Michael Boel, Co-Head of Clearing Technology at Banking Circle, shares why the TIPS infrastructure pilot is relevant for cross-border payments.
Domestic instant payments work, as seen time and time again. Schemes like SEPA Instant, Faster Payment Systems (FPS), the New Payments Platform (NPP), and RIX-INST have proven that real-time settlement at national scale is viable, reliable, and increasingly expected by businesses and consumers alike.
The problem has always been cross-border payments. Multiple intermediaries, fragmented liquidity, settlement risk that can sit open from hours to days, and currency conversion often treated as an afterthought instead of built into the transaction from the get-go. All these factors add friction.
For fintechs and payment platforms operating across multiple markets, these challenges quickly add up. However, this is changing with the TARGET Instant Payment Settlement (TIPS) platform from the European Central Bank.
We look at how enabling instant payments in central bank money across Europe has significant implications for payments infrastructure.
What Is the TIPS Cross-Currency Pilot and Why Does It Matter?
The recent TIPS infrastructure pilot tested atomic settlement, where both legs of an EUR-DKK transaction were completed simultaneously and immediately.
So, instant cross-border settlement in central bank money is no longer theoretical – it’s possible and it’s happening. The pilot is moving from proof of concept to deployable market infrastructure.
As a result, instant single currency settlement across national borders is becoming a realistic prospect. However, it also begs the question of the payment infrastructure required to scale this further.
Why Are Cross-Border Payments Still So Slow and Expensive?
Most fintech conversations five years ago focussed on customer experience and speed to market. Fast forward to today and the same fintechs are scaling internationally and encountering the operational complexities of doing so.
Most cross-border payments still travel through legacy correspondent banking networks, decades old. Each intermediary, each hop adds cost, time, and complexity.
It’s the same whether fintechs and financial institutions are operating payments for global merchants, gig economy payouts, marketplace settlements, or cross-border B2B transfers. All face the same problems.
All have the same needs: fewer intermediaries for payment origination and settlement, and more control over what happens in between. No wonder discussions have moved on to the infrastructure layer.
How Does Direct Access to Clearing Improve Cross-Border Settlement?
The closer institutions are to clearing and settlement infrastructure, the more they can control.
Our clients tell us that direct participation in domestic clearing schemes, such as SEPA Instant, Swiss Interbank Clearing Instant Payments (SIC IP), FPS, DKK TIPS, RIX Instant, and NPP, removes intermediary dependencies.
Operationally, this means they can manage liquidity in real time, reconcile faster, and build treasury operations that scale more efficiently. So much so, control of the infrastructure layer has now become a strategic imperative for financial institutions.
What Does Instant Cross-Currency Settlement Require?
Atomic cross-currency settlement requires coordination between central banks, clearing systems, and FX infrastructure that have historically been siloed. The TIPS pilot has demonstrated that this is possible on live rails.
However, cross-currency settlement through TIPS remains limited to specific corridors and scheme hours. To deliver instant cross-currency settlement across multiple markets and currencies, around the clock, demands infrastructure that goes beyond the current capabilities.
How Are Regulated Stablecoins Extending Instant Payment Infrastructure?
Regulated stablecoins, including USDC, Eurite (EURI), and Global Dollar (USDG), are creating parallel near-instant settlement rails that operate across currencies and outside scheme hours.
Settlement via stablecoin or crypto rails would certainly be in addition to, not instead of, existing SEPA Instant and TIPS rails. So, rather than replacing known and trusted settlement rails, stablecoins could provide additional benefits and use cases.
For example, a payment could settle via SEPA Instant during European business hours. Yet at 2am on a Sunday morning could this same payment could settle via a regulated stablecoin rail with the same platform, compliance standards, and counterparty.
What Is Next for Cross-Border Payment Infrastructure?
In 2020, the G20 launched a roadmap to make cross-border payments faster, cheaper, and more transparent and inclusive.
So far, ISO 20022 has created a common data language. Domestic instant schemes have proved the real-time settlement use case. And the TIPS cross-currency pilot has demonstrated functionality across currencies.
The next steps are to increase the rollout – more currency pairs, more markets, more central banks, more clearing systems – but also the opportunities and use cases.
The shift from instant domestic to instant cross-border payments is redesigning how money moves globally. This is potentially transformational, so the key is not to regard it as the same old payments, done faster. Rather to harness the opportunities and use cases for new value-added products and services.
Institutions investing in cross-border infrastructure, including direct clearing access, embedded FX, real-time settlement, and digital asset interoperability, are actively helping build the future of the payment ecosystem.
Indeed, for fintechs, payment platforms, and financial institutions operating at scale, the infrastructure layer is becoming a competitive differentiator.
