The European Commission (EC) is actively supporting this progress by working to enhance financial infrastructure resilience and ensure universal access to instant payments. However, even ambitious projects face significant challenges. In June 2023, the EC introduced proposals for the Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR) to keep up with the fast-evolving electronic payments market.
At a minimum, the financial data access and payments package aims to maintain an efficient retail financial services market by ensuring:
Currently, one in three EU payment service providers does not offer instant euro payments, and up to 70 million payment accounts in the euro area are unable to send and receive instant payments. Often, instant payments are significantly more expensive than traditional money transfers, costing up to €30 per payment.
The PSD3 and PSR measures focus on fostering a better environment for digital transformation by reducing fraud, enhancing open banking functions, and harmonizing administrative rules for over 270 e-money institutions and 800 payment institutions. These efforts aim to establish clear rights and obligations for managing customer data sharing in the financial sector, which should lead to more innovative financial products and services and stimulate competition.
The EU also aims to support a single payment area, allowing citizens and businesses to make cross-border payments as easily and safely as domestic payments, with the same charges applied to both.
Frustration with traditional correspondent banking models has driven improvements in other payment systems and providers. According to a PwC survey, 42% of respondents believe there will be an acceleration of cross-border, cross-currency, instant B2B payments in the next five years.
However, ambitious pan-European payments collaborations often face challenges, as seen with the European Payment Initiative and the P27 initiative. Conflicting interests, misalignment among coalitions, and a lack of critical mass participants are common issues.
In the case of P27, a Nordic-led cross-border payments initiative, the lack of support for scalable mobile payment schemes like MobilePay and Vipps, along with project complexities, eventually doomed the operating model.
Several key trends have accelerated the adoption of instant payment methods across Europe. Both the B2B and B2C payments landscape is rapidly modernizing, with increased expectations that international payment rails function as seamlessly as domestic rails. The European Central Bank is exploring a digital euro, a universally accepted digital means of payment throughout the euro area. A digital euro would offer a pan-European payment solution under European governance, making the European payments landscape more resilient, competitive, and innovative. The ECB is on track to begin its digital euro pilot ahead of a possible launch in 2028.
Financial institutions will need to quickly onboard and implement institutional-grade digital asset software infrastructure to meet demand and offer digital euro services to their customers. Otherwise, they risk the ECB overtaking the market and enabling direct-to-consumer digital euro apps. Additionally, the shift to digital is encouraged by the efficiency of distributed ledger technology, such as blockchain, and the desire to reduce dependency on international card schemes for payments.
Over 90% of central banks globally are researching or piloting Central Bank Digital Currencies (CBDCs), including Sweden's Riksbank, which started investigating digital currencies in 2017. In 2023, Riksbank revealed plans to test the technical solution for the e-krona, perform studies to capture end-user feedback, and prepare for the possible procurement of an issuable e-krona
KUNA Pay is another significant player in the instant payments landscape, particularly known for its innovative approach to cross-border transactions. By leveraging blockchain technology, KUNA Pay offers a secure, efficient, and cost-effective solution for international payments. Its platform is designed to facilitate real-time transactions with minimal fees, making it an attractive option for both businesses and consumers looking to move money across borders quickly and safely. KUNA Pay's integration into the European and UK payment ecosystems exemplifies the ongoing digital transformation and the push towards more accessible and reliable financial services.
As Europe continues to advance with new payment rails to bolster its economies, the technological lead and digital-first approach, supported by initiatives like KUNA Pay, stand to provide a significant competitive advantage.
UAB Kuna Pro is registered as a crypto currency exchange operator and a crypto currency wallet operator and is authorized to provide virtual currency services in accordance with Lithuanian legislation.
The site and other components of the services are protected by intellectual property laws. All rights reserved. Access to the services and the site is provided under the KUNA trademark registered in the Madrid system, which covers the UK, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Turkey, Ukraine, and the European Union.
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