The Instant Payments Regulation, , aims to accelerate the rollout of instant credit transfers (in euros) in Europe and limits charges for instant credit transfers so that they are not higher than the charges for regular credit transfers.
An instant credit transfer is “a credit transfer which is executed immediately, 24 hours a day, seven days a week,” explained Carole Schmidt, knowledge counsel at A&O Shearman, speaking at a conference on payments organised by Luxhub and A&O Shearman at the law firm’s office in Kirchberg on 23 April. Different deadlines are associated with various elements of the regulation, depending on whether the entity is a banking payment service provider (PSP) or an electronic money institution (EMI), for instance, as well as whether the entity is located inside or outside the eurozone.
Under the IPR, payment service providers need to offer instant credit transfers that mirror the the service offered for standard credit transfers, through the same initiation channels and without additional charges, Schmidt continued. That means users “must be able to give the orders using the same platform they use for standard credit transfers. If they’re allowed to give bulk orders for standard credit transfers, they should be able to do the same for instant credit transfers; if they can order recurring payment transactions as standard credit transfers, they should be able to do the same for instant credit transfers without additional charges.”
A second key obligation for payment service providers under the IPR is the sanctions screening obligation. “This might appear difficult to achieve in the 10-second delay which is granted to you, but [PSPs have to] run a check against their database of clients, at least on a daily basis, according to what is written in the regulation and clarified by the [European] Commission,” Schmidt said. In addition, euro area PSPs will need to offer payers a “verification of payee” service--free of charge--for both instant and standard credit transfers starting in October 2025.
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The European Banking Authority in February 2025 published its final draft of implementing technical standards (ITS) on reporting of data on charges for credit transfers and shares of rejected transfers. However, “as part of reducing the burden on the industry, and in response to comments received to the consultation, the draft final ITS postpone the deadline set in the amended SEPA Regulation for the first harmonised reporting by 12 months, to April 2026, and the subsequent reporting from the national competent authorities to the EBA and the European Commission to October 2026,” said the EBA. “The additional 12 months will provide sufficient time for the European Commission to adopt the EBA’s final draft ITS, and for the EBA to develop the taxonomy, datapoint model and validation rules, which the industry then needs to implement.”
Real-life example of implementation
Maria Kristensen, senior project manager at the Banque Internationale à Luxembourg, was one of the panellists during the conference and shared her perspective on implementing the instant payments regulation at the bank. The Banque Internationale à Luxembourg used a phased approach, starting first with instant payments “internally,” or between accounts of the bank itself, then moving to instant payments within Luxembourg and then across borders. “We could take that step-by-step approach to be confident that we knew how it was working,” she explained. But “the timelines are very short, so if you’re not already complying with instant payments, there’s a lot of work to do to be ready--and be ready by October.”
The Luxembourg Bankers’ Association is one of the national adherence support organisations (Naso) with the European Payments Council, noted Galina Miroshnichenko, payments & digital advisor at the ABBL. The ABBL and other Nasos are meant to provide a link with applicants who wish to adhere to an EPC-managed payment scheme and the European Payments Council itself, acting as the first point of contact for applicants as well as an overall facilitator in the adherence process.
Luxembourg on 4 April 2025 adopted a bill to implement the Instant Payments Regulation. This act sets out the conditions under which a payment institution or e-money institution can become a direct participant in a payment system, explained Schmidt. There is no obligation for an institution to be a direct participant; they can also be an indirect participant. Second, the act sets out sanctions regimes, meaning the sanction that the Financial Sector Supervisory Commission (CSSF) can impose upon supervised entities in case of breach of obligations. “As for other pieces of legislation, there is a sanction power for the CSSF, and it can go up to 10% of the net annual turnover on a consolidated basis if you are part of a group. So compliance is not an empty word.”