Instant payments are a relatively new type of credit transfer responding to the needs of a progressively digitalized society and are used increasingly worldwide. They allow funds to be transferred in a matter of seconds, at any time, day or night, and any day of the year.
On 26 October 2022, the European Commission published its new legislative proposal on instant payments, seeking to enable citizens and businesses holding a bank account in an EU and/or EEA country, to send and receive euros in real-time within only 10 seconds at any given day and time. The Commission proposes that all payment services providers (with very targeted exceptions) offering credit transfers in EUR must offer instant payments in EUR to all their customers, and the charges for instant payments in EUR must be equal to or lower than the charges for non-instant EUR credit transfers. Additionally, all providers of instant payments in EUR must follow a harmonized procedure for sanctions screening, based on daily checks of their clients against EU sanctions lists.
Both citizens and businesses benefit from instant payments. On one hand, citizens can avoid late payment penalties as funds are transferred in a few seconds and can receive funds immediately in case of an emergency when needed. On the other hand, businesses, especially SMEs, can be more in control of their cash flow, by receiving the funds that they are owed immediately when they sell goods and services. Furthermore, instant payments are also a powerful driver of competition and innovation, notably when combined with open banking (i.e. allowing consumers to share their payment data with third-party providers safely and securely to avail of new payment services). EUR credit transfers are regulated by the Single Euro Payments Area (SEPA) Regulation. Since instant payments represent a new category of credit transfers in EUR, the current proposal aims to amend the SEPA Regulation by introducing additional requirements reflecting the specific characteristics of EUR instant payments.
The Commission proposal still needs to be adopted by the European Parliament and the Council of the European Union. The obligations set out in this legislative proposal will be introduced in steps, allowing payment service providers to spread their internal resources over a longer period and thus optimize their implementation costs. The obligation to offer the service of receiving EUR instant payments will apply 6 months after the entry into force of the legislation, followed by the obligation to offer the service of sending EUR instant payments which will apply 12 months after the entry into force of the legislation for payment service providers located in Euro Area Member States. For non-Euro Area Member States (e.g. Hungary) it is proposed that all the respective obligations to such providers shall apply 24 months later than the dates that apply to providers located in the Member States whose currency is euro.