What are retail payments?

Retail payments are typically payments between consumers, businesses and public authorities. They can be everyday consumer transactions, but also include, for example, salary and tax payments made by businesses.

The most common means of payment in the euro area are payment cards, credit transfers, direct debits and cash. While some payment instruments still require the physical handling of paper, e.g. cheques, paper-based credit transfers, an increasing number of payments can be done electronically using payment cards, online/mobile banking, etc.

How have retail payments changed?

The way retail payments are made has changed significantly over recent decades.

The introduction of euro banknotes and coins in January 2002 made it easy to pay with cash anywhere in the euro area as there was no longer the need to exchange currency. However, this was not automatically replicated in the area of cashless payments. The tools available to make cashless payments still varied greatly across countries, making cross-border euro payments cumbersome, slow and costly.

The Single Euro Payments Area (SEPA) helped to harmonise the way cashless euro payments across Europe are made by removing the technical, legal and market barriers between European countries.

This provided a solid basis for further innovation and development. As part of the SEPA project, the time it takes to process electronic cross-border payments has been reduced from three or more business days to just one. However, in today’s digital world where it’s commonplace for goods and services to be available immediately and at the click of a button, many customers expect the same of payments.

That is why one of our current top priorities is encouraging the development and use of instant payment solutions in the European market.

Why is the Eurosystem involved?

Innovation can drive the process of establishing a single, efficient market for payment services in Europe, but it can also slow it down if it results in different services being on offer in different countries.

As part of its mandate, the Eurosystem – made up of the ECB and the national central banks of the euro area – is responsible for promoting the smooth operation of payment systems. We closely monitor innovation and, in our role as a catalyst, help and encourage the payment services industry to develop safe and efficient payment solutions for the euro area.