EU Banks Are Racing Towards Instant Payments In Response To Facebook’s Libra: Reuters

Banks in the European Union are setting up an instant payments system that could roll out as early as 2020 in response to Facebook’s Libra announcement, according to a Reuters report. Etienne Goose, director general of the European Payments Council, pointed out to the publication that big technology firms had the advantage of being a global unit unlike the fragmented European banking industry. He was referring to the multiple technical standards that govern communication between different banks.

According to its website, the European Payments Council (EPC) is a non-profit whose aim is to make payments in the European Union possible with a single account or card. Sixty percent of all banks within the European Union have adopted its standard for instant transfers between banks and the organization is aiming to cover all banks by 2020. Competing with the EPC is the European Central Banks’ Target Instant Payment Settlement (TIPS), which enables a similar standard.

Facebook’s Libra is a cryptocurrency and blockchain that will enable quick money transfer capability between individuals. It is scheduled to be released next year and will become a completely open-source entity in five years. The social media network has collected an impressive network of payment processors, venture capital firms, and non-profits to become a part of the Libra Association, its Switzerland-based non-profit governing the open chain blockchain.

The use of blockchain technology in money transfers is already being investigated by banks and financial services institutions like Goldman Sachs and JP Morgan. In some jurisdictions like Kenya, mobile money like mPesa, which also enables quick transfers, has already gained substantial traction. Within the European Union, the main challenge for the banks lies in making competing systems interoperable. Facebook’s system already has a unified interface in that it can use existing applications, such as Whatsapp or Facebook Messenger, to roll out the service. Banks do not have a similar window into the lives of consumers.