In a significant move towards more efficient cross-border transactions, the European Parliament has approved a regulation on Wednesday. This new mandate requires all financial institutions catering to euro transfers to also facilitate instant transfers. This essentially means that customers will have the ability to transfer money to an account in another Member State within a span of ten seconds, irrespective of the time of the day. This facility will be available even outside of regular office hours. Additionally, the regulation stipulates that the costs associated with these instant transfers cannot be more than the costs for traditional transfers.
To instill trust among consumers, organizations, and companies that are part of these cross-border transactions, the providers have been directed to verify within ten seconds that the bank account number (IBAN) provided by the payer aligns with the name of the beneficiary. This measure will enable providers to promptly alert the payers in situations of potential errors or fraudulent activities.
While super-fast payments are already a reality within the European Union, the participation of financial institutions in this initiative has been voluntary so far, leading to considerable disparities across countries. In the current scenario, even with the proliferation of digitalization, it can still take several days for the money to be transferred into an account in another Member State.
Already fairly established
Instant transfers are already gaining traction in Belgium, as indicated by Febelfin, the umbrella organization of the financial sector. As per their records, more than 21 percent of all individual transfers are executed immediately. Although this option is predominantly used for domestic transactions, the number of cross-border transactions is also seeing a substantial rise.
“We are a forerunner compared to the rest of Europe,” states Isabelle Marchand of Febelfin. “Belgian banks have already made significant progress in this area with just over 20 percent of transfers being made instantly. However, the new regulation will push banks to go a step further, which will inevitably bring operational challenges.”
The European Parliament had already reached an agreement with the Member States on the regulation. These states have been given twelve months to implement the regulation. States where the euro has not yet been introduced must also comply with the new rules after a longer transition period, provided their financial institutions already offer regular euro transfers.
