The European Commission has launched an innovative proposal to eliminate the time required for making a transfer: the introduction of payments instantaneous so “convenient, safe and unobstructed“for all citizens and businesses in Europe. Credit transfers should be paid out in 10 seconds at the most, completely changing the traditional method which takes from one to several days.
How the regulation will change
The proposal must thus update a regulation dated 2012 on payments in Euro (Sepa) which gives “the obligation to make instant payments in euro universally available and at the same price as for traditional non-instant euro transfers“, they explain from Brussels. At the beginning of this year only 11% of EU transfers were instant, now there is a need for greater speed to”significantly improve cash flow and lead to cost savings for businesses, especially SMEs, including merchants“said the Commission.
The four requirements
The proposal requires that they be respected 4 requirements: in the first place there is the will to “make instant euro payments universally available, with an obligation for EU payment service providers that already offer euro transfers to also offer their instant version within a defined period“. The second requirement is to ensure, by guaranteeing it, that the price applied for this type of payment”does not exceed the price charged for traditional non-instant euro transfers“Third is the desire to get people closer to instant payments.”with the obligation for suppliers to verify the correspondence between the bank account number (Iban) and the name of the payee provided by the payer in order to alert the payer of a possible error or fraud before payment is made“.
Finally, we want to make sure that frictions are eliminated when processing instant euro transfers “preserving the effectiveness of screening of persons subject to EU sanctions“with a procedure where payment service providers can check every day”its customers against the EU sanctions lists, instead of examining all transactions one by one “, they add from Brussels. As he explains Europatodaydaily the flow of cash blocked due to bureaucratic delays would amount to almost 200 billion euros every day, an enormous figure that is being tried in every way to streamline before 2023.
“Switching from ‘the day after’ to ‘ten second’ transfers is a seismic event, comparable to the transition from traditional post to email. Yet today nearly nine out of ten euro transfers are still processed as traditional ‘slow’ transfers“, declared the Commissioner for Financial Services, Mairead McGuinnessto I-dome. The right technology has existed since 2017, now it’s time to put it into practice.