Traditional financial institutions are struggling to remain relevant in this day and age of mobile and cashless payments. Credit cards are becoming even more common, yet that payment method is not without its flaws. Most of the mobile payment solutions are built on top of an existing financial infrastructure, but once clearing and settlement agencies start to build their own instant payment platform, you can be sure the game is afoot.
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Stet Agency Announces Instant Payments
For those among us who are not heavily invested in the traditional financial sector, the name Stet might not ring a bell. Stet is a French clearing and settlement agency, processing transactions on behalf of the French and Belgian banking communities. Due to the rise in transactions over the past few years, Stet is now in charge of handling over 15 billion transactions per year.
It goes without saying that even clearing agencies are starting to see the issues within the financial infrastructure, and a more convenient solution needs to roll out sooner rather than later. Instead of relying on a third-party agency or software provider to do so, Stet will develop their own instant payment platform for European Payment Service Providers. However, do keep in mind this new service will only be available for instruments active in the SEPA zone.
As you would come to expect from such an initiative by a French agency, their new platform will initially only be available to the French banking community. That being said, there are plans in place to open up this instant payment system to the rest of Europe as well, in due time.
There are certain roadblocks to overcome for Stet’s new initiative, though. Regulation is a major hurdle for anyone or any company active in the financial sector. In this case, there is the SCTinst regulatory requirement, which has been defined by the European Central bank’s retail payments systems board. According to the information provided to us, this instant payments platform will be fully compliant with these regulatory guidelines.
Furthermore, Stet acknowledges that centralizing this new payments system might not be the smartest idea. The technical infrastructure supporting this initiative will be offered on a white-label basis to all other European communities. Doing so will give each individual community the option to locally govern their instant payments solution.
A Major Disruption of Traditional Finances
Truth be told, it’s about time the entire clearing and settlement aspect of traditional finance got a major wake-up call. In this day and age, it is no longer acceptable to see merchants wait for up to 30 days until card payments are cleared, even though consumers are debited within 24 hours. This new payment system will hopefully change that situation.
It looks like Stet has taken a page out of Bitcoin’s book, by developing a system that sees settlement and clearing of monetary transfers complete nearly instantaneously. Bitcoin payments have often been touted as a superior payment alternative, because transfers of money are frictionless and cleared within minutes.
Images courtesy of Shutterstock, Stet