Europe’s financial sector is entering a new phase this week as the EU’s Instant Payments Regulation reaches its final implementation deadline. From October 9, banks and payment service providers (PSPs) across the bloc must be able to process and send instant euro payments around the clock and for virtually any amount.

From Ten Seconds to 24/7 Obligations

The journey began over a decade ago with the SEPA Instant Credit Transfer (SCT Inst) scheme, which allowed euro transfers in ten seconds but capped them at €100,000. While it proved the concept of instant payments, the limit left corporations constrained—especially when handling payroll, taxes, or supplier payments.

That restriction is now history. Under the new regulation, banks and PSPs must offer real-time euro transfers up to an eye-watering theoretical limit of €999,999,999.99. The European Parliament and Council’s aim is clear: make instant payments the standard, not the exception, across the bloc.

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The regulation’s rollout has been split into two phases. The first, effective January 9, 2025, required all EU and EEA PSPs to receive instant payments. The second, due this week, mandates that they must also send them.

Compliance isn’t just about speed. The law demands parity in pricing with traditional transfers, strict anti-fraud protocols, and the introduction of Verification of Payee (VoP) systems. These services alert users if the recipient’s name doesn’t match the account, a safeguard against authorized push payment (APP) fraud.

Yet, industry insiders warn that the timing couldn’t be tighter. The European Payments Council only published its directory of VoP partners in May, leaving many vendors scrambling to test and integrate the technology.

The Liquidity Tightrope

However, the removal of the €100k ceiling introduces a new risk—liquidity management. Banks must now operate on a continuous cycle, ensuring funds are available even at midnight on weekends. The move transforms treasury operations from daily batch cycles into an unbroken, real-time flow.

The European Banking Authority’s Annick Moes described the coming weeks as a potential “nightmare before Halloween,” warning that PSPs must not only meet compliance demands but also “prepare for operational shocks that come with 24/7 settlement.”

According to the regulator, instant payments remove the window that banks once had to screen transactions. Fraud teams now have five seconds to verify a payee before a payment clears.

Under the regulation, PSPs must also conduct daily sanctions checks to ensure that none of their clients are on restricted lists, a move designed to maintain security without slowing down transfers.

By standardizing instant payments across the EU, regulators hope to boost cross-border commerce, increase competition, and reduce costs. Corporations, meanwhile, are adapting their treasury systems to seize the opportunity.

Source: Finance Magnates