Instant payments (and IBAN-name checks) to become a reality in the EU

In early November, the European Parliament negotiators concluded a deal with the Spanish Presidency of the European Union. This deal revolves around new rules that will secure the “immediate arrival” of transferred funds to bank accounts of retail customers and business in the European Union. With these rules, Instant Payments are more than ever on the road to becoming the norm in the EU, as stated several times by European commissioners and notably Mairead McGuinness.

According to the agreement, “an instant credit transfer is supposed to be executed regardless of the day or hour and immediately processed, so that the payee’s payment account is credited with the amount transferred within 10 seconds after the time of receipt of the payment order”. Also, payers should be informed whether or not the payment is successful, and funds are available to the payee, within 10 seconds.

Also, it is important to note that, as explained in the agreement, “charges applied by a PSP on payers and payees in respect of instant credit transfer transactions in euro cannot be higher than the charges applied to credit transfer transactions in euro”.

In the case where a payment order for an instant credit transfer in euro is submitted from a payment account not denominated in euro, the PSP will have to convert the amount into euros, immediately after receiving the payment order.

IBAN-name checks for more security and less fraud

The negotiators also insisted that PSPs need to have “robust and up-to-date fraud detection and prevention measures” in place. These should be designed to prevent fraud and minimize the risk of errors.

To do so, PSPs operating in the EU will have to provide a service to check the identity of the payee to whom the payer intends to send the credit transfer. With no additional fee or charge for the PSU.

The press release highlights that “where a discrepancy is detected between the payment account identifier of the payee and the name of the payee provided by the payer a client should be notified, and where such information is not provided, a client should be compensated by a PSP for any financial damage”.

“With this initiative, EU banks are obliged to provide instant payment services to clients, at no extra cost, under strict deadlines. Customers will enjoy smoother payment options, businesses will face lower costs, and the EU payments systems as a whole will become more competitive,” concluded Michiel Hoogeveen, Member of the European Parliament and Vice-Chair of the Committee on Economic and Monetary Affairs.

This agreement now has to be approved by the Economic and Monetary Affairs Committee first. Then, the Council will have to approve the deal, before it actually comes into force.

Source: European Parliament

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