The three remaining banks in the Republic have reaffirmed their commitment to meeting EU instant payment deadlines for next year, despite a recent study revealing that many European banks lacking the necessary infrastructure view the set timelines as too ambitious.
Under the Single European Payments Area (SEPA) instant system, all EU payment providers must possess the ability to receive payments in less than ten seconds from January 9th next year. Furthermore, the new regulations established last month by members of the European Parliament (MEPs) dictate that they must also be capable of issuing instant payments from 2025 onward.
Based on a survey conducted by RedCompass Labs, a company specialising in payment technology and consulting, 58 per cent of high-level personnel in European banks without the required SEPA Instant systems in place consider the deadlines for next year to be overly optimistic.
The SEPA Instant, a scheme devised to simplify, expedite and reduce costs of bank payments within the EU, was introduced in 2017. However, during the first three months of last year, only 14 percent of EU credit transfers were instant payments. The EU Commission estimates that approximately €200 billion is bogged down in the European financial system each day due to in-transit credit transfers.
Representatives for AIB, PTSB and Bank of Ireland have jointly confirmed that they are each making efforts to meet the SEPA Instant deadlines for the coming year.
The Banking & Payments Federation Ireland (BPFI) has indicated that the project is of significant importance, stating that their members are working towards meeting the 2025 targets that were officially published on the 19th of March. This initiative is intended to usher in a system of universal instant payments across the EU that promises to be more secure and includes additional measures to prevent fraud.
Faced with initial delays in preparing for SEPA Instant, Irish banks sought to form Synch Payments, a joint business venture intended to expedite money transfers in 2020 and compete with entities like Revolut. However, the plan was ultimately scrapped in November, after numerous complications arose and developments in EU payment systems rendered the project redundant. The decision coincided with the arrival of political consensus between the European Council and European Parliament regarding the proposed changes to SEPA Instant rules.
As per the updated policies, a customer has the right to request for a refund if a payment service provider fails to perform specific fraud prevention responsibilities and it leads to financial loss. A survey conducted by RedCompass Labs, involving 200 bank officials, revealed that over two-thirds of the respondents have moderate to high confidence that their establishments will be able to meet the upcoming year’s deadlines.
However, the survey has also demonstrated that European banks might be underestimating the volume of transactions they would be required to handle per second. By the end of 2025, European banks are setting their targets to process between 101 and 300 transactions per second, while only 5 per cent aim to handle over 1,000.
RedCompass Labs highlighted the fact that considering the bulk payment files could encompass hundreds of thousands of transactions that require immediate processing, banks should set their goals to process at least 1,000 payments per second.