1 – What does it mean?
It’s a new payment instrument available 24/7/365 and resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer. (Definition of the Euro Retail Payment Board (ERPB)
2 – Context
The European Payments Council (EPC) focused on the subject by presenting the Sepa Credit Transfer (SCT) as an underlying reference instrument to develop an instant payment solution.
The Euro Retail Payments Board- ERPB has asked the payments sector to submit a proposition in order to set out a scheme for SEPA instant transfers in euro. This proposition will serve as a database to the regulatory corpus currently under development by the European payments council.
An implementation project of Instant Sepa Credit Transfer (SCTinst) has been submitted to the Euro Retail Payments Board (ERPB) in November 2015.
Objective : develop a cross border instant payment system
3 – Where will this lead?
- To facilitate the commercial exchanges.
- To foster the integration of European payments market.
4 – Prerequisites
- Need for a centralised platform that is able to transmit the transactions in individual mode, paired with a messaging system, and connecting all banks.
- SEPA Credit Transfer seems the best adapted to the installation of an instant payment solution.
- Determination for a collective initiative from local banks.
5 – Benefits
- Enable the immediate payment from a person to another via mobile.
- Reduce the payment delays and accelerate the invoices payments.
- Facilitate the urgent payments.
- Stimulate the electronic commerce.
- Facilitate the inter-companies exchange.
6 – Constraints and impacts
- Inequality among European payment players vis-à-vis the instant payment.
- Some countries are already suggesting instant payment solutions on the national level, others don’t.
- The implementation of a solution on the European level will require a harmonisation and integration within the payments infrastructure.
- Heavy investments for banks and clearing platforms :
- Infrastructures adaptation (Banks IS, mobile and web client areas).
- Adaptation of banking accounting systems.
- Structure adaptation in real time.
- Adaptation of infrastructures in terms of transactions volume.
- Impacts on liquidity and risks management.
- Fraud management.
- Security: the instant payment is irrevocable (beneficiary and payer identity, verification of banking details).
- Capacity to produce a balance in real-time.
- Obligations of controls and information in terms of payment services providers.
7 – Project milestones
The European Payments Council must elaborate the regulations (rulesbooks) and Guidelines by November 2016.
The public consultation concerning the EPC “scheme rulebook” project took place up to 10 July 2016.
The project implementation is due in November 2017.