We need to get on with it - reflections on the European Commission's instant payment proposal

Last week the European Commission published a draft proposal to amend SEPA legislation. They have commented that the adoption of SEPA Instant Credit Transfers has lagged, and this set of new rules will act as a much-needed push for banks and Payment Service Providers (PSPs) to offer 24/7 instant euro payment services.

This move is very welcome. Adoption of SEPA Instant Credit Transfers by banks has been a real challenge from the perspective of payments companies looking to build on top of it - currently, it’s extremely painful to build products that cope equally well with both instant credit transfers and credit transfers without sacrificing customer experience. 

The European Commission has been very patient with banks up until this point. But frankly, given how complementary open banking and instant payments are to one another, the resistance of some providers and banks to move to Instant Credit Transfers has reduced the impact of PSD2 at the expense of payers and businesses. There are many out there who would absolutely benefit from a faster and more efficient payment experience. In the UK we’ve already seen the positive impact of real-time payments powered via Open Banking - a great example being GoCardless customer Gravity Lifestyle Fitness. They use Direct Debit to collect recurring subscription payments and made the choice to implement GoCardless Instant Bank Pay for one-off payments, offering the trust and consistency of direct bank payments for moments when speed is essential. The result has been that one-off customer sign-ups and payment time are now 55% faster - a significant improvement. If the amendment is passed then the closer collaboration between PSPs and banks would mean that businesses can finally be provided with Instant Credit Transfers that offers a consistent experience, being able to confidently use them for the moments that speed and security are vital. 

This in turn will have a positive trickle-down effect on consumers and end-users. Not only will they be offered consistent and trustworthy payment methods, but there is also a cost saving. If the European Commission’s proposals succeed in being passed then banks can’t charge more for SEPA Instant Credit Transfers than they do for non-instant, which essentially means consumers and end users won’t have to pay over the odds just for choosing to use an instant payment service. This is important because it means Instant Credit Transfers will be an accessible option to all income brackets.

Whilst I’m optimistic about the proposition, I’m also aware that this is step one of what will inevitably be a long process. There’s a long way to go in the political process alone and some banks are already calling for timeframes to be extended, so the process of further amendments and the ruling itself will likely run throughout most of 2023 and probably into early 2024. Then there’s the implementation period. Variable Recurring Payments (VRPs) in the UK and PayTo in Australia are recent examples of how timelines are often extended, with PayTo’s launch postponed by nine months just weeks before it was due to go live. So it’s important banks and PSPs align early and we all collectively work to move things forward as much as we can now. 

However, to echo my sentiments from earlier, this is a very welcome initiative and the potential benefits of universal SEPA instant adoption are worth fighting for. Once adoption starts to happen and coverage increases, we’ll see an exponential increase in benefits to both businesses and consumers. So, whilst there are obstacles to overcome, there’s no time like the present to embrace the proposed changes and for us all to just get on with it so we can bring positive change sooner rather than later.