29 September 2015

ECB's Mersch: Means of payments and SMEs: where are we heading?

Speech by Yves Mersch at the dinner debate organised by the Think tank Etienne Marcel

[...] What will the future bring?

Let me turn now to the future. How will the work of the Euro Retail Payments Board benefit SMEs?

First, the ECB and ERPB are monitoring the completion of SEPA migration, which is due next year, with the phasing out of national niche credit transfers and direct debits and other waivers. Furthermore, full migration to SEPA credit transfers and SEPA direct debits by non-euro area countries is being monitored. This final stage of the long process of adapting common standards for basic payment services will deliver on the promise to be able to use one single account for euro payments throughout the EU.

Second, the ERPB has called for the launch of a pan-European instant credit transfer scheme in euro. [...] Payment service providers are already working on an instant SEPA credit transfer scheme. I expect that instant payment services in euro will be made widely available to European consumers and small businesses by 2018. [...]

Third, electronic invoicing has long been on the agenda of European policy-makers. The ERPB could investigate how a pan-European electronic invoicing landscape could be enriched with more efficient links to payment services. [...] All this will be discussed at the next meeting of the ERPB in November with a view to the direction to take.

Fourth, as many SMEs are small merchants accepting hundreds or thousands of payments every day at physical points of sale or online from consumers, the work of the ERPB in consumer card and mobile payments is particularly relevant, as this represents a rapidly growing share of the payment mix. The ERPB could focus on two areas here: i) person-to-person mobile payments enabling the convenient initiation of payments to another mobile phone user (be they consumer or merchant); and ii) contactless payments where a fast payment can be made by simply holding the mobile device or card above a merchant’s terminal.

Finally, the ERPB also oversees work on traditional technical card standardisation.[...]

All of these initiatives aim to contribute to a more efficient and competitive landscape for euro payment services. It is vital to maintain their momentum because they come at a time when the digitalisation of communication and information technology is triggering fundamental structural changes in banking and finance. The traditional retail payments business of banks faces strong competition from financial technology (“FinTech”) companies. [...]

Concluding remarks

[...]

Although the contribution of retail payments integration to the competitiveness of SMEs has received less public attention than other related measures, SMEs have significantly benefitted from the creation of the Single Euro Payments Area, as well as from the ERPB initiatives that will deepen the integration achieved by SEPA and exploit the innovative potential of digitalisation.

However, there is no room for complacency. When building the retail payments infrastructure of tomorrow, we certainly need the supply side, but we also want the demand side to shape the products according to its needs. The Euro Retail Payments Board offers a unique opportunity for all stakeholders to articulate their concrete expectations and requirements. [...]

Full speech

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