The rapid onset of technological changes observed in recent years, alongside the unstoppable process of economic digitalization, are driving significant transformations in payment systems worldwide.

The rollout of instant payment services across many countries is one of the most successful responses to the demands of digital customers, who now expect immediacy, an excellent user experience, 24/7 access to their funds, and the ability to perform payment transactions or banking processes from any mobile device.

These trends toward digitalization and instant payments have been accelerated by the shift in consumer habits following the pandemic, resulting in a significant decline in cash usage, which is being replaced by tools such as account-to-account instant payments, the growing adoption of e-wallets, payment cards, and new forms of digital currency.

The importance of payment systems in a modern economy.

Payment systems are a fundamental structural component of a developed and modern economy. They perform a crucial function: processing and settling transactions between individuals, businesses, and public administrations. This ensures the smooth operation of the economy by providing security and trust in commercial exchanges, while facilitating the successful execution of financial transactions, trade, and economic activity.

An efficient and innovative payment system is a critical structural element for maintaining the competitiveness of a modern digital economy. Various studies suggest that a country’s payment systems can foster advancements, such as the widespread adoption of digital and instant payment instruments, the replacement of physical methods like cash and cheques, and more efficient payment processing. These improvements can contribute significantly to a country's economic growth, adding valuable percentage points to its overall performance.

In addition, the introduction of instant payment systems between accounts enables payments to be settled and credited to beneficiary account within seconds, making funds instantly available for new operations. This facilitates a significantly higher number of transactions per unit of time, every day of the year, thereby considerably increasing the velocity of money circulation.

Finally, in recent years, payment systems have become a strategic priority due to their crucial role in ensuring the financial independence and sovereignty of a country or monetary area, without reliance on the services of institutions, providers, or platforms based in third countries. The valuable data on citizens and businesses that can be derived from transaction processing, the significant dependence of the European financial system on a handful of global card schemes, and the immense power of large global technology companies -who are increasingly interested in payment-derived information- all underscore why political and economic European authorities have become increasingly aware of the geostrategic importance of payment processing for protecting payments users or for maintaining economic, financial, and monetary sovereignty.

For all these reasons, payment systems are under strict supervision by central banks, whose fundamental responsibility is to ensure their proper functioning.

The instant payments revolution

The widespread adoption of instant payments between accounts fosters innovation and competition in payment services, making it ideal for addressing most use cases. It is also one of the most promising ways to enhance the processing of multi-currency international payments in terms of speed, cost, transparency, and accessibility.

The use of instant payments between accounts is blurring the boundaries between the traditional silos previously used for different types of payments (wholesale, retail, card-based, and international), as most payment use cases can now be chanelled through these new interbank rails. By utilising the latest processing and settlement technologies, funds can be transferred between current accounts within seconds, at any time of day, every day of the year. This ensures that the recipient has instant access to the funds, with the security of firm and irrevocable transactions.

The introduction of instant payments between accounts effectively eliminates the concept of payments being "on their way", as all the steps required to complete a payment in a payment system -initiation, processing, validation, routing, crediting the beneficiary, confirmation to the parties involved, and interbank settlement- are practically completed in real time.

than that of an instant transfer. The current limitation of €100,000 per transaction in the European instant credit transfer scheme has, to date, prevented substantial migration from wholesale payment systems to instant payment systems. However, instant credit transfers can also be routinely used to facilitate international multi-currency payments.

In this context, the most relevant initiatives are being driven by international organisations such as the G-20, the Financial Stability Board (FSB), and the Bank for International Settlements (BIS), all of which are promoting the global modernisation of international payments, which are currently viewed as slow, expensive, opaque, and not universally accessible. The goals for improving international multi-currency payments by 2027 have been set out in an FSB roadmap, highlighting key challenges in terms of speed, cost, access, and transparency. To achieve these objectives, the most promising solution within the financial system is to enhance interoperability between instant payment systems across accounts operating in different geographical and monetary areas. This would enable 24/7 operational overlap and facilitate faster, cheaper, more transparent, and accessible processing of international multi-currency transactions.

The widespread adoption of the ISO 20022 payment standard by instant payment systems globally is a key factor that significantly facilitates their potential interoperability and operational communication between different processors.

The remarkable success of instant payment systems like PIX in Brazil or UPI in India -both of which, in just a few years, process hundreds of millions of daily transactions and have reduced the use of cash and cards- demonstrates the immense potential of this payment instrument to facilitate economic transactions, increase financial inclusion, offer a digital alternative to cash or cards, and, in the near future, also support international fund transfers, even when currency conversion is required.

*****