27 October 2022

Finextra: Industry association pushes back on EC instant payments timeline

Industry association Payments Europe has raised concerns about the EC's plan for the mandatory provision of instant credit transfers in euros, arguing that the tight timeframe could "endanger the safety and security" of transactions.

The EC today confirmed that it is planning to make instant payments in euros available to all citizens and businesses holding a bank account in the EU and in EEA countries. The proposal aims to ensure that instant payments in euro are affordable and secure, boosting convenience for consumers while improving cash flow and ensuring cost savings for businesses.

Mairead McGuinness, commissioner for financial services, financial stability and Capital Markets Union, says: "Moving from “next day” transfers to “ten seconds” transfers is seismic and comparable to the move from mail to e-mail. Yet today, nearly nine out of ten credit transfers in euro are still processed as traditional ‘slow' transfers.

"There is no reason why many citizens and businesses in the EU are not able to send and receive money immediately, the technology to provide for instant payments has been in place since 2017.

"This facility to send and receive money in seconds is particularly important at a time when bills for households and SMEs are increasing and every cent counts. This initiative will directly benefit EU citizens and businesses."

Under the proposal, PSPs in the euro area that already offer credit transfers in euros will have six months to also offer their instant version for receiving and 12 months for sending.

However, Payments Europe, while welcoming the commission's efforts on instant payments, says that the six month timeframe is "too narrow and could endanger the safety and security of transactions".

In contrast, the Open Finance Association has offered full-throated support for the plans, with chair Nilixa Devlukia saying: "We are very encouraged to read the Commission’s proposal, which understands that instant payments must be available to every European. They cannot be a premium feature, offered at a high cost to only a small number of consumers, as they are today."

The European trade association of bank-independent Third Party Providers also hailed the proposal, particularly its insistence that that the price charged for instant payments in euro does not exceed the price charged for traditional, non-instant credit transfers.

Says the association: "This is crucial to ensure that the true benefits of instant payments can be made available to all EU consumers."

Tom Greenwood, CEO and founder of global instant payments gateway Volt believes the rule change will be a boon to the open banking industry. "Until today only circa 50% of banks in the EU have implemented instant payments (via SEPA Instant). This leaves the other 50% opting out of instant payments, and creates significant barriers to the development and adoption of open banking, to the detriment of consumers and businesses.

"This is all now set to change, with tremendous impact for open banking payments adoption, unlocking new use cases for account-to-account payments, including in physical in-store retail settings. By mandating instant payments, the biggest blockers to open banking payments becoming mainstream are instantly solved."

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