“The instant payments regulation will allow people to transfer money within ten seconds at any time of the day, including outside business hours,” stated the European Council on Tuesday, announcing the new directive on instant euro payments across the EU and in EEA countries. Photo: Shutterstock

“The instant payments regulation will allow people to transfer money within ten seconds at any time of the day, including outside business hours,” stated the European Council on Tuesday, announcing the new directive on instant euro payments across the EU and in EEA countries. Photo: Shutterstock

The European Council adopted a new regulation on Tuesday that introduces enhanced security measures for instant payments and is designed to improve cash flow mobility and innovation in financial services. This includes enabling intra-EU transfers to take place within 10 seconds.

In a move to enhance the efficiency and autonomy of the European economic and financial sectors, the European Council adopted a regulation that mandates the availability of instant payments in euro across the European Union and European Economic Area countries. Aimed at consumers and businesses alike, the regulation is expected to mitigate the dependency on financial institutions and infrastructures outside the EU, the council in a press release on Tuesday 27 February.

The regulation introduces the provision for instant transfers of money, allowing transactions to be completed within 10 seconds at any time of the day, including outside of traditional business hours. This facility is not limited to domestic transfers but extends to cross-border payments within EU member states, taking into account the specific needs of entities in non-euro areas.

Under the new regulatory framework, banks and other payment service providers that offer standard credit transfers in euro will now be obligated to also provide the option for instant payments in euro. The regulation stipulates that any fees associated with instant payments should not exceed those applied to standard credit transfers, ensuring fairness and accessibility for users.

A phased implementation approach has been outlined, with a quicker transition period for euro area countries and a more extended adjustment period for non-euro areas. This consideration acknowledges the varying capacities of regions to adapt to the new requirements.

Furthermore, the regulation enhances the operational framework for payment and e-money institutions (PIEMIs) by modifying the settlement finality directive. This adjustment ensures that PIEMIs are included in the mandate to offer instant credit transfer services post-transition, with specific safeguards in place to prevent additional risks to the payment system.

An essential feature of the regulation is the enhancement of security measures for instant payment transactions. Providers will be required to verify the match between the beneficiary’s international bank account number (IBAN) and name, aiming to alert payers of potential errors or fraudulent activities before the completion of a transaction. This verification process will also be applicable to regular transfer services.

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