European Commission proposes law mandating instant payments in euros

By Gloria Methri

The European Commission has adopted a legislative proposal to make instant payments in euro available to all citizens and businesses holding a bank account in the EU and in EEA countries. Under the new rule, banks in the euro zone would be required to provide ‘instant payment’ option to customers 24/7.

The proposal aims to ensure that instant payments in euro are affordable, secure, and processed without hindrance across the European Union.

Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said, “Instant payments are fast becoming the norm in many countries. They should be accessible to everyone in Europe too, so that we stay globally competitive and make the most of the innovation opportunities offered by the digital age.”

The EU wants to modernise payments to ensure hassle-free transfers from one account to another in seconds, at any time of the day, unlike the existing card payments system and direct deposits which take up to several business days.

Mairead McGuinness, Commissioner for financial services, financial stability and Capital Markets Union, said, “Moving from ‘next day’ transfers to ‘ten seconds’ transfers are seismic and comparable to the move from mail to e-mail. Yet today, nearly 9 out of 10 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.”

Requirements for instant payments

• Making instant euro payments universally available, with an obligation on EU payment service providers that already offer credit transfers to offer also their instant version within a defined period.
• Making instant euro payments affordable, with an obligation on payment service providers to ensure that the price charged for instant payments does not exceed the price charged for traditional, non-instant credit transfers in euro.
• Increasing trust in instant payments, with an obligation on providers to verify the match between the bank account number and the name of the beneficiary to alert the payer of a possible mistake or fraud before the payment is made.
• Removing friction in the processing of instant euro payments while preserving the effectiveness of screening of persons that are subject to EU sanctions, through a procedure whereby payment service providers will verify at least daily their clients against EU sanctions lists, instead of screening all transactions one by one.