On October 26, 2022, the European Commission adopted legislation it anticipates will make euro based instant payments more accessible in the EU through affordable, secure, and uninterrupted processing. The legislation, which is an amendment to the 2012 Regulation on the Single Euro Payments Regulation (SEPA), applies to all citizens and businesses in the EU and EEA countries that hold a bank account. The speed and ease of instant payments “help to significantly improve cash flow, and bring cost savings for businesses, especially for SMEs, including retailers”, with payments processing at anytime within ten seconds. According the press release from the Commission, only 11% of EU euro credit transfers were made using instant payments at the beginning of 2022, and the Commission hopes to increase that percentage through SEPA. The legislation is part of a commitment made through the Commission's 2020 Retail Payments Strategy, to improve instant payments.
SEPA is comprised of four requirements:
- “Making instant euro payments universally available, with an obligation on EU payment service providers that already offer credit transfers in euro 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 in euro 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 (IBAN) and the name of the beneficiary provided by the payer in order 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.”
More information on the SEPA legislation is available here.