The Single Euro Payments Area (SEPA) Instant Payments Regulation (Regulation (EU) 2024/886) is set to revolutionise the European Payments landscape by enabling real-time electronic payments across the region. Jackie Hennessy and our Banking team explain below.

This initiative, established by the European Payments Council, aims to enhance the efficiency, speed, and accessibility of transactions in euro, allowing instant credit transfers between participating financial institutions in less than ten seconds, available 24/7, every calendar day of the year.

The SEPA Instant Payments Scheme, which launched in November 2017 as an optional scheme, has seen varied adoption across Member States. Currently, there is 62% coverage across financial institutions in the EU, but Ireland lags behind with only 5% coverage. To address this, the SEPA Instant Payments Regulation mandates all eligible institutions to support instant payments, with phased implementation deadlines starting from January 2025 for institutions within the Eurozone.

The regulation requires significant technical upgrades and operational changes from financial institutions to support instantaneous processing and settlement of transactions. This includes the ability to process high volume, low latency payments at all times, a shift from the traditional batch processing systems. The regulation also imposes stringent security and anti-fraud standards, including payee verification procedures and financial sanctions screening, to ensure compliance and protect transaction and user data.

The SEPA Instant Payments Regulation is a strategic response to the growing demand for instant payments driven by the digital economy and the rise of fintech solutions. It promises significant benefits for consumers, businesses, and the economy by facilitating quicker transactions, reducing costs, and enhancing liquidity management across Europe. However, it also presents challenges, including the potential for increased fraud and the need for robust compliance frameworks.

As we approach the implementation deadlines, it is crucial for Payment Service Providers (PSPs) to assess their operational readiness. Non-compliance could result in substantial penalties, increased regulatory scrutiny, and loss of market competitiveness. Therefore, PSPs should take a proactive approach to align their systems with the evolving regulatory landscape.

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If you have any queries related to the SEPA Instant Payments Regulation or need assistance with compliance and operational readiness, please don’t hesitate to contact our team below.

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