EU Legislators Forge Groundbreaking Agreement for Advancing Instant Euro Payments
In a significant move toward enhancing financial efficiency, the European Council and Parliament have reached a provisional agreement on instant payments in euros. The agreement aims to streamline the arrival of funds in bank accounts for both retail customers and businesses across the EU.
The initiative, a modification to the Single Euro Payments Area (SEPA) legislation, mandates payment service providers (PSPs), including banks, to offer instant credit transfers. These transfers are designed to be executed promptly, regardless of the time or day, ensuring that payees’ accounts are credited within 10 seconds of receiving the payment order.
The agreement emphasizes the importance of safety, requiring PSPs to implement robust fraud detection and prevention measures to mitigate the risk of unintended transfers due to fraud or error. Clients are to be promptly informed about the availability of funds, with compensation mechanisms in place for discrepancies and financial damages.
A crucial aspect of the agreement is the inclusion of non-bank entities, such as e-money institutions and stablecoin issuers, gaining direct access to central bank payment systems. This move is expected to bolster competition and reduce reliance on third-country financial institutions.
Importantly, payment service providers must ensure that charges for instant credit transfers in euros do not exceed those applied to traditional credit transfers. This ensures affordability and accessibility for consumers and businesses alike.
The phased implementation of the rules, with a shorter transition period in the euro area and a more extended period in EEA countries, allows for a smoother adaptation to the new framework.
Michiel Hoogeveen, the lead MEP, highlights the customer-centric nature of the initiative, noting that EU banks are obligated to provide instant payment services to clients at no extra cost. This commitment aligns with the broader goal of creating a competitive and robust EU-wide payments ecosystem.
The agreement also addresses concerns related to access to liquidity in euros outside business hours, offering a special derogation for member states whose currency is not the euro.
As the proposal moves through the approval process, including scrutiny by the Economic and Monetary Affairs Committee and a plenary vote, the EU stands on the cusp of a transformative leap toward more efficient and accessible instant payments. The inclusion of fintech companies under specific conditions further signals a forward-looking approach to fostering innovation in the financial landscape.