Facebook Libra accelerates EU banks’ real-time payments plan

Just weeks after announcing its cryptocurrency plans, Facebook is already ruffling feathers in the European Union (EU). Banks in the region are feeling the heat and according to a new report, they intend to implement a real-time payments system to compete with Libra and other fintech startups.

The region already has real-time payment systems. However, such channels haven’t managed to attract all the banks in the economic bloc. This is set to change, a report by Reuters has revealed.

“The clock is ticking,” the director general of the European Payments Council (EPC), Etienne Goosse told the news outlet. The council was founded to create harmonization of electronic methods of payments in the region. It boasts of having some of the largest banks in the region as members including BBVA, BNP Paribas, Deutsche Bank and HSBC.

It’s not just Facebook’s efforts that are challenging the legacy systems, he added. Other big tech firms are moving into payments as was witnessed with Apple’s latest credit card venture. Unlike the banks, the big tech firms have the advantage of being global, unlike the fragmented European banking industry, he remarked.

The banks are under siege, he believes, stating, “They come with a global solution, under a global brand offering many things that the consumers seem to find wonderful. So, we have no time.”

The EPC has set 2020 as the target for a fully integrated real-time payment system in Europe, Goosse told Reuters. In its current state, the system fails because there exists too many separate networks, he believes.

His remarks were backed by Piet Mallekoote, the CEO of the Dutch Payment Association. “The challenge now is to make these mechanisms interoperable,” he told the outlet. Mallekoote also revealed that in the Netherlands, banks have implemented a real-time payment system and he hopes the rest of Europe can follow in their footsteps.

Whether the banks will put their competitive interests aside and work together remains to be seen. However, even then, competition from big tech firms will still be formidable. Facebook, for instance, has a well-established social media platform with billions of users globally, a platform that it can tap to its advantage. The traditional banking system could be looking at its biggest threat yet.