SEPA Instant – Introduction

SEPA Instant – Introduction

Instant Payments are credit transfers that occur in real-time where the funds are available to the beneficiary almost instantly. SEPA Instant payments which went live in 2017 was introduced to prevent fragmentation of payment systems in SEPA (Area) ie. each country developing its instant payment equivalent.

Here are the characteristics of a SEPA Instant payment

• Available 24*7*365
• End-to-end flow must be completed within 10 seconds
• Payments are settled immediately and are irrevocable
• A maximum of 100000 EUR per transaction (Excluding closed user groups)

On 26 October 2022, the European Commission put forward a proposal on instant payments that amends and modernizes the single euro payments area (SEPA) regulation of 2012. This proposal came into effect in Q1 2024.

This regulation made SEPA instant payment mandatory for PSPs offering SEPA credit transfers. The regulation also said that the fees for instant payment should not be higher than SEPA credit transfers.

SEPA instant payment would also have to be the de facto payment method for customers

Banks have to comply with this regulation in the following timeline

PSPs in the Euro Zone

• Incoming – 9^th Jan 2025
• Outgoing – 9^th Oct 2025

PSPs outside the Euro Zone

• Incoming – 9^th Jan 2027
• Outgoing – 9^th July 2027

What are the advantages of SEPA instant payments ??

• Users can send and receive payment instantly
• Available 24*7*365 – Convenience
• Improves cash flow for business
• Customers can use their mobile to make payments
• Has the potential to replace cards
• Further harmonization of the European Union Single Market

In the next set of articles, we will look at how SEPA instant payment works and what challenges banks face in implementing SEPA instant payments

SEPA Instant Regulation text: https://data.consilium.europa.eu/doc/document/ST-15764-2023-REV-1/en/pdf

SEPA Instant Rulebook: https://www.europeanpaymentscouncil.eu/what-we-do/epc-payment-schemes/sepa-instant-credit-transfer/sepa-instant-credit-transfer-rulebook