On 19 March 2024, Regulation (EU) 2024/886 on instant credit transfers in euro has been published in the Official Journal of the European Union. The European Parliament and the Council adopted the Regulation in February 2024.

This Regulation will amend the Single Euro Payments Area Regulation (260/2012) (SEPA Migration Regulation) to make instant payments in euro available to all citizens and businesses holding a bank account in the EU and EEA countries. The Regulation also grants access for payment institutions and electronic money institutions 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. Lastly, the Regulation amends the Cross-Border Payments Regulation to ensure that charges applied to payers and payees for cross-border instant credit transfers in euro do not exceed the charges applied for cross-border non-instant credit transfers in euro.

The Regulation will enter into force on 8 April 2024.

So what?

The Regulation requires PSPs, who provide standard credit transfers in euro, to offer the service of sending and receiving instant payments in euro. The reforms introduced by this will apply to PSPs, with longer transition periods applying to PSPs located in member states that are not in the eurozone. PSPs located in the eurozone must comply with the requirement to offer instant payments when they already offer credit transfers by 9 January 2025 when receiving instant credit transfers and by 9 October 2025 when sending instant credit transfers. PSPs located in the EU but outside the eurozone must comply by 9 January 2027 and by 9 July 2027 respectively. 

Widespread system upgrades are likely to be required and roadmaps developed to implement instant payments and the underlying requirements. Under the relevant verification rules payer’s PSP would need to ensure whether all of the necessary conditions for processing the payment transaction are met, whether the necessary funds are available and whether the beneficiary’s IBAN and name match in order to alert the payer to possible mistakes or fraud before a transaction is made. The Regulation provides for pecuniary measures against the payer’s PSP who fail to comply with the verification requirements. Same measures also apply to payee’s PSP where they fail to comply with their obligations under those provisions in the Regulation. Under the Regulation, PSPs would also need to provide the payment service users with the functionalities to set payment limits on their instant credit transfers either on a daily or per transaction basis. There are changes to sanctions screening requirements, requiring them to be conducted daily on the entire customer base, rather than on a per transaction basis. 

PSPs impacted by the changes must take steps to adopt measures to comply with the requirements. This includes considering investment in technology and infrastructure to upgrade legacy systems, enabling the execution of instant payments 24/7/365 so that payments can reach the recipient within seconds. Additionally, it includes investing in fraud detection and prevention technologies to ensure instant payments are executed securely.