EU Council Adopts Regulation for Instant Euro Payments

The Council of the European Union has taken a significant step forward by adopting a groundbreaking regulation that promises to democratise instant payments in the euro currency across all EU and EEA member states. This landmark decision aims to bolster Europe’s economic and financial sovereignty by reducing dependency on third-country financial entities and fostering a more resilient payments infrastructure within the region.

The new regulation, driven by the imperative to fortify Europe’s strategic autonomy, will facilitate seamless instant payments for both consumers and businesses, thereby mitigating reliance on global giants such as Visa and Mastercard. By empowering domestic and cross-border transactions to be completed within ten seconds, irrespective of business hours, the regulation heralds a new era of efficiency and convenience for European citizens and enterprises alike.

One of the key highlights of the regulation is its mandate for payment service providers, including banks, to integrate instant payments into their standard euro credit transfers, ensuring equitable access to fast and secure transaction capabilities. Importantly, these instant transfers will incur fees on par with traditional credit transfers, preventing any undue financial burden on users.

Laurent Descout, Founder and CEO of Neo, lauded the regulatory initiative, emphasising its potential to optimise liquidity management for merchants and corporates. He underscored the benefits of reduced settlement lags and enhanced cash flow efficiency, heralding a paradigm shift in treasury operations and business scalability.

The regulation also extends regulatory coverage to payment and e-money institutions (PIEMIs), granting them access to payment systems and mandating their participation in instant credit transfers after a transitional phase. While this move promises to democratise access to instant payments, the EU Council has implemented stringent safeguards to mitigate potential risks to the financial system.

Furthermore, instant payment providers will be mandated to verify beneficiary information, enhancing fraud prevention measures and ensuring transaction accuracy. This requirement underscores the EU’s commitment to safeguarding the integrity and security of its payment ecosystem.

Kjeld Herreman, Head of Strategy Advisory at RedCompass Labs, hailed the regulation as a significant milestone but cautioned that its swift implementation poses formidable challenges for banks. Addressing technical complexities and scaling digital capabilities within a compressed timeline will necessitate collaborative efforts among financial institutions and service providers.

Despite the technical hurdles ahead, the regulation heralds a transformative shift in Europe’s payments landscape, promising greater accessibility, efficiency, and security in financial transactions. As the continent navigates this paradigm shift, collaboration and innovation will be pivotal in realising the full potential of instant euro payments, heralding a new era of financial empowerment and resilience.

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