SEPA Instant Credit Transfers: Towards a new European standard?

Entered into force a year ago, IPR now requires all payment service providers in the Euro zone of the European Economic Area to offer SEPA instant credit transfers for incoming payments by January 2025 and for outgoing payments by October 2025 at the latest. This regulation thus reaffirms its objective of accelerating the adoption of SEPA instant credit transfers and aims for greater alignment with traditional SEPA credit transfers.

According to the European Central Bank's annual report from December 2024, the daily number of instant payments has increased by 72% in 2024 compared to 2023, although its adoption remains very heterogeneous across countries and client segments. The use of SEPA instant credit transfers is driven by individual clients in P2P (Peer to Peer) and C2B (Consumer to Business) transactions, while usage by B2B (Business to Business) companies remains timid.

Instant payments are therefore not yet the new norm in all European countries. So what will be the keys to broader adoption by consumers, and particularly by companies, and what obstacles still need to be overcome?

The stakes around the Regulation on Instant Payments (IPR)

The aim of the new European regulation is to accelerate the adoption of SEPA instant credit transfers at the European market level by facilitating their accessibility and establishing this new standard as a means of conducting fast, secure, and cost-effective transactions. To promote widespread adoption, it is essential to reduce friction. This is why the European Commission has integrated SEPA instant credit transfers into the SEPA regulation, ensuring that they are processed under the same conditions and with the same services as traditional SEPA credit transfers.

By standardising SEPA instant credit transfers, the European Commission aims to:

1. Strengthen consumer trust: By enhancing security and fraud prevention through a feature that verifies the match between the IBAN¹  and the beneficiary's name called "Verification Of Payee" (VoP).
2. Encourage competition: By providing standardisation to promote the emergence of new payment solutions in-store or online.
3. Improve cross-border transactions: By streamlining cross-border transactions within the Eurozone, and even the European Economic Area, in line with the European Union's objectives for a more integrated financial market.
4. Support financial inclusion: By making instant payments accessible under the same conditions as traditional SEPA credit transfers to help include more consumers and businesses in the digital economy.

This regulatory approach to instant payments is thus a strategic initiative aimed at optimising payment processes, enhancing the overall efficiency of the payment landscape in Europe, fostering the emergence of new solutions, and regaining sovereignty over our payments.

The evolution of consumer and business expectations

There is indeed a fundamental shift in customer expectations. Consumers, accustomed to the instant gratification of digital services, expect the same immediacy in their financial transactions. This expectation is particularly pronounced in interactions between businesses and consumers (B2C), where instant payments can significantly enhance client satisfaction. Companies that can offer instant refunds to their customers enable greater loyalty and a distinct competitive advantage.

For some businesses, instant payment is a key element of their business model. The purchase of used vehicles is more efficient when payment to the seller is immediate. Under certain conditions, the payment of an insurance premium within seconds can be a differentiating marketing element.

Although the new regulation may utimately lead to increased adoption of SEPA instant credit transfers, B2B payments are not expected to grow as quickly as P2P and C2B payments. This is partly due to the perceived lack of added value for businesses, which is often cited as a barrier to the development of instant credit transfers.

The payment terms practised between companies allow for advance planning of payments. While individuals see a clear benefit in being able to settle a bill via SEPA instant credit transfer in the evening after work, billing or treasury management teams in companies are only present at their desks during business hours. Some clients are beginning to develop automated processing routines, but these are currently isolated examples that apply to SEPA instant credit transfers received in the early evening.

At the same time, we observe the emergence of specific needs from businesses that may involve large amounts for SEPA instant credit transfers. This includes the payment for a merger and acquisition transaction or urgent settlement, after the cut-off for other types of transfers, to expedite the dispatch of a delivery.

To go beyond these occasional use cases, businesses will need to work closely with software providers to develop new solutions tailored to their needs.

Challenges around liquidity for banks

Today, there is an asymmetry between, on the one hand, the availability of SEPA instant credit transfers for users in banks 24/7/365 and, on the other hand, interbank liquidity management systems that still experience daily closure periods, weekends, and annual closure days. This new regulation on SEPA instant credit transfers undoubtedly marks a starting point for evolving the remuneration and regulation systems of interbank liquidity.

Risks of Fraud to be rigorously assessed

The regulation introduces a new challenge in the fight against fraud, imposing increased vigilance on financial actors regarding the management of thresholds. The accuracy and consistency of information related to beneficiaries is also a key element. This vigilance will intensify for transactions processed in real-time, especially with increasing volumes. Given that transfers must be completed within a maximum of 10 seconds, 24 hours a day, 7 days a week, and 365 days a year, the stakes in the fight against fraud are heightened. Banks already have robust systems and precise knowledge of their clients that allow them to identify risks. They will need to continue investing to strengthen their measures.

Conclusion

The new European regulation on SEPA instant credit transfers is an opportunity to reinforce our sovereignty and promote this payment method among individuals to subsequently broaden its use.

However, we are at the starting point of a movement that is expected to accelerate in the coming years. Banks are already considering offering businesses new solutions based on SEPA instant credit transfers to receive payments from their individual or corporate clients. The banking system will need to evolve to continuously adapt its fraud prevention measures and align the balancing and remuneration methods for bank liquidity.

Companies and banks will need to work with their software provider partners to define new payment standards and probably also new treasury management standards.

Numerous projects are underway, and the upcoming period, approached with enthusiasm, will require stakeholders in the ecosystem—companies, software providers and banks—to cooperate in developing connected and automated solutions.

This new regulation on SEPA instant credit transfers thus represents a tremendous impetus for the entire ecosystem to transform and adopt a functioning model that could gradually trend towards real-time operations.

¹International Bank Account Number