Credit transfer in 10 seconds at no extra cost, EU launches payment revolution

From the correspondent in Strasbourg – Euro payments in ten seconds without charging additional costs or fees for customers and businesses, particularly small and medium-sized enterprises (SMEs). The European Parliament is launching the digital shopping revolution, approving by an overwhelming majority (599 votes in favour, 7 against and 35 abstentions) the regulation introducing new rules for the everyday operation (as credit transfer) of the single market.

The main new element is that throughout the EU an instant transfer will have to be processed, regardless of the day or hour, and the money arrive in the beneficiary’s account within ten seconds. The payer will also receive confirmation that the payment has been made to the designated beneficiary within the same time frame, again within ten seconds.

The new provisions will be virtually immediate: they will come into force 20 days after publication in the EU Official Journal, and from then on member states will have 12 months to implement the regulation. Member states that do not adopt the euro will still have to apply the rules for bank accounts that already can conduct transactions in euros, albeit after a longer transition time than those in the eurozone. Provision is also made for a waiver to making the transfer within ten seconds for such bank accounts if made outside of business hours, given the varying conditions of access to euro liquidity.

The legislative initiative aims to meet two main objectives: economic protection and combating evasion. On the one hand, it wants to prevent businesses in particular from collecting too late what they need for their business, and on the other hand, it wants better transaction tracking to avoid illicit activities.

Michiel Hoogeveen (ECR), the measure’s rapporteur, has no doubts: “The Instant Payments Regulation marks the long-awaited modernization of payments in the European single market. It is a step change that will have to be made by everyone, especially in Italy, so reluctant to technological progress and new payment methods, as evidenced by the tug-of-war with the European Commission on POS introduction and deployment, the card payment device.

Now, with the House vote bringing the legislative process to a close, states will have to get busy as under the provisions of the new regulation banks and payment service providers will have to ensure that transfers are processed immediately. Moreover, payment service providers (those who make the transition, thus entities such as Paypal or the operators of the Visa and Mastercard circuits) will have to allow their customers to set a maximum amount for instant transfers in euros and reimburse the customer “if it does not fulfil his fraud prevention obligations.” Again, payment service providers offering instant transfers will have to check whether any of their customers are subject to sanctions or other restrictive measures related to money laundering and terrorist financing.”