Is your Treasury ready for Instant Payments Regulation?

Since its inception in 2008, SEPA has aimed to harmonise payments across Europe, creating a unified market, driving standardisation and improving cross-border efficiency. Today, SEPA includes 41 countries, with recent additions like Serbia, North Macedonia, Moldova, Montenegro, and Albania.

While SEPA Instant Payments have been available since 2017, the uptake in the corporate environment has remained relatively low. Several factors may have impeded broader integration of instant payments, including transaction amount cap, the absence of a mandatory provision to send and receive instant payments, and limitations around bulk payments. Given that, the changes introduced by IPR could become the push to accelerate adoption.

Within the euro area, Payment Service Providers (PSPs) must be able to receive instant euro payments by January 2025 and send them by October 2025. For non-euro EU countries, Opens in a new tabthe regulation will apply from 2027, following a similar phased approach.

To encourage adoption, the IPR has introduced several key changes:

• Pricing parity: Instant payments must cost the same as standard SEPA transfers.
• No amount cap: Removing the previous €100,000 transaction amount limit, enabling high-value instant payments.
• Enhancing security: In the euro area already from October 2025, both SEPA classic and SEPA Instant Payments will be subject to Verification of Payee (VoP) checks to confirm account name and IBAN match.

Instant payments are redefining speed of processing transactions, with execution time limited to 10 seconds maximum. This reduced window also shortens the time available to detect fraud or suspend transactions. To reduce operational and fraud risks, the IPR introduces Verification of Payee (VoP). Before a payment is executed, the VoP check takes place to return one of these statuses: “Match”, “Close match”, “No match” or otherwise, information that no match is possible. The status informs to what extent payee’s details match the account holder’s information as inputted by the payor. While VoP checks are mandatory for individual transactions, for batch payments corporates may opt out from using it. Nevertheless, accepting the associated risks should be carefully considered. VoP can be very useful to check new counterparty details or double check the data when executing high-value individual payments.

With VoP having entered into force, maintaining an accurate address book becomes essential to avoid payment delays and mismatches. From correct invoice details required to make a payment, to data stored in company’s banking application and ERP systems, high level of data accuracy enables efficient payment processing. By reviewing name records upfront, corporates can avoid operational inefficiencies and delays. Executing VoP checks on corporate’s own accounts can be helpful to see what outcome their debtors will see when making a payment to them and how the result aligns with data placed on the issued invoices. Accurate name data may be especially relevant when dealing with off-takers to avoid delays caused by “No Match” VoP results.

Changes driven by instant payments go beyond data updates. The implications of adopting instant payments apply to the company’s value chain: from customer interactions, back-office functions, liquidity and risk management processes and operations.

Instant payments unlock a range of new possibilities, including:

• Payments are no longer restricted by cut-off times, enabling 24/7 operation
• Supplier payments can be processed within seconds
• Time-critical payments (e.g. customer refunds, salary payments) can be processed instantly and outside standard hours
• Real-time euro fund concentration across banks and countries becomes feasible

However, these benefits come with operational challenges. Receiving payments outside of business hours, on weekends or public holidays, can impact processes related to client support, liquidity management or reconciliation.

Now that the Instant Payment Regulation is taking effect across the eurozone in the EU, we are seeing varying processing times depending on the countries and banks involved. Because the regulation sets strict processing time limits (a maximum of 10 seconds), instant payments are – by design – more prone to time out (and therefore be rejected) than regular SEPA credit transfers. The risk of bank rejecting payment increases with using instant settlements. For instance, banks do not have enough time to carry out additional checks when transactions are viewed as potentially fraudulent, they can either accept or reject them. In addition, even a brief lack of access to the network can make a receiving bank unable to process payment in time. Previously SEPA Instant Payment could have been converted to standard SEPA transfer but with the new legislation now in force this will no longer be allowed.

Adopting instant payments is a strategic decision, corporates need to weigh benefits and risk of switching to instant. Key questions to consider include:

• Where do corporates see value of introducing instant payments?
• Are instant payments needed for ad hoc transactions, planned bulk payments, or both?
• Does the speed of instant payment outweigh risks and fraud concerns?
• Is treasury operationally ready to manage instant payments?
• Does the corporate have a robust process in place to efficiently resubmit rejected instant payments or to initiate those as regular SEPA credit transfers?

Ultimately, the true value of instant payments emerges when they are seamlessly integrated into broader financial and operational processes. It is good to know that instant payments and Verification of Payee is now available in ING:

• for all our clients
• for single payments and bulk payments
• via all of ING's banking channels and
• for all payment accounts in the eurozone countries

With IPR driving adoption, shortened timelines could become a new standard. The question is whether corporates are operationally equipped to fully embrace instant payments, and to what extent they can help solve existing challenges or potentially introduce new ones.

At ING, we’re always open to discussing the impact of instant payments on daily banking processes. In early July, we hosted a client webinar (webinar Opens in a new tabrecording available upon registration) to explore the topic of SEPA Instant Payments with focus on Verification of Payee. You can find more information in our FAQs published on our website. If you’d like to get to know more about instant payments, explore how ING works with instant payments, or have specific questions, please reach out to your Transaction Services contact.