EU Banks Discouraged By Short Deadline to Offer Instant Payment Services

Banks operating in the European Union have until January 2025 to provide instant payment services.

The new guidelines are affecting a majority of banks in the UK. A third of EU banks currently do not provide instant payment services, and they are being discouraged by the January 2025 deadline. According to recent research, this deadline is too close.

A survey conducted by RedCompass involved 200 payment professionals operating in banks based in the EU. The research identified that 58% of the banks operating in the region do not provide instant payment services.

The banks also believe that the deadline provided by regulators to achieve the instant payment offering is unrealistic. A third of these banks also lack confidence that they will meet the set deadlines.

Instant Payment Services Come With Massive Benefits

While there are some concerns from certain banks about meeting this deadline, some banks believe the offering comes with some benefits. According to the survey, around three-quarters of banks, equivalent to 77%, believe in the benefits offered by instant payments.

77% of banks believe that the benefits of instant payments outweigh the costs. Additionally, a little over half of the banks, which is 55% of those involved in the survey, are planning to provide instant payments as a default option to their clients.

Bringing Instant Payments Is an Intense Process

The survey conducted by RedCompass also detected that banks might be underestimating the intensity of the process of bringing instant payments to their offerings. These offerings will improve service delivery and make it easier for banks to handle customer transactions.

A majority of banks are planning to process between 101 and 300 payments every second to fulfill instant payments. During times of peak traffic, bulk payment files can contain 100,000s of payments, making the process of fulfilling instant payments hectic.

To offer instant and fast payments, banks should aim to process more than 1,000 payments per second.

A majority of the banks involved in the survey are planning to provide instant payments by increasing their IT budgets. If they increase their budgets, these banks will meet the new SEPA guidelines. However, banks will have to part with between €1 and €3 million each to upgrade their IT departments and accommodate the guidelines.

The CEO of RedCompass Labs, Tom Hewson, opines that the new EU guidelines show that instant payments are now coming to Europe. The revolution would improve user experiences in the banking industry.

“Our research shows that there is understandably some trepidation about the proximity of the timelines and a possible underestimation of how much they need to scale their throughput and invest,” Hewson said.

The executive further said that integrating instant payments did not require a single solution that cuts across all banks.  Therefore, it is expected that banks will explore alternative approaches that do not need them to change the operations of their core banking systems.