January 9 marks the deadline for all payment service providers (PSPs) in the eurozone to be able to receive instant payments, as mandated by the Instant Payments Regulation (IPR) adopted in March 2024. PSPs have until the end of the year to be able to send instant payments as well.
It’s the latest step in the effort to ensure instant payments are accessible to everyone in the EU. To fully comply with IPR, PSPs must integrate their systems with the SEPA Instant Credit Transfer scheme, ensuring that euro-denominated instant payments are received and that confirmation is sent to the payer’s PSP within 10 seconds.
To make instant payments accessible to the widest range of users, the charges for instant transactions cannot exceed those applied to other types of payments. Providers are also required to display transparent fee structures for users. The payment limit is capped at €100,000.
Compliance requires that PSPs must implement strong fraud detection mechanisms and comply with anti-money laundering (AML) regulations. PSPs are required to offer clients the ability to set a maximum amount for instant credit transfers in euros as an additional safety measure. If a customer still incurs financial loss due to fraud, they may seek compensation from the PSP.
Penalties for non-compliance can reach up to 1% of the financial institution’s annual gross revenue. EU countries that still use their own currency must adopt the IPR regulations by 2027.
Pushing for Growth
Instant payments now account for nearly 20% of all EU credit transfers, up from 0.08% in 2018, largely due to a series of initiatives by SEPA (Single Euro Payments Area) and the European Union Council.
Unlike the global payment service SWIFT, SEPA exists specifically for banking and transfers within Europe. SEPA payments can only be made in euros.
In October 2022, the European Commission proposed that any citizen holding a bank account in the European Economic Area should be able to make instant payments in euro. Last April, the European Union Council followed suit by adopting new rules requiring instant payments to be fully accessible.
The European Union Council’s guidelines mandate that customers must be able to transfer euro-denominated funds within 10 seconds at any time, even outside business hours, to any other EU member state. In addition to providing faster service for businesses and individuals, the initiative aims to help European payments companies compete on a more equal footing with Visa and Mastercard.