From November 21st, it will be possible to carry out a money transfer in 10 seconds. Nine European countries have joined the scheme, but not Portugal which has until November 2018 to join up.
Transferring money almost immediately between European countries will be free, up to a maximum of €15,000, in nine countries - Spain, Germany, Italy, Austria, Estonia, Latvia, the Netherlands, Finland and Lithuania.
The goal is to extend this service by November 2018 to all 31 European countries and banks within the Single Euro Payments Area (SEPA).
The European Central Bank is a year ahead of schedule and will start with the TIPS (target instant payment settlement) system to improve bank transfer speed.
The promise is that money will become available in the receiving account in 10 to 20 seconds, miraculous when compared to the current average transfer time of 24-hours, or up to four days if the transfer is made just before a weekend.
The system avoids intermediaries as the money to cover the transfers will come directly from a fund European banking system members previously will have deposited.
The new payment scheme is not mandatory and banks may choose to join only as recipients or only as issuers.
The European Payments Council, the forum for discussion of the various existing payment methods, already has called on all European banks to join the initiative.
Almost all Spain’s banks have joined the programme, while Germany’s banks will sign up before July 2018.
It is not yet clear when Portugal’s banks will join this new service but the aim is that by November 2018 all countries and banks that are part of SEPA will be integrated into this new platform.
In addition to the 28 EU countries, Iceland, Liechtenstein, Monaco, San Marino, Norway and Switzerland are to join. As for the UK, Brexit looms, as does uncertainty.
As for banking charges, these are limited to 0.20 cents per transaction during the first two years of operation, so money transfers to European countries will be cheaper than many current methods.
