Regulations for real-time Euro money transfers pushed

In today’s fast-paced world, efficient and secure cross-border transactions have become essential for both individuals and businesses alike. To address the need for seamless, timely, and compliant European payments, the European Commission introduced a groundbreaking regulatory framework aimed at fostering universal access to instant euro payments.

Currently, while instant payments enable near real-time fund transfers, they represent just a small fraction of total euro transactions. Only about 11% of euro transfers are instant, and one out of every three EU Payment Service Providers (PSPs) fails to offer these services. Moreover, many payment accounts in the eurozone lack support for instant transfers, which can lead to significant delays and costs.

The European Commission estimated that the temporary lockup due to money transfer latency amounts to approximately €200 billion daily, representing a potential annual economic gain of up to €1.8 billion when unlocked.

On October 26th, 2022, the European Commission put forth a proposal for a regulation on instant credit transfers in euros, seeking to enhance affordability, security, and ubiquity of instant payments throughout Europe. This initiative builds upon existing regulations like the Single Euro Payments Area (SEPA) and the Cross-Border Payments Regulation, aiming to expand the reach of instant payments beyond the current limitations.

Under the proposed regulation, PSPs offering credit transfers in euros must extend their instant versions within a specified period, charging no more than what they currently charge for non-instant credit transfers in euros. Additionally, PSPs will be required to perform checks to confirm the accuracy of the beneficiary information and compliance with anti-sanction and anti-financial crime laws.

Parliament has taken steps towards finalizing the legislation, emphasizing several key points. Firstly, it ensures that PSPs cannot raise their fees to avoid complying with the requirement to charge no more for instant credit transfers than traditional ones. Secondly, it mandates that PSPs should provide verification of the match between the International Bank Account Number (IBAN) and the beneficiary name without additional charges, even for non-instant payments.

A provisional agreement was reached between the European Parliament and Council on November 7th, 2023, setting forth specific requirements for PSPs, including offering instant credit transfers, processing them within ten seconds, applying charges not higher than those for standard credit transfers, converting the transaction amount into euros if necessary, implementing robust and up-to-date fraud detection systems, preventing erroneous transfers, and combating criminal activities such as money laundering or terrorist financing.

Following a transition period, the new rules will also apply to EU countries outside the euro area, where accounts already offer euro transactions.

As of now, the European Parliament Committee on Economic and Monetary Affairs (ECON) has approved the agreed text, and the legislative body is set to vote on adoption during the February I plenary session.