The payments industry is buzzing, as instant payments will become mandatory as early as next year. The EU Instant Payments Regulation requires banks to offer this option, and will be applied in two stages, on January 9 and October 9, 2025. Infrastructure platforms such as EBA Clearing, banks, and other payment service providers (PSPs) such as e-money institutions (EMI) are all currently busy preparing for the change.

„Around two thirds of payment service providers in Europe already meet the requirements for the initial date next January,“ EBA Clearing CEO Hays Littlejohn said in an interview with Börsen-Zeitung. This means that 80 to 90% of accounts subject to the EU regulation should already be covered.

„However, there is still a lot to do for everyone, as a significant increase in real-time payments can only be managed if every cog in the ecosystem works,“ Littlejohn added. There should be no bottlenecks in processing, and the number of rejected transfers should not increase either, adds Erwin Kulk, Head of Service Development and Management.

The two payment experts believe it is difficult to predict whether volumes will increase abruptly from October 2025 onwards. However, it is important to be prepared for the scenario of a significant increase in transaction volumes. How much volume is generated depends on the extent to which payment providers increase their range of services to customers.

The two executives emphasise that EBA Clearing has been able to scale its instant system RT1 without a single system failure since its launch at the end of 2017. RT1 now processes around 3 million transactions a day, while the number of standard SEPA transfers in EBA Clearing's STEP2 system amounts to over 27 million. Bottlenecks in backend performance are unlikely, even if RT1 were to experience an avalanche-like increase in transaction volumes.

EBA Clearing is the private sector counterpart to the TIPS infrastructure for instant payments set up by the European Central Bank. TIPS stands for Target Instant Payment Settlement. The EU Commission believes that banks have done too little to promote the acceptance of instant payments, so it now wants to force instant payments onto the market by means of its new regulation.

The EU Commission wants the instant payment infrastructure to become the backbone for European independence in payment transactions. This is to be achieved with the help of the introduction of a digital euro, and via the European Payments Initiative (EPI).

The two payment experts have a neutral view about the changes being forced via regulation. They acknowledge that EU Commissioner Mairead McGuinness has taken decisive action to remove the hurdles for instant payments. The new rules must now be implemented in the most efficient way.

There are certain challenges in preventing fraud, say Littlejohn and Kulk. A comparison with the EU sanctions list will have to be carried out on a daily basis, to verify both sender and recipient. And the IBAN name check, which is mandatory for all SEPA transfers, could also lead to aborted transactions.

Consumers will be confronted with additional pop-up windows for the checks. If they are not prepared for this, it could become a problem. Rejected payment processes are not only annoying for the retailer, but also damage the overall acceptance of instant payments.

The managers believe that it is important that rejected transactions are avoided. „We are working with PSPs on network-based solutions to better identify cases of fraud", says Littlejohn. „These should help providers to create friction only where it harms the fraudsters – and not their customers.“