Description
The year 2025 will bring a major breakthrough for EU consumers: as of 9 January, all banks in the EU will be required to ensure that instant credit transfers are made under the same economic conditions as ordinary credit transfers, at no extra cost. This important innovation is the result of the introduction of the EU Instant Credit Transfer Regulation 2024/886, approved last March, which will allow transactions to be received in as little as 10 seconds, regardless of the day or time of sending, without any additional charges or fees.
Instant and ordinary credit transfers
Ordinary and instant credit transfers differ mainly in terms of execution time. An ordinary credit transfer generally takes one or more working days to be credited to the recipient's account, whereas an instant transfer allows the sum to be received within seconds, 24 hours a day, 7 days a week.
Instant payments offer greater convenience and efficiency for both individuals and businesses. They make it possible, for example, to quickly split a restaurant bill with friends or to receive sums of money instantly. For businesses, especially small and medium-sized ones, and for public institutions, instant payments are a useful tool to better manage cash flow. Merchants can also benefit from it, reducing operating costs and improving customer service through immediate refunds and faster transactions.
EU Regulation 2024/886
At the beginning of 2022, only 11% of transfers in the EU were completed within seconds. Every day, around EUR 200 billion remains stuck in transit in the financial system, slowing down the economy. To address this inefficiency, the European Commission presented a proposal in October 2022 to make instant euro payments accessible to all bank account holders in the EU and EEA countries. The initiative is part of the Capital Markets Union, a European project that aims to create a single capital market, facilitating the flow of investments and savings across member states for the benefit of citizens, businesses and investors.
In November 2023, the European Parliament reached an agreement with the Council on the text of the regulation, which was finally approved in February 2024.
EU Regulation 2024/886 stipulates that banks and other payment service providers offering standard credit transfers in euros must also guarantee the service of sending and receiving instant credit transfers. Any fees charged for instant payments may not exceed those for standard credit transfers. This means that each customer, depending on his current account type, will pay the same amount for instant credit transfers as for standard credit transfers. Already today, many ordinary credit transfers are offered at no extra cost or, in other cases, at a low cost, such as one euro per transaction.
To reduce the risk of errors or fraud, payment service providers will also be obliged to check the correspondence between the IBAN and the payee's name, informing the payer of any discrepancies before completing the transaction.
In addition to affordability, the regulation introduces advanced security standards and enhances transparency. The use of advanced technology to monitor transactions in real time will make it possible to prevent fraud and block suspicious transactions in good time. In addition, financial institutions will be required to provide clear and detailed information to consumers, improving transparency on execution times and transaction costs.
To foster the adoption of instant payments across the EU, the regulation supports interoperability between different payment systems. This will ensure that transactions run smoothly between banks in different member countries. The area covered by the new rules includes not only EU Member States, but also SEPA countries such as the UK and Switzerland.
Thanks to the new regulation, consumers and businesses will benefit from a faster, safer and more convenient payment system, with a positive impact on the entire European economy. The legislation also promotes greater cooperation between banks, payment institutions and supervisory authorities, creating an integrated system for reporting and investigating illegal activity.
Source: European Consumer Centre Italy - ECC-Net Italy
Image owner: European Parliament