The European Central Bank ("ECB") has announced a major policy change aimed at improving the efficiency and stability of the financial system. In an effort to enhance competition, innovation, and efficiency in the financial sector, the ECB has decided to grant non-bank payment service providers ("NB-PSPs") direct access to central bank-operated payment systems. This move marks a significant step toward a more open and integrated payments ecosystem, ensuring faster and more secure transactions across the euro area.
Expanding Access to Payment Systems
The decision, officially titled ECB/2025/2, aligns with Regulation (EU) 2024/886, which seeks to modernize the European payments landscape by facilitating instant credit transfers in euro and ensuring a competitive environment for all payment service providers. It sets out a framework under which NB, including also payment institutions and electronic money institutions, can gain direct access to Eurosystem payment infrastructure, such the Trans-European Automated Real-time Gross Settlement Express Transfer ("TARGET") system. Until now, only banks and other credit institutions had direct access to these systems. By extending participation to NB-PSPs, the ECB aims to foster greater competition and innovation in the financial ecosystem while maintaining robust risk controls. This new framework will come into effect on April 9, 2025, coinciding with the deadline for EU Member States to implement related legislative changes. Access to TARGET for eligible NB-PSPs will commence on June 16, 2025, following amendments to the ECB's TARGET participation guidelines.
Strict Compliance Requirements for NB-PSPs
Under the new framework, NB-PSPs will be required to meet stringent conditions to ensure their participation does not introduce financial stability risks. They must establish and maintain adequate security measures, demonstrate compliance with relevant EU regulations, and provide official confirmation from either their national regulatory authority or their own management that they meet the eligibility requirements. Additionally, each NB-PSP must submit annual compliance statements to the relevant Eurosystem central bank to maintain access.
A transition period has been set to allow for a smooth shift to the new system. NB-PSPs that are currently registered as indirect participants, including those using third-party intermediaries to access central bank-operated payment systems, must transition to direct participation by December 31, 2025. This period will allow affected institutions to complete the necessary administrative and technical adjustments, including security upgrades and connectivity testing with Eurosystem central banks.
Limits on Account Balances and Financial Penalties
To prevent excessive accumulation of liquidity and ensure that central bank accounts are used solely for settlement purposes, the ECB has also introduced maximum holding limits for NB-PSPs. The total balance on an NB-PSP's account at the end of any business day must not exceed twice the peak value of its outgoing cash transfer orders over the past 12 months. For newly established NB-PSPs, this limit will be based on estimated transaction volumes, with periodic recalculations conducted by the relevant Eurosystem central bank. Any institution exceeding its prescribed limit will be required to reduce its balance immediately, or at the latest by the following business day.
Failure to comply with these holding limits will result in financial penalties. NB-PSPs exceeding their permitted balances will be charged a penalty rate of 0.03% on the excess amount, along with an additional daily fine of €1,000. Repeated or significant violations may be considered material non-compliance, which could result in the termination of access to the payment system and further penalties of €1,000 per closed account. The ECB will review these compliance measures regularly, with the first evaluation scheduled one year after the said implementation.
No Safeguarding Accounts for NB-PSPs or Crypto Firms
One of the most notable provisions of the ECB's decision is the explicit prohibition on safeguarding accounts for NB-PSPs and crypto-asset service providers. While EU regulations allow NB-PSPs to hold customer funds in safeguarding accounts, the ECB has determined that central banks should not serve this function. Allowing NB-PSPs to deposit customer funds at central banks could disrupt the financial system by encouraging deposit outflows from commercial banks, potentially interfering with monetary policy transmission.
Similarly, the ECB has stated that it will not offer safeguarding accounts to crypto-asset service providers, ensuring a level playing field across the financial sector. Instead, such institutions will need to continue using traditional credit institutions for safeguarding funds, as required under Regulation (EU) 2023/1114.
Enhanced Transparency and Monitoring Measures
Accounts held by NB-PSPs in TARGET or other Eurosystem-operated payment systems will be restricted strictly to settlement purposes. The decision also establishes a monthly self-attestation reporting regime for NB-PSPs that participate in ancillary payment systems. These institutions will be required to submit detailed reports on their peak and average daily balances, as well as their settlement obligations, to the relevant Eurosystem central bank.
Alignment with EU Regulations and Implementation Timeline
The ECB's decision aligns with Regulation (EU) 2024/886, which seeks to modernize the European payments landscape by facilitating instant credit transfers in euro and ensuring a competitive environment for all payment service providers.
The new framework will come into effect on April 9, 2025, coinciding with the deadline for EU Member States to implement related legislative changes. Access to TARGET for eligible NB-PSPs will commence on June 16, 2025, following amendments to the ECB's TARGET participation guidelines.
Conclusion:
By granting non-bank payment providers direct access to the Eurosystem's payment infrastructure, the ECB seeks to enhance the speed, security, and efficiency of euro-area payments while upholding robust risk controls. This move paves the way for a more open, competitive, and resilient financial ecosystem—one that fosters innovation while safeguarding the integrity and stability of Europe's payment systems. Over time, it could also encourage greater financial inclusion and cross-border payment harmonization across the region.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
