The Future of Instant Payments in the EU

The new EU Instant Payments regulations, issued by the European Parliament in February 2024, have created a wide-ranging set of mandatory drivers for change across the financial services industry within European Union member states, and possibly beyond. These regulations, applicable to all Payment Service Providers (PSPs) across 20 Eurozone countries and 7 non-Euro member states, mandate the facilitation of instant payments for everyone, anywhere, anytime.

The main elements of the new regulations are:

  • Processing window commitment – 10-second rule, initial timestamp at order intake

  • Universal access – 24×7, across all channels

  • Reachability – must be able to send and receive to and from any account (Eurozone only)

  • Bulk files – ability to process each transaction in a bulk payment file through the instant service  

  • Fee transparency & alignment – Instant payments must not cost more than standard domestic credit transfers

  • IBAN (& LEI) name check – validation of beneficiary across all channels prior to processing

  • Sanctions screening – must be performed but can be deferred and carried out once per day

Whilst compliance is mandatory for all member states, there’s a phased implementation plan, with PSPs within the Eurozone taking the initial lead. 

Expected Timetable

Law officially enacted end of February 2024  

For operations within the Eurozone 

– PSPs must receive support within 9 months (expected deadline: January 2025)

– PSPs must support send within 18 months (expected deadline: October 2025)  

– EMIs must support Receive and Send within 36 months (expected deadline: April 2027)

For operations in the EU outside the Eurozone 

– PSPs must support receive within 33 months (expected deadline: January 2027

– PSPs must support send within 39 months (expected deadline: July 2027)

– EMIs must support receive in 36 months (expected deadline: April 2027)

– EMIs must support send in 39 months (expected deadline: July 2027)

The primary objective of the EU parliament is to strengthen and improve payment services for individuals and businesses throughout the EU, in line with the broader vision for inclusive and efficient financial systems across member states. In practical terms, these new regulations will drive a massive shift in volumes from the existing SEPA Credit Transfer service rails to the instant payment rails. This shift in volume flows may be through support for specific Instant services in various EU domestic markets or via the pan-European TIPS and RT1 services from the ECB and EBA respectively. 

How will this major shift in volumes to Instant impact the market?

Acceleration of the move to the Cloud:

Many PSPs will need to assess whether their current environment is fit-for-purpose i.e. can it support the performance metrics required by the large increases in volumes, the need to run 24×7, and the calling of new services including AI-enabled processing? The obvious response will be large-scale migrations of infrastructures to the cloud, and assessing if existing solutions can make that move to the cloud successfully.

Drives opportunity for strategic refresh across all payment rails:

To support the new regulations, organizations need to update their processing environments beyond just instant payment rails, as the regulations also demand that non-instant payments support the new services.

Many institutions are operating on platforms established over a decade ago, raising concerns about their suitability for handling the new services or the ability to support modern customer engagement tools. Thus, this necessary change, driven by new EU regulations, presents an opportunity for organizations to address long-running issues in various aspects of their payment operations, including product setup, time to market, customer engagement, intelligent routing, etc. Hence, a strategic refresh across all EU payment rails.

What can Temenos do to help? 

Temenos can rapidly transform and elevate the payment processing capabilities of Banks, PSPs, and EMIs in Europe to enable them to successfully:

  1. Support Euro instant payment processing and clearings including the new EU regulations
  2. Support the refresh of all processing and management of EU-based payment services including SEPA Credit Transfers, SEPA Direct Debits, TARGET2

Depending on the needs of your business, you can decide to specifically address your instant payments challenges and/or leverage the Temenos cloud-native, API-first platform to scale across your entire Euro and cross-border payments processing needs.

Customers can choose to implement Temenos payments, with any core banking solution, either:

  • On-premise
  • In the Cloud
  • SaaS-based service 

The following highlights key aspects of our offering:

  1. Support for instant payment services managing timeouts, notifications, and exceptions
  2. Configurable API order intake, automated tracking, dashboard management, fees & charges, reporting, etc.
  3. Support for the pan-European TIPS and RT1 services, but also specific domestic instant payment clearing services including Equens and Iberclear.
  4. Support for updated 2024 EU Instant Payment regulations plus continual regulatory updates for ongoing compliance
  5. Built on our market leading, award winning technology platform, cloud native, micoservices enabled, secure data management, active data streaming, etc.
  6. Packaged for rapid implementation and easy integration into your environment
  7. Available as a highly scalable, configurable, 24×7 service
  8. Ability to enhance and extend the solution to meet your organisation’s particular payment needs
  9. Ability to leverage integrated sanctions screening and AML services
  10. Ability to expand to cover additional non-instant payment rails e.g. SEPA credit transfer, SEPA direct debit, Target2, SWIFT etc.
  11. Ability to expand to support additional banking services, especially those related to payments processing such as channels, account servicing, treasury, Liquidity management

Please reach out to Temenos to hear more about our award winning, and proven, instant payments solution to find out how we can help you through this time of change and opportunity to grow your business.