trending
The Central Bank of Iceland is preparing new payments infrastructure that would allow banks and payment service providers to offer account-to-account payments for goods and services, as the country seeks to reduce its dependence on card networks and strengthen financial resilience.
Iceland’s Domestic A2A Payments Infrastructure
Tómas Brynjólfsson, deputy governor for financial stability, said the central bank is in the final stages of preparing a tender for infrastructure supporting domestic instant credit transfers.
The proposed scheme would provide shared technical standards, interfaces and rules, while leaving customer-facing services to banks and payment providers.
Consumers would be able to pay directly from their bank accounts at the point of sale and online, with providers competing on functionality, pricing and user experience.
Card Dependence Has Become a Resilience Concern
Iceland is one of Europe’s most highly digitised payments markets, but that sophistication has also created concentration risk.
Payments for goods and services are made almost entirely through Visa and Mastercard, while cash use is very low and widely adopted A2A services have not emerged to the same extent as in some neighbouring Nordic markets.
Brynjólfsson argued that domestic debit rails, which proved important during the global financial crisis, have gradually given way to foreign infrastructure.
For the central bank, the issue is not replacing international networks but ensuring there are alternative payment routes if critical services are disrupted.
TIPS Provides the International Component
The domestic A2A initiative sits alongside Iceland’s planned participation in the Eurosystem’s TARGET Instant Payment Settlement service.
The Central Bank of Iceland is targeting technical readiness for TIPS in the second half of 2028, although no final go-live date has been set.
Brynjólfsson described TIPS as a form of “international shelter”, allowing instant payments in Icelandic krónur to settle on shared European infrastructure without requiring Iceland to replicate the same scale and operational capability domestically.
The combination of TIPS and a domestic A2A scheme is intended to give Iceland both international integration and greater local resilience.
Central Bank Builds the Foundation, Market Provides the Services
The strategy rests on three principles: maintaining multiple viable payment routes, treating international integration and domestic capability as complementary, and limiting the central bank’s role to trusted common infrastructure.
Banks and payment firms would then compete in the services built on top.
That approach reflects a broader European shift in thinking about payment sovereignty.
For Iceland, sovereignty is not about withdrawing from global payments infrastructure. It is about ensuring that international connectivity does not become a single point of failure, while creating enough domestic capability to preserve competition, continuity and choice.
Comments