The European Parliament has taken a significant ste towards modernizing money transfers within the EU. With the new rules, both retail clients and businesses, particularly SMEs (small and medium-sized enterprises), are set to experience instant financial transactions, ensuring that money arrives in the recipient’s account within just ten seconds, any time of the day.
Unlike traditional transactions that could take days, these will be processed instantly, regardless of the time or day, and the payer will be promptly informed about the transfer’s success. This move not only speeds up transactions but also aims to increase the safety and reliability of financial transfers across the EU.
Extension to Non-Euro Member States
An interesting aspect of these regulations is their applicability beyond the Eurozone. Member states whose currency is not the euro but offer transactions in euro will also need to adhere to these rules, albeit after a longer transition period. This inclusion ensures a broader impact, facilitating swift transactions across the entire EU.
Charges for instant credit transfers, however, cannot exceed those for traditional transfers. This provision aims to encourage the adoption of instant transfers by ensuring they are financially accessible.
To protect customers, the new regulation mandates that Payment Service Providers (PSPs) have strong fraud detection and prevention measures. For added safety, PSPs will enable clients to verify the identity of recipients without extra charges and allow them to set limits on instant credit transfers to guard against fraud.
Next Steps?
Following its overwhelming approval, the rules will become effective 20 days after their publication in the EU Official Journal. PSPs in the euro area will have nine months to prepare for receiving and 18 months to send instant credit transfers in euro.
Michiel Hoogeveen (ECR, NL), the lead MEP on the initiative, highlighted the significance of this regulation:
The Instant Payments Regulation marks the long-awaited modernisation of payments in the European single market... Customers can now say goodbye to the inconvenience of waiting two or three working days to access their money.
