Instant Payments Revolution Is Here: The New Standard Across Europe for the Benefit of Consumers and Businesses !

Pelican AI welcomes the endorsement of the Instant Payments Regulation, widely adopted by the plenary of the European Parliament. This piece of legislation aims to set an obligation on payment service providers to offer instant payments (no more than 10 seconds from approval of transfer in euros in the whole EU.

Thus, the provision is also binding for European countries outside the Eurozone, paving the way for a truly interconnected European financial landscape at the service of consumers and businesses.

In an era of digital transformation, instant credit transfers stand as a beacon of efficiency and convenience, paving the way for a seamless and interconnected European financial landscape. Their swift execution and accessibility across borders empower individuals and businesses to conduct transactions with unparalleled speed and flexibility, fostering a more integrated and dynamic EU economy.

Under the new regulation, payment service providers, including banks and saving banks, must also offer real-time transfers without charging any higher fees than traditional credit transfers. Additionally, there will be no limitation to the number of instant payments that a user can request on any accredited payment platform.

Likewise, the adopted text lays down screening requirements on payment service providers. The providers are therefore obliged to verify whether any of their users are listed persons or bodies in order to avoid transferring money from or to individuals or entities under sanction regimes or terrorist organisations. 

The recent implementation of instant payments regulations brings both challenges and opportunities for banks across the globe. While the aim is to improve the overall payment experience for consumers and businesses, banks need to adapt their operations and strategies to remain competitive in this evolving landscape.

Let's delve into the key impacts this regulation will have on banks.

What is needed:

The instant payments regulation would require a number of initiatives from the banks such as:

• Technology Investment: Upgrading existing infrastructure and integrating new systems to handle 24/7, real-time processing requires significant investment. This includes building robust fraud detection and risk management mechanisms to operate within the shorter transaction window.
• Operational Efficiency: Banks must streamline internal processes for quicker settlement and efficient liquidity management. This involves automating tasks and optimizing workflows to handle the increased volume and speed of transactions.
• Cost Management: Implementing instant payments might impact traditional revenue streams from slower transfers. Banks need to find new ways to generate income, such as offering value-added services like merchant payments integration or financial management tools.
• Regulatory Compliance: Understanding and adhering to the new regulations, including stricter liability for account verification and customer screening, requires ongoing training and compliance monitoring.
  
  

Enforcement of this regulation

Enforcement of this regulation from March 2024 (expected) would mean:

Overall, the backed text contributes to strengthening the EU Single Market, making it easier, faster and cheaper for Europeans and businesses to trade across the Union, not leaving any EU country behind. Pelican AI offers integrated payments and compliance SaaS solutions for instant payments that cover all the regulation requirements, from sanctions screening to IBAN name checks to anti-fraud measures.

The Way Forward

While navigating the initial challenges is crucial, banks that embrace the opportunities presented by instant payments regulations stand to gain significant advantages. By investing in technology, streamlining operations, and exploring new business models, banks can position themselves as leaders in the evolving digital payments landscape. Additionally, collaborating with industry players and regulatory bodies will be key to building a secure, efficient, and inclusive instant payments ecosystem for the future.

Our next set of blogs on instant payments will delve deeper into these aspects…