EU Approves Instant Payments for Financial Innovation

The Council of the European Union has approved a new regulation that ensures the availability of instant payments in the euro currency for all EU and EEA members, reports Fintech Magazine. This regulation aims to enhance Europe's economic and financial sectors' strategic autonomy, diminishing excessive reliance on third-country financial institutions and infrastructures, including major global players like Visa and Mastercard.

The comprehensive regulation is designed to expedite cash flows, offering increased benefits to citizens and businesses through the introduction of innovative value-added services. Citizens will be able to transfer money within ten seconds at any time, even beyond regular business hours, not only within their own country but also across EU member states. While the primary focus is on the euro, the regulation takes into account the peculiarities of non-euro area entities.

With the adoption of this regulation, all payment service providers, particularly banks, are mandated to expand their standard euro credit transfers to include instant payments both for sending and receiving. Importantly, the fees for instant money transfers must not surpass those applicable to current standard credit transfers. The EU Council anticipates the implementation of these regulations after a transition period, expecting a faster timeframe in the euro area compared to the non-euro area, which requires additional time for adjustment.

Additionally, the regulation mandates instant payment providers to verify the match between the beneficiary's IBAN and name, extending this requirement to regular transfers to enhance security against mistakes or fraud. The regulation includes a review clause, compelling the European Commission to present a report evaluating the development of credit charges.