Open Banking: Transforming Europe’s Payment Landscape

«European policymakers have laid important foundations and infrastructure, in PSD2 and SEPA Instant, for faster, secure, and more cost-effective payments experiences for customers and businesses. But more work is needed.» — Joe Morley, EU CEO, TrueLayer

Open banking has emerged as a pivotal catalyst for driving the widespread adoption of instant payments in Europe, with only 14.2 percent of euro credit transfers currently being processed through SEPA Instant, the Pan-European real-time payment system, as reported by TrueLayer, a leading payments network, writes Francis Bignell for The Fintech Times. 

TrueLayer’s latest report, titled «Payments in the EU — Building better user experience through open banking & SEPA Instant,» outlines a strategy to enhance the synergy between open banking and instant payments. This strategy is attributed to the evolving regulatory landscape, encompassing the Payments Services Regulation (PSR) and Instant Payments Regulation (IPR), as well as consumer preferences favoring manual bank transfers.

TrueLayer asserts that open banking technology can facilitate SEPA Instant’s capability to enable merchants to accept instant payments for goods and services. Crucially, the report emphasizes the importance of enhancing user experiences by eliminating hurdles in the consumer’s open banking payment journey. It also recommends that keeping the cost of fees for instant payments low is essential.

Furthermore, TrueLayer advocates for granting fintech companies access to payment systems on a fair and non-discriminatory basis, a move expected to foster competition in the market.

One of the report’s major recommendations is the elimination of IBAN (International Bank Account Number) discrimination. This measure is anticipated to create a genuine single European payments market.

Commenting on the report, Joe Morley, EU CEO at TrueLayer, stated, «European policymakers have laid important foundations and infrastructure, in PSD2 and SEPA Instant, for faster, secure, and more cost-effective payments experiences for customers and businesses. But more work is needed.»

Morley emphasized the need for the EU to keep pace with global developments, citing the success of Pix payments in Brazil, which now surpasses both credit and debit card payments combined. He called for a modern, open, and dynamic payment system that fosters competition and benefits consumers and merchants alike.

Morley underscored the importance of finalizing the Instant Payments Regulation and directing open banking changes in the Payments Services Regulation towards enhancing user experiences. He believes that these initiatives, when combined, will lead to the creation of a domestic payment method that Europe has been seeking, providing an alternative to the current card duopoly.

TrueLayer’s report and recommendations offer a comprehensive blueprint for achieving this vision, with a commitment to collaborating closely with EU policymakers in the months ahead to turn this vision into reality.