Instant payments: the benefits for customers and business | Topics | European Parliament (2024)

FAQs

What is the EU legislation on instant payments? ›

The instant payments regulation will allow people to transfer money within ten seconds at any time of the day, including outside business hours, not only within the same country but also to another EU member state. The regulation takes into consideration particularities of non-euro area entities.

Instant payments allow people and businesses to pay and receive payments more conveniently and efficiently. With instant payments, people can easily split a restaurant bill with friends and receive funds immediately. Businesses, especially small and medium-sized companies, can exert more control over their cash flow.

EU increases pressure on banks to adopt instant payments – the clock is already ticking. On 26 February 2024, the European Council adopted a new regulation, the Instant Payments Regulation. This will make instant payments in euro fully available to consumers and businesses in the EU and in EEA countries.

The Instant Payments Regulation (IPR) is a new European Union legislation that requires all payment service providers (PSPs) to offer the possibility to send and receive euro payments within seconds, 24/7, across the EU.

Unlike standard bank transfers, instant payments are set up so that the money reaches the recipient's bank account within seconds, which means it's not possible to retrieve the money via a clearing process.

How does TIPS work? TIPS offers final and irrevocable instant payments settlement in euro on a 24/7/365 basis. Participating payment service providers can open dedicated cash accounts (TIPS DCAs) in the books of their respective central bank.

One of the advantages of IMPS is it is accessible 24*7 throughout the year, even on bank holidays. Unlike NEFT or RTGS that may not be available on bank holidays, you can instantly transfer funds without any hassle. Enter Your ATM/Debit Card Grid and One Time Password (OTP) to complete your transaction.

The most obvious benefit is speed and efficiency. You receive a payment within 10 seconds of a transaction, which means you can use your new funds immediately.

The European Commission's retail payment strategy, released in September 2020, focuses on four principles: (I) increasingly digital and instant payment solutions with a pan-European reach; 2) innovative and competitive retail payment markets; 3) efficient and interoperable retail payment systems; 4) efficient ...

How big is the instant payments market? ›

The market value is expected to be valued at US$ 28,011.6 million in 2023 and is likely to reach US$ 125,718.5 million by 2033. Previously, the market was booming at a high CAGR of 23.2% (2018 to 2022), resulting in a market size of US$ 24,003.1 million in 2022.

The EPU facilitated the convertibility of European currencies by setting exchange rates that were deemed to reflect the reality of each country's economic situation. On the other hand, currency restrictions were maintained vis-à-vis the dollar area.

The legislation aims to make payment transfers faster, more secure, and affordable for consumers and businesses. It will require EU payment service providers that offer SEPA credit transfer services to provide instant euro payments within 10 seconds.

A well known use case is the transfer of funds via mobile phone between friends to split a bill at a restaurant. Instant payments at a merchants' point of sale are also increasing, although they are more complex. In-store payments with a mobile app by the scanning of a QR code are a good a example of such use.

Examples include PayPal, Venmo and Square's Cash App. In such systems, it is relatively straightforward to transfer funds from payer to payee more or less simultaneously.

Maximum payment terms cannot be longer than 60 days unless expressly agreed by both parties and not grossly unfair. Where no terms are specified the default is 30 days. There are exceptions. The term begins from receipt of invoice and verification of invoice cannot exceed 30 days.

Regulating instant payments: Benefits for Europeans

The EU Council says new instant payments regulation will allow citizens to transfer money within ten seconds at any time of day, even outside business hours, not only within the same country but also across EU member states.

The Revised Payment Services Directive, otherwise known as PSD2, introduced the industry to 'open banking'. It aimed to create a more integrated European payments market, making payments more secure and protecting consumers.

Article 7 of the EU Pay Transparency Directive effectively bans pay secrecy by employers. It rules that employees have the right to: Request information about their own pay level. Request information about the average pay levels for other employees doing equal work or work of equal value to them, broken down by sex.