‘Move forward’ on instant payments, Central Bank tells banks

Cash must continue to be accepted to avoid financial exclusion, event hears

Irish banks should "move forward" on instant payments, while consumers' shift to electronic means of paying is "unlikely to be fully reversed" after the pandemic, Central Bank deputy governor Sharon Donnery told a webinar on Wednesday.

Ms Donnery cited survey evidence from 17 EU countries that suggests the majority of consumers expect to continue to use digital services as often as they do now, “or perhaps even more”. However, cash is likely to continue to be the most common way of making small retail payments, she said.

“It is important in our role as central banks that we continue to ensure choice and the availability of cash. Not all members of the public will want to use electronic means of payment owing to their habits, or a preference for anonymity and privacy,” Ms Donnery said.

Restrictions on the acceptance of cash as a retail payment "creates risk of financial exclusion", John Berrigan, the European Commission's director-general for financial stability, financial services and capital markets union said.

“We trust that member states will take the necessary measures to ensure the acceptance and accessibility to cash. If necessary, the Commission will consider legislative action to ensure this.”

The event, organised by the Central Bank, heard that the Republic was not as advanced in the rollout of instant payments as some other EU jurisdictions. Ms Donnery called for progress on this as well as increased interoperability with European systems.

Instant payments are electronic retail payments processed in real time, with the funds made available immediately for use by the recipient.

“We encourage banks and other payment service providers to move forward towards implementing instant payment solutions in the near term which can be offered to Irish consumers and businesses. Irish providers need to adopt a forward-looking strategic outlook towards payments rather than wait for instant payments to become a mandatory requirement,” she said.

Seamless interaction

“We need to make sure instant payment solutions and systems at the national level can interact seamlessly with European counterparts.”

A group of Irish banks recently came together on a project co-ordinated by Banking & Payments Federation Ireland to develop an app called Synch Payments that would compete with fintech players such as Revolut. But the joint venture has yet to receive competition regulator approval.

The event also heard from Martina Weimert, chief executive of the European Payments Initiative, a group of 33 financial institutions that is working to create a pan-European instant payments standard.

No Irish banks are among its initial founders, but Ms Weimert said the interim company would open up for new members to join by the end of the year.

“We think that the European economy deserves this kind of solution, which will allow us to become independent and sovereign.”

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics