The European Parliament has conclusively passed new regulations designed to ensure the immediate arrival of payments in the bank accounts of customers and businesses throughout the European Union. The objective of this new EU regulation is to guarantee that customers and businesses, particularly Small and Medium Enterprises (SMEs), do not experience prolonged delays in receiving money from bank transfers. The regulation also aims to enhance the security of monetary transfers. Banks and Payment Service Providers (PSPs) will be required to process transfers instantly. The updated legislation, which has already been agreed upon by EU governments, amends the existing rules of the single euro payments area. The updated text received overwhelming approval with 599 votes in favor, 7 against, and 35 abstentions.
An instant transfer will be processed irrespective of the day or time, and the money will be deposited in the beneficiary’s account within a span of ten seconds. The payer will also receive a confirmation of the payment execution to the designated beneficiary within the same timeframe. It is important to note that Member States whose official currency is not the euro will still be required to implement the regulations for bank accounts that currently have the capability to process transactions in euros, although they will be granted a longer transition period than those within the eurozone. There will also be an allowance for the ten-second transfer rule to be relaxed for the aforementioned bank accounts if transactions are made outside of standard working hours, given the variable conditions concerning access to euro liquidity. Furthermore, charges applied by a PSP for instant euro credit transfer transactions must not exceed those applied to “non-instant” euro credit transfer transactions.
In order to ensure security, PSPs will be required to implement robust and current fraud detection and prevention measures to prevent transfers from being directed to incorrect accounts due to fraud or errors. To this end, PSPs operating in the EU will instantly provide a service to verify the identity of the recipient, without any additional costs or charges. To further safeguard against fraud, PSPs will be required to enable their customers to set a maximum limit for instant euro transfers. If a PSP fails to fulfill its fraud prevention obligations and this leads to financial loss, a customer can request compensation from the PSP, according to the new rules. Additionally, PSPs offering instant transfers will ultimately be obligated to verify whether any of their customers are subject to sanctions or other restrictive measures related to money laundering and terrorist financing.
