In countries like India they have long been standard, in the EU they are still a niche: the so-called instant payments. Consumers can transfer money from one account to another within seconds. Now Europe should catch up.
According to the will of the EU Commission, consumers in the European Union should have the option of real-time transfers as standard. The Brussels authority presented a legislative proposal on Wednesday that is intended to remove hurdles to paying in seconds.
Among other things, real-time payments in euros should not be more expensive for bank customers than standard transfers, which are usually free. In addition, all credit institutions would have to offer fast transfers at any time. Normal transfers usually take one working day, real-time payments only up to ten seconds. The European consumer association Beuc welcomed the initiative by the EU Commission. “Instant payments shouldn’t be a premium service – it’s time to make them the new normal,” said CEO Monique Goyens.
So-called instant payments have been technically possible in Europe since 2017. According to the EU Commission, around a third of the banks in the EU do not offer this option at all. And consumers also have reservations. At the beginning of 2022, only eleven percent of transfers were made as real-time payments. In countries like India or Brazil, on the other hand, it is around 90 percent.
EU Financial Markets Commissioner Mairead McGuinness on Wednesday compared the move from standard to real-time transfers to the move from post to email. There is no reason why many citizens and businesses are not able to send and receive money immediately. The ability to do so is particularly important at a time when household and business bills are rising and every cent counts.
According to the EU Commission, authorities, charities and banks themselves would also benefit from faster cash flows and the new opportunities for innovation. In addition, the international role of the euro will be strengthened.
In order to increase confidence in instant payments, the EU Commission’s proposal aims to reduce the risk of incorrect transfers. The banks should be obliged to compare the Iban and the name of the recipient. In addition, the banks would have to check their customer files daily to see whether they included people sanctioned by the EU – instead of checking each individual transfer as before, which led to a large number of false hits and delays. The EU states and the European Parliament now have to negotiate the EU Commission’s proposal.