The Council and the European Parliament have reached a political agreement on the instant payments proposal, which will improve the availability of instant payment options in euro to consumers and businesses in the EU and in EEA countries.

The new rules will improve the strategic autonomy of the European economic and financial sector as they will help reduce any excessive reliance on third-country financial institutions and infrastructures. Improving the possibilities to mobilize cash-flows will bring benefits for citizens and companies and allow for innovative added value services.

Instant payments allow people to transfer money within ten seconds at any time of the day, including outside business hours, not only within the same country but also to another EU member state. The provisional agreement takes into consideration particularities of non-euro area entities.

Under the provisionally agreed rules, payment service providers such as banks, which provide standard credit transfers in euro, will also be required to offer the service of sending and receiving instant payments in euro. The charges that apply (if any) must not be higher than the charges that apply for standard credit transfers.

The Council and Parliament agreed that the new rules will come into force after a transition period that will be faster in the euro area and longer in the non-euro area, who need more time to adjust.

The colegislators agreed to grant access for payment and e-money institutions (PIEMIs) to payment systems, by changing the settlement finality Directive (SFD). As a result, these entities will be covered by the obligation to offer the service of sending and receiving instant credit transfers, after a transitional period. The colegislators added appropriate safeguards to ensure that the access of PIEMIs to payment systems doesn’t carry additional risk to the system.

Under the new rules, instant payment providers will need to verify that the beneficiary’s IBAN and name match in order to alert the payer to possible mistakes or fraud before a transaction is made. This requirement will apply to regular transfers too.

The Council and Parliament included a review clause with a requirement for the Commission to present a report containing an evaluation of the development of credit charges.

Background

This initiative comes in the context of the completion of the Capital Markets Union. In March 2021 and April 2022 the Council adopted conclusions in which it highlighted the widespread use of instant payments and recalled the objective of developing competitive EU-wide market-based payment solutions.

On 26 October 2022 the Commission put forward a proposal for a regulation on instant credit transfers in euro. It amends and modernises the single euro payments area (SEPA) regulation of 2012 on standard credit transfers in euro by adding to it specific provisions for instant credit transfers in euro.

The aim of the draft regulation is to increase the uptake of euro instant credit transfers and to facilitate the access to such services for consumers and businesses in the Union. There will be the following requirements regarding euro instant payments:

• making instant euro payments universally available, with an obligation on EU payment service providers that already offer credit transfers in euro to offer also their instant version
• making instant euro payments affordable, with an obligation on payment service providers to ensure that the price charged for instant payments in euro does not exceed the price charged for traditional, non-instant credit transfers in euro
• increasing trust in credit transfers, with an obligation on providers to verify the match between the bank account number (IBAN) and the name of the beneficiary provided by the payer in order to alert the payer of a possible mistake or fraud before the payment is made
• removing friction in the processing of instant euro payments while preserving the effectiveness of screening of persons that are subject to EU sanctions, through a procedure whereby payment service providers will verify at least daily their clients against EU sanctions lists, instead of screening all transactions one by one

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