Instant payments: Providing the rails for new payment solutions

Abstract

In November 2023, European legislators reached an agreement on legislation to increase adoption of instant payments. Instant payments enable consumers and corporates to make transactions in real time and 24/7. These unique features allow for value-added services such as e-commerce and point-of-sale payment solutions that can compete with card payments. Through a discussion of a number of successful payment solutions built on instant payments, this paper explains how instant payments could help Europe in its quest to develop a homegrown payment solution. The analysis starts with a discussion of Brazil’s Pix and India’s Unified Payments Interface, providing interesting insights into the possibilities of instant payments. The paper then moves on to a description of the European Payments Initiative — the consortium of European banks that recently acquired iDEAL, the Dutch accountto- account e-commerce payment solution. The paper also shows how Swish — the Swedish payment solution — provides valuable lessons to Europe as regards the launch of a payment solution, notably with respect to the importance of realising network effects.