Embracing the Promise of Europe's Instant Payments Regulation

Change can be intimidating, especially when it shakes the foundations of an industry that has operated on established norms for decades. For European financial institutions, the Instant Payment Regulation (IPR) might feel like one of those seismic shifts. The mandate to provide instant payment services across the Single Euro Payments Area (SEPA) means big changes for banks, both operationally and technologically.

But IPR isn’t just a challenge. It’s an opportunity to fundamentally improve the way payments work in Europe. A world of faster, less expensive transactions will be better for banks and consumers alike. And with the help of trusted partners like Fiserv, adapting to IPR doesn’t have to be an uphill battle.

A fundamental shift in banking

The IPR is a game-changer for the European financial system. Traditionally, instant payments have been viewed as an expensive service and used sparingly, with only the most forward-looking banks supporting them.

This is where Fiserv has been ahead of the curve. Nearly a decade ago, we were the first vendor to support instant payments in Europe. Now, as instant payments become the standard rather than the exception, we’re here to make the transition seamless for banks across the region.

The IPR mandates that euro-denominated banks must fully support instant payments by October 2025. Non-euro countries like Poland, Denmark, and Sweden will follow suit by 2027. This staggered approach ensures everyone has time to prepare. And there’s plenty to look forward to, with the right support in place.

Why IPR is a win for banks and consumers

When the text of the legislation first splashed across screens in March 2024, it would have seemed onerous to provide a then-niche service — surely considered a competitive advantage by any financial institution offering it — for the same cost as a classic SEPA transaction. But banks have much to gain by this new standard.

For one, instant payments are less expensive to run than ACH payments. The IPR stipulates that each transaction will have 10 seconds in which to make the funds available to the payee and confirm the completion to the payer’s PSP. If anything about the transaction is amiss, the payment will fail and be returned to the sender. This pass-fail functionality will eliminate the manual processing involved with traditional rails, reducing the resources banks need to allocate to manual intervention and reconciliation. Banks will also save time and resources through built-in fraud protection features like Verification of Payee (VoP), which reduce the risk of fraud and enhance trust in the banking industry.

Banks serving corporates will also benefit from happier clients. Instant payments into corporate treasuries enable real-time insights into cash positions — which, in turn, means better liquidity management, faster reconciliation and bill pay, more informed money market positions, and more. Businesses that optimize liquidity in this way can look forward to greater profitability and resilience against unexpected challenges.

For consumers, IPR’s impact goes beyond a more efficient interchange fee. Imagine a gig worker finishing their job and seeing the payment land in their account seconds later. The same goes for everyday consumers splitting bills, paying rent, or making online purchases. Instant payments also lower transaction costs for merchants and consumers by reducing reliance on credit card payments. Look for payment services to proliferate in the mold of Dutch provider iDEAL, whose secure, convenient account-to-account transfer service has earned a 70% market share in the Netherlands.

Moving away from American card rails

The IPR isn’t just about speed and efficiency. It also reflects Europe’s strategic vision for payments. The EU’s focus on creating its own payment infrastructure, separate from American card networks, demonstrates a commitment to financial sovereignty. The development of initiatives like the Wero system for real-time payments signals Europe’s ambition to build a globally competitive financial ecosystem.

Fiserv has been a consistent ally in this mission. By helping banks integrate instant payments since 2017, and supporting the immediate cross-border (IXB) program’s proof-of-concept, we’ve supported the European financial community in building a more resilient and independent payment infrastructure. This aligns with the goals of the European Commission and the European Central Bank, which aim to lower the overall cost of payments while enhancing security.

An opportunity to update infrastructure

Change makes most organizations uneasy, but there’s no need to see IPR as a threat. With the right partner, the transition can be incredibly smooth.

Being on the forefront of instant payments innovation in Europe has given us at Fiserv a unique window into the transformation that accompanies the adoption of new payment rails. And whatwe’ve seen is that onboarding a new payments module is a rare opportunity to update important pieces of infrastructure. It’s a chance to streamline business models, develop new product offerings, and innovate new differentiators. When financial institutions partner with Fiserv, they gain access to decades of expertise, cutting-edge technology, and a team that has decades of combined experience navigating similar transformations.

The coming of IPR isn’t just about compliance; it’s about unlocking possibilities. Instant payments bring opportunities for European banks to innovate, differentiate, and compete more effectively. And while it may seem intimidating at first, our commitment is to make that transition as painless as possible, helping you become part of a truly future-facing payment landscape.