Instant euro credit transfers: Commission proposes new Regulation
As part of its Retail Payments Strategy, the Commission has proposed a regulation that will enable the making of instant payments (IPs) in euro.
While the SEPA Regulation and existing payment settlement systems provide a framework within which euro IPs can be made, only 11% of euro credit transfers in the EU were by way of IP at the end of 2021.
The proposal will amend the SEPA Regulation, and comprises four key elements with staggered implementation dates.
Providing euro IPs
- The requirement to offer euro IPs will only apply to payment service providers (PSPs) that already offer euro credit transfer services.
- Payment institutions and electronic money institutions will not be required to offer euro IPs, but may elect to do so.
- Customer interfaces whereby customers/payment service users (PSUs) can already submit orders for euro credit transfers must be updated to allow those PSUs to submit orders for euro IPs.
- Euro-area PSPs must be able to receive euro IPs within 6 months of the proposed Regulation coming into force, and must be able to send euro IPs within 12 months of the proposed Regulation coming into force.
- Non-euro-area PSPs must be able to receive euro IPs within 30 months of the proposed Regulation coming into force, and must be able to send euro IPs within 36 months of the proposed Regulation coming into force.
In-scope PSPs will not be allowed to charge more for sending or receiving euro IPs than they charge for sending or receiving non-instant euro credit transfers at the moment. This restriction will apply to PSPs in the euro area 6 months after the proposed Regulation comes into force, and to PSPs outside the euro area 30 months after the proposed Regulation comes into force.
Regulation (EU) 2021/1230 (the Regulation on cross-border payments) will be amended to ensure that cross-border euro IPs executed by a PSP located in a non-euro area Member State cannot be priced at a higher level.
Verification of Payee Details
In-scope PSPs will have to provide a service to their PSUs whereby the PSP checks that the payee’s IBAN matches the payee’s name, and the PSP must tell the PSU if it detects a discrepancy before the order is finalised. The PSU can then decide whether to make the payment or not. PSPs will be able to charge a fee for providing this service, and PSUs will not be required to use the service.
This validation requirement will apply to PSPs in the euro area 12 months after the proposed Regulation comes into force, and to PSPs outside the euro area 36 months after the proposed Regulation comes into force.
PSPs that execute euro IPs will be required to verify, at least once each day, whether their customers are subject to EU sanctions (and immediately after any new sanctions are introduced, or existing sanctions amended). This would replace a requirement to screen on a transaction-by-transaction basis. If a PSP fails to do this and a euro IP is processed in breach of EU sanctions regulations, that PSP will be liable to the other PSP for any penalties imposed as a result of that breach. These provisions will apply 6 months after the proposed Regulation comes into force.
We will publish further updates as the proposed Regulation makes its way through the EU legislative process.
“Moving from “next day” transfers to “ten seconds” transfers is seismic and comparable to the move from mail to e-mail. Yet today, nearly nine out of ten credit transfers in euro are still processed as traditional ‘slow’ transfers…This facility to send and receive money in seconds is particularly important at a time when bills for households and SMEs are increasing and every cent counts. This initiative will directly benefit EU citizens and businesses.”
Mairead McGuinness, Commissioner for financial services, financial stability and Capital Markets Union