The European Union (EU) has enacted new regulations to ensure swift fund transfers to the bank accounts of retail clients and businesses across its member states. The legislation aimed at eliminating delays in transactions particularly benefits small and medium-sized enterprises (SMEs) and enhances overall transaction security.
Under the updated Single Euro Payments Area (SEPA) rules, banks and payment service providers (PSPs) are mandated to ensure the affordability and prompt processing of credit transfers. The regulations introduce the concept of instant credit transfers, ensuring that funds are transferred within ten seconds, regardless of the time or day. Additionally, payers must receive confirmation within the same timeframe regarding fund availability to the intended recipient.
Even non-euro currency member states are required to comply with the regulations if their accounts facilitate regular euro transactions, albeit with a transition period. However, a temporary exemption from the ten-second payment requirement may apply to accounts outside business hours due to potential concerns about euro liquidity access.
To bolster transaction security, PSPs must implement robust fraud detection and prevention measures to prevent misdirected credit transfers. They are also required to offer identity verification services without additional charges and allow clients to set maximum amounts for instant credit transfers to mitigate fraud risks.
Michiel Hoogeveen, the lead MEP, hailed the Instant Payments Regulation as a long-awaited modernization of payments in the European single market. He emphasized the convenience of transferring money within ten seconds at any time of the day.
The enactment of the Instant Payments Regulation underscores the EU’s commitment to facilitating seamless and secure financial transactions, promoting financial inclusion, and fostering economic growth across member states.