Iceland Central Bank Outlines Domestic Account-to-Account Payment Plan

The Central Bank of Iceland outlined a proposed account-to-account payment system for retail purchases and transfers, adding a potential option in a country where card payments dominate and cash use is very low.

The service would let customers pay directly from bank accounts in stores, on websites and in person-to-person transfers. Iceland does not have a widely used account-to-account retail payment option. The proposal also addresses reliance on international card networks and continuous connectivity.

Under the proposed model, the Central Bank would provide shared infrastructure, operating standards and settlement. Banks and payment firms would build customer-facing apps and merchant services. Recipients would get confirmation when a payment is made.

“For a small, highly digital economy – such as Iceland – payment sovereignty does not mean self-sufficiency,” said Tómas Brynjólfsson, Deputy Governor for Financial Stability at the Central Bank of Iceland. He delivered the remarks at the Money Live Nordic Banking conference in Copenhagen on Oct. 30.

The domestic retail proposal is separate from Iceland’s participation in the Eurosystem’s TARGET Instant Payment Settlement (TIPS) system. The Central Bank of Iceland and the European Central Bank signed an agreement June 24, 2026, for Iceland to join TIPS. The system would support instant Icelandic króna payments settled in central bank money.

Iceland’s TIPS participation has a readiness target in the second half of 2028, and no final go-live date has been set. That target applies to TIPS; no launch date has been announced for the proposed domestic retail system.