Despite listing just 3 adherents as having registered as SEPA Request to Pay (SRTP) adherents (as of the 13th of October 2023), the European Payments Council (EPC) is unconcerned about the pace of uptake.
To better understand the registration process and rate of registration, Finextra sat down with director general of the EPC, Giorgio Andreoli.
Request-to-Pay is not a payment instrument, but a way of requesting payment initiation and to provide value-added services related to payments, like e-invoicing. SRTP is the EPC’s attempt to design a standard model for Request-to-Pay across the European
Union. The set of rules developed by the EPC sets out how a payee can request payment from a payer (online or in person). The payer can then decide whether to confirm or reject the request, provide more information or set a new date for payment.
It has long been expected that banks will be the main drivers for SRTP adoption, but slow uptake is raising questions around whether use-cases for the scheme are enough to build a critical mass in the industry.
Andreoli explains that while the EPC has three participants which have been duly certified, and are publicly reported on the
EPC site, there is one additional referenced technical service provider, and three self-declared technical service providers.
“It is still a small number,” Andreoli observes, “but as we said, we gave the message that SRTP is steady since March 2023 when we shared version3.0 of the scheme. We have seen growing interest since then.”
When asked whether this rate of registration was in keeping with the EPC’s initial expectations, Andreoli responds: “It’s difficult to say, but of course this number can’t be satisfactory. As the adherence process for SRTP is more complex, this explains
why uptake has been slower than that of SCT Inst. In November or December this year, we will begin offering an updated homologation process via an API, which should speed up and partially automate the process to make becoming an adherent faster.
“At that time, we expect SRTP uptake to improve because the homologation process itself should be faster.”
Andreoli disagrees that only bank adoption will be required to drive widespread SRTP uptake, stating that he is expecting strong adoption also by non-banks, e.g. merchants and corporates. This is possible, he says, because SRTP is fully independent from
underlying payment rails – provided it is an account to account credit transfer.
“Also, SRTP was largely developed to support e-invoicing use-cases. Given the incoming VAT In the Digital Age (VIDA) regulation which will make e-invoicing mandatory for certain players in the B2B and B2G space, SRTP will be extremely important, as it is
a European-wide standard that may assist firms meet the new rules across the European Economic Area. It will potentially be complementary to e-invoicing standard EN16931 and facilitating invoicing and payments reconciliation, and reporting to tax authorities.”
How do registration numbers for SCT Inst compare?
The registration numbers for SRTP are drastically different from those registered with the EPC as SCT Inst participants. According to the EPC’s register (as of the 13th of October 2023), 2,274 institutions have registered as SCT Inst adherents, representing
more than
60% of European Payment Service Providers (PSPs).
Andreoli explains that it’s essential to differentiate SRTP from SCT Inst. While SRTP is a non-mandatory payment scheme, once the Instant Payments Regulation (IPR) proposal will be approved, PSPs in the EU will be required to offer SCT Inst payments.
The new IPR is expected to be finalised by the end of 2023, and enter into force in Q1 2024. PSPs will then have staggered timeline to comply with the IPR, depending on whether they are based in the Euro area (6 months for adherence as a Payee’s PSP), and
up to a possible 36 months if the PSP is based in the EEA but outside the Euro area. The precise timeline is dependent on the final text being approved during the trilogue phase.
In May 2023, the
Council of the European Union agreed its position on the instant payments proposal, which seeks to increase the uptake of euro instant credit transfers and facilitate access to such services for consumers and businesses in the EU.
The new SCT Inst rules would require the following, on the basis of the current legislative proposal:
- making instant euro payments universally available, with an obligation on EU payment service providers that already offer credit transfers in euro to offer also their instant version
- making instant euro payments affordable, with an obligation on payment service providers to ensure that the price charged for instant payments in euro does not exceed the price charged for traditional, non-instant credit transfers in euro
- increasing trust in instant payments, with an obligation on providers to verify the match between the bank account number (IBAN) and the name of the beneficiary provided by the payer in order to alert the payer of a possible mistake or fraud before
the payment is made
- removing friction in the processing of instant euro payments while preserving the effectiveness of screening of persons that are subject to EU sanctions, through a procedure whereby payment service providers will verify at least daily their
clients against EU sanctions lists, instead of screening all transactions one by one
“SCT Inst has been a great success story for the EPC, considering it has not been a mandatory scheme so far. It’s a demonstration that the EPC delivers strong products that are fit for market. We expect that as the new instant payment regulation enters into
force, we will definitely see a boost in adherence. Today, we still see a gap of around 1,000 adherents between the SEPA Credit Transfer (SCT)(which is mandatory) and the SCT Inst, which is not yet mandatory. So we expect roughly 1,000 new adherents coming
in the next two to three years, depending on how the regulation will define the window for adoption.”
For instance, he furthers, adoption will be required sooner for PSPs which are in the Euro area, while the deadline for participants outside the Euro area, like the Nordics, would be less stringent. Andreoli adds that SCT Inst adoption has been stronger
within the Euro area to date, because there is a single currency (simplifying cross-border), it is more convenient and there are already use cases at play.
Conversely, adoption in non-Euro area countries has been slower as SCT Inst transactions are denominated in Euro, meaning that countries like Poland, Hungary or Denmark would need separate Euro accounts or a currency conversion made possible by a Euro PSP
– with an additional cost for the end user.