Work on instant payments in Europe advances

24 May 2023

Instant payments are credit transfers that make funds available in a payee’s account within ten seconds of a payment order being made. The adoption of instant payments brings benefits to merchants, companies, public administrations and citizens alike, as it means funds are made available immediately.

Today SEPA instant credit transfers (SCT Inst) in euro account for about 14% of all conventional SEPA credit transfers (SCT). There is consensus in the Eurosystem that the full potential of instant payments has not yet been reached and that its share can increase without risking that SCT Inst will crowd out SCT. Both the Eurosystem and the European Commission are therefore aiming to remove the barriers that prevent instant payments from being available to everyone in Europe. The proposed actions should further harmonise the provision of instant payments and further increase the number of SCT Inst transactions settled in Europe by a significant amount, thus bringing benefits to citizens and firms.

In October 2022, the European Commission put forward a legislative proposal to ensure that citizens holding a bank account in the European Economic Area can make instant payments in euro. The proposal seeks to enhance the availability and affordability of these immediate credit transfers. It will increase the number of payment service providers (such as banks) that offer instant transfers of funds in Europe based on the SCT Inst scheme.

The Eurosystem strongly supports the proposal as it is in line with the Eurosystem's retail payments strategy, which is aimed at achieving full deployment of instant payments. The main goal of the strategy is to support the development of a pan-European solution that allows citizens to pay in a fast and safe way in physical stores or online with the same payment method anywhere in Europe. This initiative is behind the European Payments Initiative's plan to launch a digital wallet solution based on instant account-to-account payments.

The Eurosystem’s initiative to increase the reach of instant payments in Europe via the TARGET Instant Payment Settlement (TIPS) service also complements the objective of achieving full instant payment reachability, and since March 2022 it has led to a 12% increase in participants connected to the TIPS platform.

The Eurosystem also believes that instant payments could bring significant benefits to public administrations, although these would still rely to a very large extent on SCT. The ECB has therefore published a brochure that encourages public administrations to implement instant payments in their daily transactions, such as for pensions or taxes. By switching to instant payments, public administrations could save not only money but also resources and contribute to a more efficient economy where citizens and businesses can make payments faster and electronically and have funds instantly available to spend or invest.