Most payments in Sweden are currently settled in the Riksbank’s settlement system for large-value payments (RIX). As RIX is constructed for large-value payments between financial institutions, all smaller payments between bank customers have to be compiled into large payments (clearing) before they can be settled in RIX. This process takes time, and also requires coordination and intermediaries. This will change if the Riksbank eventually uses the Eurosystem’s and ECB’s platform for instant settlements, Target Instant Payment Settlement (TIPS). TIPS allows for each payment to be separately and instantly settled around the clock. This reduces the need for intermediaries and opens the door for new innovative payment solutions.
Overall, it is reasonable to expect cheaper and smoother payment solutions in the future. But this development also raises a number of questions about competition. For example, it may become difficult for a user to change payment service provider if the service is so smooth that the user does not even know which company is behind it. There are also questions with regard to privacy protection and to the safety and robustness of the payment system. It may also become more difficult to promote safety on the payment market if much of the infrastructure is located abroad and run by players with their headquarters in another country.