Talk with José Luis Langa, Deputy Managing Director of Iberpay, operator of the Spanish retail payment system, and Chairman of the Board of the European Automated Clearing House Association (EACHA)

More than six years after its launch, the share of instant payments in euros (SCT Inst) remains below 20% of all other types of credit transfers. What's the reason for this?

You can view the situation as either a glass half full or half empty. While the initial launch was successful, several important European countries have yet to fully embrace SCT Inst. The primary reason lies in its voluntary nature. Without comprehensive coverage, there is no guarantee that SCT Inst will be accessible to all individuals and businesses within the SEPA area. Consequently, banks may not be highly motivated to adopt it on a widespread scale. Additionally, the higher cost associated with the instant processing of individual transactions round the clock compared to bulk payments has hindered broader adoption. Many banks offer instant payments as a premium service with fees, unlike traditional credit transfers. Fortunately, new EU regulations address both challenges, making it likely that SCT Inst will become the new standard in the medium term.

How effective is SCT Inst from the demand side?

Currently, adoption primarily focuses on small-value payments between individuals. Companies and public administrations rarely utilize this solution to date. There is significant room for improvement. To optimize payment flows across the entire value chain of financial transactions and business processes, SCT Inst needs further development. For instance, raising the current limit of 100,000 euros would facilitate its use for international or B2B transactions. There is also room to make SCT Inst better prepared for commerce transactions.

What is the impact of the interoperability between the ECB's TIPS and EBA Clearing's RT1 euro systems, which has been in place since December 2021, on the use of SCT Inst?

It has had a positive impact. Let’s consider Spain as an example. Since the first day of operation of the two systems, Iberpay has connected the Spanish financial community with other European participants through a single window with all the combined functionalities of both systems. This means maximum accessibility in the SEPA area with minimum cost and complexities for the participants. Current figures show that nearly 5% of all instant payments processed by Iberpay are made via RT1 or TIPS. And the trend is increasing.

What's the role of CBDCs and stablecoins in the context of instant payments?

Both types of tokenized money are suitable to facilitate the process of delivery against payment of securities and to avoid settlement risks.

However, they are unlikely to replace established instant payment solutions for processing, clearing and settlement of retail payments. Unlike instant payment processors, DLT networks cannot finally and irrevocably settle thousands of transactions within a second.