FRASCATI, Italy (Reuters) - The European Central Bank launched on Friday a new system aimed at letting banks settle payments instantly across Europe, helping them to compete with PayPal and other global tech giants.

The PayPal and Androin Pay apps are seen on a mobile phone in this illustration photo October 16, 2017. REUTERS/Thomas White/Illustration

Developed in just over a year, the ECB’s TARGET Instant Payment Settlement (TIPS) system will let people and companies in Europe transfer euros to each other within seconds and regardless of the opening hours of their local bank.

U.S. firms PayPal, Google, Facebook and Amazon, and China’s Alibaba and Tencent currently dominate such services in Europe.

This has worried European policymakers in recent months following a string of cyber attacks on financial infrastructure and fractious economic and diplomatic ties with U.S. President Donald Trump.

So far, however, just eight mostly medium- or small-sized banks from Spain, Germany and France have signed up.

“We need to address the reasons for the scarcity of major European players in the payments market,” ECB director Yves Mersch said unveiling TIPS in Frascati, Italy. “If there is a lack of investment capacity...we should not shy away from pooling resources and volumes and creating bigger players.”

A spokesman for PayPal said the firm welcomed TIPS and called for “more collaboration across the payments industry”.

Similar ECB efforts have not always gone well.

Its platform for settling financial transactions has not reached the expected volumes, forcing the central bank to raise fees by a half.

The first payment via TIPS took place on Friday between a customer of Spain’s CaixaBank and one of French bank Natixis, the ECB said.

Spain’s BBVA is the only banking giant to have joined so far. The other participants are Spain’s Abanca Corporación Bancaria, Banco de Crédito Social Cooperativo and Caja Laboral Popular Cooperativa de Crédito, and Germany’s Berlin Hyp and Teambank.

Payments take 10 seconds or less to process and cost the payment provider a fifth of a euro cent, or 0.002 euro.

TIPS is open only to providers that have an account at a central bank connected to the euro zone’s TARGET 2 network, meaning it is effectively restricted to European Union banks.

It will settle transactions only in euros at first, but the ECB said it can support other currencies too if there is demand.

The platform was developed by the Banca d’Italia - in cooperation with the central banks of Germany, France and Spain - which is now also managing it.