Instant payments: an economic assessment of regulatory initiatives proposed by the European Commission
The European Commission has published a proposal on its regulatory approach towards ‘instant payments’ (‘IPs’), which are bank credit transfers settled in real time. In the EU, the technical standard for IPs is SEPA Instant Credit Transfer (‘SCT Inst’). The existing credit transfers that are not in real time are referred to as SEPA Credit Transfers (‘SCT’).
The Commission’s objective is to ensure that anyone holding a payment account in the EU is able to receive and send SCT Insts within and across member states, in order to foster pan-European market initiatives.
The proposal has identified a number of areas for regulatory intervention, in particular:
- mandating Payment Service Providers (‘PSPs’) to offer the service of both receiving and sending IPs in euros;
- requiring PSPs to introduce a confirmation of payee (‘CoP’) service to ensure that the account number and name of payee match;
- requiring that any charges that are applied for sending/receiving euro instant credit transfers within the eurozone should be no higher than the same PSP’s charges that are applied for a traditional credit transfer;
- additional requirements for sanctions screening.