Banks ready to unveil pan-European payment system

European banks were poised to unveil plans for a new cross-border payment system as Computer Weekly went to press.

European banks were poised to unveil plans for a new cross-border payment system as Computer Weekly went to press.

An announcement is expected to be made within the next week, following a meeting of representatives from European banks and industry bodies in Brussels earlier this week. Their plans - which come in response to new European regulations to reduce the cost of transferring money across international borders - could have major implications for IT departments at UK banks.

European Commission regulations will require bank charges for cross-border payments in the euro zone to be the same as those for similar domestic transactions.

The regulations, which were adopted by the European Parliament in December, are due to come into force in July.

Banking bodies believe the rules could lead to banks having to develop a new clearing house or link existing clearing systems to create a European-wide payment infrastructure and real-time payment system.

According to the European Central Bank, a technology infrastructure to support cheaper cross-border money transfers could be implemented two years after consensus is reached within the banking industry.

Analysts have advised IT managers at UK banks, many of which still have largely manual systems for processing low-value, cross-border payments, to get involved in discussions to shape the new infrastructure. If they do not, they run the risk of having systems in which they had no input forced upon them at a later date.

If European banks decide to link their domestic clearing houses, they will require some standardisation of message protocols. Target, an existing real-time payment service, could be used to help link systems in different countries.

The more radical option of developing a single European clearing house for cross-border payments would be a massive IT project, and is thought to be less likely.

Read more on IT legislation and regulation

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