IPs and IBAN-name checks become a reality in the EU
Members of the European Parliaments (MEPs) have, on Wednesday February 7th, voted in the Instant Payments Regulation consisting in new rules that will ensure transferred funds instantly arrive – within 10 seconds – into the bank accounts of both retail customers and business.
The advent of Instant Payments (IPs), with an increased security
This new regulation, already agreed with EU member states in November 2023, makes sure that retail clients and businesses, and notably SMEs, “will not have to wait for their money, as well as to enhance the safety of such transfers. In this respect, banks and PSPs will have to ensure that credit transfers are affordable and immediately processed”.
In the near future, instant credit transfers will be executed regardless of the day or hour, and the money will have to arrive in the recipient’s account within 10 seconds. Moreover, as stated in the press release, “the payer should be also informed within ten seconds of whether or not the funds transferred have been made available to the intended recipient”.
To ensure the success of such instant credit transfers – and guarantee safety – Payment Service Providers will have to put in place “robust and up-to-date fraud detection and prevention measures to avoid credit transfers going into the wrong account due to fraud or error”. To do so, and as highlighted in the European Parliament’s latest communication, “PSPs operating in the European Union should immediately […] provide a service to verify the identity of the recipient”.
Michiel Hoogeveen the lead MEP highlighted: “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.”
Ramzi Dziri, Head of Product at LUXHUB, adds: “At LUXHUB, we welcome this initiative and look forward to helping Instant Payments become the norm in Europe.
“As a Regtech specialist, we’re constantly working on easing the life of financial institutions: the Instant Payments Regulation has been on our radar for quite some time as we have developed, for PSPs both at the initiating and receiving ends of a payment, an efficient IBAN-name check solution, entitled Payee Verification Platform, which enables verified and safe transactions”.
The regulation will enter into force 20 days after its publication in the OJ. The IBAN-name check obligation will then enter into application 18 months after.
Learn more about payee VERIFICATION PLATFORM
Source: European Parliament