EU Mandates Instant Cross-Border Payments
The European Union's instant payments mandate is now in force, pressuring banks and fintechs to provide 24/7, transparent settlement for cross-border flows. Despite the mandate, The Payments Association highlights that significant friction remains, including high costs and compliance burdens. The new rules are expected to drive demand for APIs and real-time fraud controls that can manage compliance at speed.
- The regulation, which entered into force on April 8, 2024, amends the Single Euro Payments Area (SEPA) Regulation. It mandates that payment service providers (PSPs) in the Eurozone must be able to receive instant euro payments by January 9, 2025, and send them by October 9, 2025. For non-euro area member states, the deadlines are January 9, 2027, for receiving and July 9, 2027, for sending instant euro payments. - A key provision is the "Verification of Payee" (VoP) service, which PSPs must offer free of charge to payers. This service verifies the recipient's name against their IBAN before a payment is authorized to reduce errors and fraud. This is a critical change as the risk of fraud with instant payments is estimated to be up to 10 times higher than with standard transfers. - The rules stipulate that charges for instant euro credit transfers cannot be higher than those for standard, non-instant credit transfers. This pricing parity is designed to encourage adoption and make instant payments the "new normal". The European Commission estimates that nearly €200 billion is locked in the financial system daily, which instant payments could unlock. - In the U.S., the real-time payments landscape includes the RTP® network, launched in 2017, and the FedNow® Service, which went live in July 2023. In the second quarter of 2025, FedNow processed $245 billion in transactions, while the RTP network handled a daily average of 1.18 million payments with a total daily value of $481 billion. - Globally, initiatives to connect domestic real-time payment systems are underway to improve cross-border settlement. For example, Singapore's PayNow and Thailand's PromptPay are linked, allowing for near-instant transfers using just a phone number. Broader initiatives like Project Nexus aim to create a global hub connecting multiple real-time payment networks. - The rise of instant payments has intensified the need for real-time fraud detection using digital identity verification. Innovations now focus on continuous identity verification throughout the customer journey, using behavioral biometrics and real-time data analysis to detect anomalies and prevent authorized push payment (APP) fraud. - Institutional interest in using stablecoins for cross-border payments is growing as a way to bypass the slower correspondent banking system. Stablecoins offer the potential for near-instant settlement and reduced transaction costs, with their market capitalization exceeding $200 billion and transaction volumes reaching $27.6 trillion in 2024. - Senior product leaders are shifting their focus from the transaction itself to the broader customer experience, bundling instant payments into comprehensive service packages. The strategy involves building value-added services like API-based liquidity analytics, embedded finance, and real-time treasury management on top of the new instant payment infrastructure.
