European Parliament adopts instant payments regulation to expedite fund transfers
The European Parliament, in a bid to revolutionise fund transfers, has greenlit new regulations aimed at ensuring immediate transfers to retail customers and businesses across the EU.
The move comes as a boon for small and medium-sized enterprises (SMEs) and retail clients, guaranteeing swift access to their funds without any waiting period, according to the FinTech Times.
Under the new regulations, banks and payment service providers (PSPs) are mandated to facilitate affordable and prompt credit transfers. Instant transfers are defined as transactions that reflect in the recipient’s account within a mere 10 seconds, irrespective of the time or day. Additionally, payers must be promptly notified within the same time frame regarding the availability of the transferred funds.
PSPs within the euro area have been given a nine-month timeline to ensure their readiness to receive instant credit transfers in euro, while they have 18 months to commence sending them.
Michiel Hoogeveen, a Dutch member of the European Parliament, commented, “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. We are delivering on something that people and businesses truly care about: transferring money within 10 seconds at any time of the day.”
The regulations also extend to member states not using the euro as their primary currency, with a special focus on accounts that conduct regular transactions in euro. However, there will be exemptions from the ten-second payment mandate outside business hours, considering concerns related to access to euro liquidity.
To bolster safeguards against fraudulent activities, payment service providers (PSPs) must enhance their fraud detection and prevention mechanisms. Additionally, all PSPs operating within the EU are mandated to offer identity verification services to recipients at no extra cost.
Furthermore, the regulations dictate that PSPs cannot impose higher fees for instant credit transactions in euros compared to non-instant transfers. Moreover, clients now have the autonomy to set maximum limits for instant credit transfers and can adjust them as needed before subsequent transactions.
In addition, PSPs facilitating instant credit transfers must conduct thorough checks to ensure that none of their clients are under any sanctions or restrictions related to money laundering or terrorist financing. These measures collectively strengthen the security framework in the financial landscape.