What is the latest news about T2 and TIPS? All Payment Service Providers (PSPs) which have adhered to the SCT Inst scheme and are reachable in TARGET2 will need to also become reachable in TARGET Instant Payments Settlement (TIPS), either as a participant or as reachable party, by end of 2021. At the same time, all Automated Clearing Houses (ACHs) offering instant payment services must also migrate their technical accounts from TARGET2 to TIPS.
What are the benefits? By early 2022, the vast majority of the banks in the eurozone will be able to boast instant payments capabilities between countries that use the Euro. As a result, liquidity traps will be greatly reduced or removed altogether, PSPs will be afforded the autonomy to decide where to hold liquidity and settle (either ACH or TIPS) without being impacted by decisions made by other PSPs, and banks will be able to conduct monetary transfers without needing bilateral agreements to establish links. In short, these changes give banks more freedom to dictate how, when, and where they receive and transfer funds.
Who will be affected and what can you do to prepare? All financial institutions within the Eurozone (7,000+ institutions) who are T2 participants will need to comply with this mandate. To help transform a mere compliance initiative into a strategic opportunity to grow their business, banks and financial institutions should take steps now to update legacy systems, build out instant payment functionalities, and adopt ISO 20022. Whether banks accomplish this by completely replacing existing payments infrastructure or by implementing technology, like Volante's VolPay, that bridges the gap between outdated legacy systems and modern, real-time requirements, the message is clear: now is the time to modernise payments capabilities.
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VolPay’s cloud-native microservices architecture will allow us to support current and future payment rails on and off the cloud. This will enable us to provide innovative customer experiences for over 14 million Poste Italiane account holders and 28 million cards as we continue to shift away from traditional payment methods to next-generation digital options and account-based payments.
Learn how Volante's solution can help your organisation modernise its payments infrastructure in compliance with the TIPS mandate.