts as a catalyst for the creation of common standards in the market for realising instant payments. In this context, the Eurosystem decided to develop a new service for the settlement of instant payments called TARGET Instant Payment Settlement (TIPS) that offers a high level of reachability as well as final and irrevocable settlement for instant payments in central bank money on a 24/7/365 basis. 

Mobile payments

The applications developed by payment service providers, in cooperation with start-ups, both at national and European level, that enable the execution of retail payments with the use of a mobile phone, concern either person-to-person (P2P) or consumer-to-business (C2B) transactions. 

The applications developed by payment service providers, in cooperation with start-ups, both at national and European level, that enable the execution of retail payments with the use of a mobile phone, concern either person-to-person (P2P) or consumer-to-business (C2B) transactions. 

These innovative mobile payments are typically based on traditional payment instruments (cards, credit transfers or direct debits), enabling smart phones to be used as payment-initiating devices. Thus, mobile payments can be classified as proximity payments (contactless payments using, for example, Near Field Communication Technology (NFC) and as remote payments for online purchases (e-commerce).

In addition, in mobile payments the payment data and the payment instruction are transmitted and/or confirmed via mobile communication and data transmission technology through a mobile device.

Digital wallet solutions

A digital wallet makes it possible to combine different payment instruments in a single electronic device, which is then used to make secure payments, either proximity or remote, very conveniently and easily. 

A digital wallet makes it possible to combine different payment instruments in a single electronic device, which is then used to make secure payments, either proximity or remote, very conveniently and easily. 

Digital wallet holders can use cards and accounts for their payments just as they would use cards or cash to make payments out of a physical wallet. In particular, digital wallet solutions offer flexibility and security to users, since they serve as storage (i) of secure information necessary to authenticate the user and (ii) of payment data necessary for initiating a payment transaction using a device or application, without the service provider having access to the user's funds. 

Payment initiation services

Payment initiation services are clearly defined in Directive (EU) 2015/2366 (Payment Services Directive (PSD2)), which was transposed to Greek legislation by Law 4537/2018. 

Payment initiation services are clearly defined in Directive (EU) 2015/2366 (Payment Services Directive (PSD2)), which was transposed to Greek legislation by Law 4537/2018. 

These are the services provided “to initiate a payment order at the request of the payment service user in relation to a payment account held at another payment service provider”. These services are built on top of traditional payment schemes (cards, credit transfer, or direct debit) and facilitate users in managing their payments on an aggregate basis for purchases in physical and online stores. 

The recent introduction of payment initiation services into the EU and national regulatory framework offers users a much broader range of solutions for managing their payments, with the same level of security, through the providers of these services. 

Distributed ledger technology applications and digital currencies

Digital currencies, most notably cryptocurrencies, have increasingly attracted the attention of both public authorities and market participants.

Digital currencies, most notably cryptocurrencies, have increasingly attracted the attention of both public authorities and market participants. However, the lack of a regulatory framework, their high price volatility and the increased risk of being used for money laundering and terrorist financing make them less attractive than conventional currencies as a medium of exchange. 

The ECB and the ESCB recognise that the developments in Distributed Ledger Technology (DLT) underlying alternative means of payment such as digital currencies can be utilised by the current financial ecosystem. At the same time, the ESCB studies and analyses the prospects, as well as the implications for monetary policy and financial stability, of a central bank digital currency (CDBC). 

Electronic invoicing

Electronic invoicing (also known as electronic invoice presentment and payment (EIPP)) can be defined as the delivery of an invoice, its payment, and its subsequent processing and storage, in a fully electronic format. 

Electronic invoicing (also known as electronic invoice presentment and payment (EIPP)) can be defined as the delivery of an invoice, its payment, and its subsequent processing and storage, in a fully electronic format. 

Electronic invoices (e-invoices) offer significant advantages over traditional paper-based invoices, including higher speed, fewer errors, savings on printing costs and postage and, above all, full automation and integration of the process between the transacting parties. The possibility of electronic settlement of the e-invoices at a national level, with pan-European interoperability, is an additional factor of development of the single retail payments market. Full automation in the invoice exchange and settlement process between the transacting parties helps to improve market efficiency by saving substantial financial resources. 

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