Navigating the EU's Instant Payments deadline: Countdown to compliance

Following the release of the legislative proposal by the Commission in October last year, intensive trilogue discussions and negotiations have been underway. As a founding member of both the European Digital Payments Industry Alliance (EDPIA) and the Open Finance Association (OFA), Worldline is delighted to have contributed to this process, actively participating in public consultations and policy exchanges with decision-makers. This agreement closes a critical chapter for the payments industry and simultaneously begins a new success story – instant payments will become mandatory for banks in the EU, and European citizens and companies will receive the benefits that instant payments provide.

A pivotal aspect of the regulation pertains to the amendment of the Settlement Finality Directive, and Worldline welcomes these changes. The Settlement Finality Directive excludes today payment and e-money institutions from directly accessing the designated payment systems, preventing firms from offering solutions that benefit all European businesses and consumers. With the amendment, Worldline, alongside other payment and e-money institutions, will gain direct access to the payment system infrastructure. This access will accelerate the adoption of instant payments as a retail payment method. As the leading European processor that facilitates instant payments since the introduction in 2017, Worldline looks forward to taking on a more significant role within the evolving landscape.

To ensure frictionless, secure instant payments for consumers, banks and merchants, the Commission has outlined four key pillars of the regulation:

1.     Mandatory uptake of instant payments in euro, as per the obligation of payment providers that offer regular credit transfers in euro to also offer their instant version within a defined period

2.     Affordability of instant payments in euro, as per the obligation on payment providers in not exceeding the price charged for a traditional, non-instant credit transfer in euro for instant payments in euro

3.     Increase of trust in instant payments with an obligation on payment providers to verify the match of IBAN with the name of the beneficiary as a measure to reduce fraud. This requirement will apply to regular transfers, too.

4.     Removing friction in the processing of instant payments in euro via daily sanctions screening for users as opposed to transaction screening

In the Eurozone, banks must be able to receive instant payments within 9 months of the entry into force of the regulation, with the pricing measures and entity-based sanction screening also to be in effect. Banks will have 18 months to ensure their systems can facilitate the sending of instant payments as well as support the IBAN name checking. For non-Euro banks, there is a longer timeline of 33 months to receive instant payments and 39 months to send instant payments also in conjunction with the aforementioned requirements. Non-bank Payment Service Providers (PSPs) will have 36 months to receive and send instant payments. Adhering to these compliance obligations within the stipulated time frame is essential to avoid penalties. The final version of the regulation is expected to be published in the Official Journal of the EU in the first half of 2024.

Beyond this key milestone establishing instant payments in the EU as the new normal for European citizens and corporates, the payment, an essential component of any type of contract or commitment between two counterparts, is becoming more than ever a commodity and a new means to create additional value. The fact that the real-time dimension will be mandatory for one of the most important credit-transfer-related schemes in the world signals the way forward. The present regulation and its successful implementation within the financial industry is a founding act to what will happen in global payments, starting with cross-border payments. Although more complex, cross-border payments will also become instant.

Worldline’s development roadmap aligns seamlessly with the regulation and the expected surge in transaction volumes. Worldline is currently the largest European processor of instant payments, with an average of over 2 million instant transactions processed daily. From payment initiation and channel solutions that directly benefit the end customer to back-office processing and clearing & settlement, Worldline has the unique capability to cover the whole value chain for instant payments or in combination for example with open banking.

Learn more about Instant Payments and Verification of Payee. Discover all of our solutions for Financial Institutions.

Read the original press releases:

Parliament: Agreement reached on more accessible instant payments in euros 
Council: Instant payments: Council and Parliament reach provisional agreement

Further questions?

For legislative and policy inquiries, please contact Emőke Péter, Head of European Public and Regulatory Affairs.

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