Brussels, 7 November 2023
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Focus on speed and consumer safety
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Instant transfers that are affordable and available across the EU
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Further integration of the Union payments market
EP negotiators struck a deal with the Spanish Presidency on new rules to secure immediate arrival of transferred funds to bank accounts of retail customers and businesses in the EU.
To make sure that retail clients and businesses, especially SMEs, will not have to wait for their money as well as to provide safe transfers, the agreement updates the Single Euro Payments Area (SEPA) legislation. Payment service providers (PSPs) such as banks, providing transfer services in euro, will be required to offer the service of instant credit transfers.
Member states whose currency is not the euro will also have to apply the rules, where the accounts already offer regular transactions in euros, after a longer transition period. There will be a special derogation for such accounts outside business hours given possible concerns about access to liquidity in euros.
Instant credit transfer
According to the agreement, an instant credit transfer is supposed to be executed regardless of the day or hour and immediately processed, so that the payee’s payment account is credited with the amount transferred within 10 seconds after the time of receipt of the payment order. The payer should be also informed within 10 seconds whether or not the funds transferred have been made available to the payee.
Where a payment order for an instant credit transfer in euro is submitted from a payment account that is not denominated in euro, a PSP should convert the amount of transaction from the currency in which the payment account is denominated into euro, immediately upon receiving that payment order.
Customer safety, penalties, and sanctions
Negotiators agreed that PSPs should have in place robust and up-to-date fraud detection and prevention measures, designed to prevent a credit transfer being sent to an unintended payee as a result of fraud of error.
To this end, PSPs operating in the EU should immediately and without any additional charges or fees, provide a service to verify the identity of the payee to whom the payer intends to send a credit transfer.
Where a discrepancy is detected between the payment account identifier of the payee and the name of the payee provided by the payer a client should be notified, and where such information is not provided, a client should be compensated by a PSP for any financial damage. As an additional safeguard against fraud, PSPs should allow its clients to set a maximum amount for instant credit transfers in euro, which could be easily modified prior to the next transfer.
Moreover, PSPs offering instant credit transfers should verify whether any of their clients are subject to sanctions or other restrictive measures related to the prevention of money laundering and terrorist financing.
Charges stay the same
Charges applied by a PSP on payers and payees in respect of instant credit transfer transactions in euro cannot be higher than the charges applied to credit transfer transactions in euro.
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Michiel Hoogeveen (ECR, NL) the lead MEP said: ” With this initiative, EU banks are obliged to provide instant payment services to clients, at no extra cost, under strict deadlines. Customers will enjoy smoother payment options, businesses will face lower costs, and the EU payments systems as a whole will become more competitive. The Parliament negotiating team also secured that, under certain conditions, Fintech companies will be granted direct access to the European Central Bank’s payment infrastructure, so they won’t have to pay banks anymore to do it for them”.
Next steps
The provisional political agreement reached by the EP negotiating team will now have to be approved first by the Economic and Monetary Affairs Committee, followed by a plenary vote. The Council also has to approve the deal, before it can come into force.
Further information
Source – EU Parliament
Instant Euro payments: EU Council version of the provisional agreement
7 November 2023, 22:15
The Council and the European Parliament have reached a political agreement on the instant payments proposal, which will improve the availability of instant payment options in euro to consumers and businesses in the EU and in EEA countries.
The new rules will improve the strategic autonomy of the European economic and financial sector as they will help reduce any excessive reliance on third-country financial institutions and infrastructures. Improving the possibilities to mobilize cash-flows will bring benefits for citizens and companies and allow for innovative added value services.
Instant payments 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 provisional agreement takes into consideration particularities of non-euro area entities.
Under the provisionally agreed rules, payment service providers such as banks, which provide standard credit transfers in euro, will also be required to offer the service of sending and receiving instant payments in euro. The charges that apply (if any) must not be higher than the charges that apply for standard credit transfers.
The Council and Parliament agreed that the new rules will come into force after a transition period that will be faster in the euro area and longer in the non-euro area, who need more time to adjust.
The colegislators agreed to grant access for payment and e-money institutions (PIEMIs) to payment systems, by changing the settlement finality Directive (SFD) in order. As a result, these entities will be covered by the obligation to offer the service of sending and receiving instant credit transfers, after a transitional period. The colegislators added appropriate safeguards to ensure that the access of PIEMIs to payment systems doesn’t carry additional risk to the system.
Under the new rules, instant payment providers will need to verify that the beneficiary’s IBAN and name match in order to alert the payer to possible mistakes or fraud before a transaction is made. This requirement will apply to regular transfers too.
The Council and Parliament included a review clause with a requirement for the Commission to present a report containing an evaluation of the development of charges for credit charges.
Background
This initiative comes in the context of the completion of the Capital Markets Union. In March 2021 and April 2022 the Council adopted conclusions in which it highlighted the widespread use of instant payments and recalled the objective of developing competitive EU-wide market-based payment solutions.
On 26 October 2022 the Commission put forward a proposal for a regulation on instant credit transfers in euro. It amends and modernises the single euro payments area (SEPA) regulation of 2012 on standard credit transfers in euro by adding to it specific provisions for instant credit transfers in euro.
The aim of the draft regulation is to increase the uptake of euro instant credit transfers and to facilitate the access to such services for consumers and businesses in the Union. There will be the following requirements regarding euro instant payments:
- making instant euro payments universally available, with an obligation on EU payment service providers that already offer credit transfers in euro to offer also their instant version
- making instant euro payments affordable, with an obligation on payment service providers to ensure that the price charged for instant payments in euro does not exceed the price charged for traditional, non-instant credit transfers in euro
- increasing trust in credit transfers, with an obligation on providers to verify the match between the bank account number (IBAN) and the name of the beneficiary provided by the payer in order to alert the payer of a possible mistake or fraud before the payment is made
- removing friction in the processing of instant euro payments while preserving the effectiveness of screening of persons that are subject to EU sanctions, through a procedure whereby payment service providers will verify at least daily their clients against EU sanctions lists, instead of screening all transactions one by one
- Position of the Council ahead of negotiations with the Parliament
- Commission proposal
- Council adopts conclusions on strategic autonomy of the European economic and financial sector (press release, 5 April 2022)
- Retail payments: Council supports action to promote instant payments and EU-wide payment solutions (press release, 22 March 2021)
- Digital finance (background information)
- Capital Markets Union (background information)
Source – EU Council